I don’t think these assumptions will ever let you create a theory that genuinely “ties physics and economics together at the fundamental level”, with anywhere close to the precision and reliability of true physical laws, or in a way that allows us to use physics equations together with economics equations to create better models of the world.
Maybe it’s possible to use something like these assumptions to “tie physics and economics together at the usual, economics-y level” of rough approximations and general guidelines to help us understand cause and effect. But I think even if this project succeeded, you’d just create basically another economic theory/perspective, which is sometimes helpful in situations where it applies well (but it doesn’t apply everywhere, and doesn’t model things perfectly). Compare for instance to various “green” or “human-centric” perspectives on economics, such as the perspective of the “circular economy”. The “circular economy” idea is based on real physical facts (matter is conserved, the earth has finite resources, etc), so you might think it would be easier to come up with precise mathematical laws, but in practice it’s been HARDER for fans of the “circular economy” to formalize their ideas, compared to traditional economic models that are based more in “illusory” human factors like skills, money, demand, etc.
That said, some of the ideas of the “circular economy” have probably been very helpful in some situations even if they haven’t led to a revolutionary improvement in economics. So, another unique perspective on value could probably be similarly helpful in certain situations, like heavy industry as you mentioned, or perhaps agriculture or construction.
“I don’t think these assumptions will ever let you create a theory that genuinely “ties physics and economics together at the fundamental level”, with anywhere close to the precision and reliability of true physical laws...”
Do you know of any true physical laws that connect physics and economics?
I don’t; I was referring to the precision with which physics connects to itself and makes great predictions (like how the rules of newtownian mechanics work extremely well together to predict the motion of objects). As opposed to the IMO lesser (but still useful) precision with which economics connects to itself. (The leading models of economics cannot do stuff like predict the exact future path of recessions or inflation or the price of commodities or etc; they are more like general principles and illustrations rather than a single giant perfectly coherent system that you could use to simulate events.)
It feels to me like the assumptions are not the clear issue. Usefulness is.
Why spend so much effort eliminating “dollar value distortions” from social cost estimates when those estimates already have margins of error due to uncertainties about manufacturing processes, modes of transportation, etc.?
Why publish economic figures in a slightly more accurate format when that format is going to be necessarily quite complex? It seems like TEMS values would be hard to use for practical purposes.
There’s definitely great work to be done around figuring out how to account for externalities. But I just don’t see the benefits of an entirely new framework.
@Erin @Jackson Wagner @ChristianKleineidam @Arturo Macias
All of this being said, do you think that more often than not that the assumptions would hold?
I don’t think these assumptions will ever let you create a theory that genuinely “ties physics and economics together at the fundamental level”, with anywhere close to the precision and reliability of true physical laws, or in a way that allows us to use physics equations together with economics equations to create better models of the world.
Maybe it’s possible to use something like these assumptions to “tie physics and economics together at the usual, economics-y level” of rough approximations and general guidelines to help us understand cause and effect. But I think even if this project succeeded, you’d just create basically another economic theory/perspective, which is sometimes helpful in situations where it applies well (but it doesn’t apply everywhere, and doesn’t model things perfectly). Compare for instance to various “green” or “human-centric” perspectives on economics, such as the perspective of the “circular economy”. The “circular economy” idea is based on real physical facts (matter is conserved, the earth has finite resources, etc), so you might think it would be easier to come up with precise mathematical laws, but in practice it’s been HARDER for fans of the “circular economy” to formalize their ideas, compared to traditional economic models that are based more in “illusory” human factors like skills, money, demand, etc.
That said, some of the ideas of the “circular economy” have probably been very helpful in some situations even if they haven’t led to a revolutionary improvement in economics. So, another unique perspective on value could probably be similarly helpful in certain situations, like heavy industry as you mentioned, or perhaps agriculture or construction.
“I don’t think these assumptions will ever let you create a theory that genuinely “ties physics and economics together at the fundamental level”, with anywhere close to the precision and reliability of true physical laws...”
Do you know of any true physical laws that connect physics and economics?
I don’t; I was referring to the precision with which physics connects to itself and makes great predictions (like how the rules of newtownian mechanics work extremely well together to predict the motion of objects). As opposed to the IMO lesser (but still useful) precision with which economics connects to itself. (The leading models of economics cannot do stuff like predict the exact future path of recessions or inflation or the price of commodities or etc; they are more like general principles and illustrations rather than a single giant perfectly coherent system that you could use to simulate events.)
It feels to me like the assumptions are not the clear issue. Usefulness is.
Why spend so much effort eliminating “dollar value distortions” from social cost estimates when those estimates already have margins of error due to uncertainties about manufacturing processes, modes of transportation, etc.?
Why publish economic figures in a slightly more accurate format when that format is going to be necessarily quite complex? It seems like TEMS values would be hard to use for practical purposes.
There’s definitely great work to be done around figuring out how to account for externalities. But I just don’t see the benefits of an entirely new framework.
Duly noted, thank you