Tuesday, August 29, 2017

Lars P. Syll — Revealed preference theory — much fuss about ‘not very much’

Utility theory and economists' approach to human action in general reminds me of previous debates in the history of intellectual thought that hung on words. 

Logical positivism was introduced as a corrective, but its assumptions, too, lacked foundation. 

Ludwig Wittgenstein's Tractatus Logico-Philosophicus was assumed to be a positivist document, he dissociated himself from the Vienna Circle. His view was that it was a tract in the philosophy of logic as an iteration in the debate around the work of Gottlob Frege and Russell-Whitehead's Principia Mathematica. Wittgenstein later published Philosophical Investigations as a corrective to the limitations of the Tractatus, which only treated the logic of description. He credited Pierro Sraffa, one of his friends at Cambridge, for insights involved in the development of a unique approach to philosophical logic evinced in his later work.

Observing the actual use of terms in context is central to the later Wittgenstein. He said that his method was neither nominalistic nor pragmatic, both of which involve assumptions. While he did not use the term with respect to his own method, it can be called "operational."
Don’t say: “They must have something in common, or they would not be called ‘games’” but look and see whether there is anything common to all. For if you look at them, you won’t see something that is common to all, but similarities, affinities, and a whole series of them at that. To repeat: don’t think, but look.  — Philosophical Investigations § 66
Pressing ordinary language beyond its accustomed use invites logical problems that may infect meaning. The later Wittgenstein was especially critical of exporting ordinary language terms for technical use since they bring along many associations that are difficult to disentangle, leading to ambiguity and confusion, especially when done haphazardly by assuming that what seems obvious actually is.

This seems to me to the be case as someone trained in philosophical logic looking at conventional economics. Terms like "utility," "preference," "rational" and the like suggest the kinds of approach in Western intellectual thought that Wittgenstein found problematical. Being subjectively oriented they don't add anything empirically without being defined operationally, and even when they are defined operationally problems can still creep in owing to ordinary language associations that are at least in part normative or prescriptive while posing as entirely positive.

The point of analysis based on philosophical logic is becoming clear about what is being expressed. Very often it is not obvious and without care one can be led astray oneself and also lead others astray. In the hands of sophists, people can be intentionally misled though illogic that appears compelling in the manner of presentation.

Mathematical expression is supposed to obviate this, but connecting mathematical symbols in models to what is purportedly being modeled depends on definitions and rules that involve assumptions and concepts that need to be carefully specified and adhered to throughout. Formal consistency can never be a guarantee of the quality of a formal model as a representation. In fact, formal consistency can mask logical inconsistency being introduced in other ways, either inadvertently or purposefully.

Wittgenstein called this "nonsense."
Philosophy is a battle against the bewitchment of our intelligence by means of our language — Philosophical Investigations § 109
Lars P. Syll’s Blog
Revealed preference theory — much fuss about ‘not very much’
Lars P. Syll | Professor, Malmo University


Matt Franko said...

I would say our English language use of the word "money" is one of the best (negative) examples of what Wittgenstein was talking about here...

The word is indeed bewitching to most people...

Tom Hickey said...

That's an apt example, Matt. "Money" is indeed bewitching.

Bewitchment leads to magical thinking. This leads speculation in economics, finance, and related fields into the weeds and sometimes into the briar patch, or into the Elysian Fields of illusion.

Matt Franko said...

It seems to breed even more use of figures of speech Tom...

It's like the figures of speech can only be explained by using other figures of speech... terminology is not in the scene...