Chapter
The Problem with Aggregates in Economics
1:06:50 - 1:13:15 (06:24)
The use of aggregates in economics to establish scientific relationships between different economic factors is the main reason why economics is considered pseudoscientific, according to the Austrian school of economics. They argue that the market economy can only be understood by examining individual human action, rather than relying on aggregates like production and unemployment rates.
Clips
Economics is the study of how individuals make choices under conditions of scarcity, which is related to human action.
1:06:50 - 1:08:45 (01:54)
Summary
Economics is the study of how individuals make choices under conditions of scarcity, which is related to human action. Economists create models to understand and predict human behavior and use it to prescribe policies that control the future.
ChapterThe Problem with Aggregates in Economics
Episode#284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics
PodcastLex Fridman Podcast
The introduction of aggregates in economics is the reason for its pseudoscientific nature.
1:08:45 - 1:11:12 (02:27)
Summary
The introduction of aggregates in economics is the reason for its pseudoscientific nature. Economists try to understand the market economy by looking at aggregates, which is purely physics envy.
ChapterThe Problem with Aggregates in Economics
Episode#284 – Saifedean Ammous: Bitcoin, Anarchy, and Austrian Economics
PodcastLex Fridman Podcast
The validation of theories in physics can be achieved more definitively through experiments, while economics lacks this capability, relying on thought experiments to test theories.
1:11:12 - 1:13:15 (02:02)
Summary
The validation of theories in physics can be achieved more definitively through experiments, while economics lacks this capability, relying on thought experiments to test theories.