No Prediction, No Soup For You...
Monday, March 5, 2007 
There has been an intermittent dialogue taking place in response to my previous post on The Economic Modeling of Religion, in which Bob Ekelund, one of the authors of The Marketplace of Christianity and a professor of Economics of Auburn U responded to misgivings about the applicability of the economic model. Recently David George - a colleague at La Salle known for his work in meta-preferences (see his Preference Pollution: How Markets Create the Desires we Dislike) has added a provocative comment to the mix.
So I am starting a new thread here with a top-level post for two reasons: to make sure that newer viewers are award of the dialogue, and particularly Bob Ekelund's responses and defense of the economic model of religion, and to answer David George's point concerning understanding and prediction, which will give me more of chance to discuss this continuum.
An excerpt from D. George's response:
Second, I must disagree with both of you that, to quote Bob Ekelund, "any model must have predictive power." As you, Rich, appear to point out in an earlier entry, "understanding" is also of great importance. Work that I have done tends to focus on exactly such understand[sic] without claiming to be able to predict. The late Milton Friedman brought economics to its present sorry methodological state by asserting in an early 1950s article that "assumptions don't matter." I have seen first-hand the mischief that this can cause. Beginning, I believe, with Thaler and Sheffrin around 1980, attempts to explain internal conflict have begun with the assumption of "two-selves" (or "multiple-selves") residing within each individual. If pressed, advocates of these models will probably stress that person isn’t really “two-selves” but simply behaves "as if" he is. As I have argued extensively, this does little to further our understanding of internal conflict. To tell someone trying to understand her internal conflict that she has more than one self begs the question, to put it mildly. To explain that the preference that moves them to act is not the preference that they prefer having, in contrast, "sheds light." To be in the grip of crummy preferences is to rationally act and to still be respected as a "whole." In addition, it permits normative evaluation of market shortcomings (markets are ill equipped to create preferences that we prefer having) while at the same time not particularly suited for making predictions. The two-selves models, in contrast, do not have the same normative weight. My point: assumptions matter if we are to gain "understanding."
OK, I totally agree that assumptions are crucial to a true understanding of any phenomena via modeling. But, and this was my point in my original post about the economic modeling of religion, if there is no predictive power, I question what the model provides other than an explanation for why things are the way they are. I'll even go so far as to say that, if there is no prediction, there is no understanding.
Now, with apologies to D. George, this is a pretty harsh view. I am lead to it, however, by wondering where the belief that the model provides understanding comes from if not from some "test" of the model via prediction. Maybe it's the word model that has me going here. A model that provides understanding ONLY is really only an explanation of the current situation - one that might "sound right," but which is lacking any inductive way of measuring its merit as compared to another "model."
There's an interesting connection to Chaos Theory here. Because of sensitive dependence on initial conditions that is the hallmark of many a non-linear dynamical system, it would appear that one could have complete understanding of a system (i.e. the equations that determine the interactions among the system members are know to be exact) but no predictive power. So doesn't this blow away my argument about the need for prediction? How can Chaos Theory be used to model anything at all if non-predictability is built in? The difference is that Chaos Theory, in a nicely recursive way, predicts its own unpredictability. Not only that, but because of the constrained randomness that is the best way of describing the output of many a chaotic system, it does so pretty accurately.
So I challenge anyone to come up with a model that only yields understanding, but no prediction.
I predict that, in all cases the "model" is better described as an explanation of the current state.
Reader Comments (2)
I believe that I incorrectly posted the following comment on another of Rich's sites (on April 1st), so I post it here. I've enjoyed your own exchange and offer this brief response. I'll have to think about a number of the points you raise.
David correctly aruges that I (and my co-authors) do in fact depict a market for religion in the Beckerian manner. It is a non-material good just as marriage,divorce,dating,artistic experience, etc. These and many more non-material goods have been analyzed for the past three or four decades in the literature. We simply take a demand for granted, observable in almost every known society, primitive and modern. (Many others have said as much). Our hook in Marketplace is that forms of religion -- product differentiation if you will -- is a function of particular variables such as income, education, state of science and many others. As these change, the form of religion demand changes and evolves. Supplier-entrepreneurs are in fact there to "discover" these often subtle differences and exploit them. We believe that the history of Christianity and religion generally supplies evidence to this effect. "Supernatural services" of all types -- fortunetellers, psychics (see appendix to Ch.4 for an empirical test of the latter), New Age, etc. ad infinitum -- are there and have alwyas been there to readily fill demands. Sadly, this is true of many professors as well. Grades and course content is, at many schools, determined by threats of dismissal or (for those with tenure) other kinds of unsavory treatment. One might interpret this as a "race to the bottom" but I think something different is going on in the religion market. If we take the entire span of human existence, religious "individuality" is double peaked -- one for primitive pre-agricultural hunters and one emerging in modern non-establishment clause nations. Note that the two fastest growing categories in the on-going U. Chicago social science study are "no religion" and "Christian, no denomination." The big problem is to define "religion" -- is it a church, an organization, individual spiritual belief?
As to "commitment to truth," I ask "whose truth"? The example of the on-going Episcopal-Anglican tussle over "truth" is a case in point (one which I give a lot of attention to in Marketplace, Chapter 9). The Old Testament appears to condemn homosexual behavior, butin that very place there is a litany of condemnations that, by modern standards, appear preposterous (slavery, eating pork, etc. etc. etc.). Who is to interpret what "truth" is in this and many other areas. Clearly, in the case mentioned, schism is underway by mutual interactions of suppliers and demanders. The majority of US Episcopal bishops hold a different truth than African Anglicans. (I am as deeply suspicious of those who claim to hold political truths as well).
I'll have to think about the "multiple selves" argument. I fear that this describes many people I know! Prediction is the stuff of science. If there are truly no ways to predict and/or test for "goodness" of prediction, then we must as scientists remain agnostic about those matters. While all predictions must carry probabilities concerning "causes," some probabilities clearly trump others. Even agnostics must look at probabilities I guess in order to determine "extent" of "belief" in the Easter bunny or the tooth fairy. You both raise excellent questions.
Regards, Bob Ekelund
PS A recent review of Marketplace in the London Times by an athiest friend of Richard Dawkins is very interesting. He likes the economic approach but has pithy things to say about the benefits of religion.
Bob - As always, some fascinating facts and ideas to support your thesis on "product differentiation" in Christianity.
There have been some recent articles in the Chronicle about the connections between religion and just about everything else. One is a massive essay by David Baresh (4/20/07) in which he reviews approx. a dozen books that focus on biology, evolution, and religion. (With books by Dennett, Wilson, Dawkins, Wolpert, etc.) The Chronicle article is titled "The DNA of Religious Faith" while there is a slightly modified version of his 2/24/2007 post of Richard Dawkin's blog titled Biology and BullSh*t
Have you read any of Baresh's essays, or the books he describes?
Reading the Baresh summaries naturally led me to wonder about evolutionary theory applied to economics. I have seen some references, and wonder if there are any that you would recommend.
And whether you believe there is an underlying evolutionary thread that connects economics and religion in a way that supplements your work.
(If you have a link to the London Times Review, please consider including it in your next comment)
Rich