Economics Research at ConceptualMath.org
American discussion in economics contains many popular myths that are easy to disprove with evidence. WE need much more fact-checking. But even more so, we need to identify the many blind-spots and wishful thinking errors that make up our beliefs. Mathematical reasoning may help us identify these blind-spots and rethink what is meant by a healthy functioning economy. This site offers some of those evaluations. We introduce them below.
Draft: July 2014
Part 1: Rethinking & Evaluating
We must recognize our need to reevaluate what we value and how we measure what we value. Money is not wealth, yet we persistently use money in our attempts to measure wealth. In doing so, we make very predictable errors based on our desire to make those measures have more meaning than they possibly can. This leads to cheating, doctoring the numbers.
But the errors can take on more basic forms. Sometimes people just don't understand the numbers. Sometimes people overlook hidden information in the measure. Sometimes people overlook the critical changes in the trend. These basic oversights can even become the basis of popular arguments during elections.
Part 2: Overlooked Externalities
Part 3: Income, Employment, & Wealth
Americans are too willing to believe theories that contradict empirical
data, make one dimensional linear assumptions, and read
too much into numbers. We forget that money is
not wealth. Before reading the numbers we should understand our starting
assumptions. Engineers would recognize that a healthy economy would probably
look like a band pass filter.
We should all recognize that the means by which we gain
money has many dimensions. So does our spending.
CPI measures fail to track the cost of living. We
need to be aware of these dimensions to have rational discussions about
wealth, poverty, income,
employment, and economic policies.
Part 4: Taxes and Tax Policy
In popular tax discussion we have seen a lot of obfuscation, much of
it intentional. The terms taxes, tax rate, tax burden, and tax share have
been interchanged haphazardly. Taxes are measured in real
dollars - how much did you actually pay? Tax rate is a comparison
of your taxes to your income, regardless of how the taxes were actually
assessed. Tax burden is the
opportunity cost of your taxes - what did you have to give up to pay your
taxes? Tax share is the portion of the taxes paid by a particular
cohort. The mixing of the terms has been used to hide the fact that the
middle class pay the highest tax rate and the
highest tax burden, even while our children (the deficit) will pay the
highest actual tax and tax share. By ignoring the deficit, many sources
have incorrectly identified the rich (the 1%) as paying the highest share
of the taxes.
Part 5: The Federal Budget and Deficit
We hear a lot of theories about the federal deficit problem. They all
need to be fact-checked. A good starting point would be to look at the
changes that occurred under each president, during
the recent recession, or to break the budget
up with pie graphs. Those are only starting
We need much better fact-checking and reasoning. Few of our popular
economic theories are consistent with empirical evidence. This appears
to result from the theories themselves having huge blind-spots and being
based on wishful thinking. This site hopes to encourage all to improve