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Fwiffo 11 July 2015 10:34 AM
59%

I am also reserved on the same point but on different grounds.

The productiveness here is monetay productiveness while the question asks whether there is "real value provided". Yeah it has moved money from one hands to other hands but if you were to forget the financial side of it would it have made anybodys lives better? An apple feeds a person, a hair cut looks neat. People sometimes choose to be mean but that doesn't suggest that meaness is productive. If the only value is that it allows people to play this exciting game called "economy" then it is just a glorified slot-machine.

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Silent Cal 15 July 2015 03:10 PM
69%

You're holding up an impossible standard. You could just as easily say that people sometimes choose to eat apples but that doesn't mean they derive any real value from it.

I do believe that retail day-trading is essentially a slot machine, and probably worse on net than the ones in casinos, but most of finance doesn't provide that kind of entertainment value or sporadic reinforcement or whatever, so I'm not sure what's causing the money to flow unless it's helpful to the parties involved.

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Fwiffo 18 July 2015 06:32 AM
52%

I can refer to nutrional values in the case of apples and show how eating an apple confers an advangtage regardless of whether it was bought or not. I can also argue that forcefeeding someone an apple is likely to make them healthier. The real value of apples doesn't come from that people want to eat them. It comes from fructose and such being a powerful body building ingredient.

The standard you are setting is trivially easy to fullfill to the point that it makes it not a standard at all. If people constantly doing it is grounds to prove that is providing them real value then 1000 flies liking shit can never be wrong. Thus any question of the form "people constantly do X but does it provide them real value?" can be answered in the affirmative regardless of the value of X. In order to question whether they should want to do it constantly we need to be able to imagine a scenario where it is an error to want that. For example preferring uncut hair to cut hair would be inferior on esthetic grounds (or one could try to argue that a cut hair is too "fake" and "kitch" so uncut hair is more organic and thus esthetically superior. Regardless there are esthetic standards (even if they are nebolous) on which we can rate different options).

It is easy to see how a poisoned apple fails at its function but it is very hard to pinpoint what goes wrong when a financial instrument fails to do its function. For example not being profitable doesn't seem reason enough to turn away (as similar profits can be racked in without them).

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Silent Cal 20 July 2015 05:26 PM
69%

My standard is to assume any activity lots of people voluntarily choose to engage in is valuable to those people, unless we have a compelling reason to assume otherwise. Failing to understand where the value comes from is not a compelling reason. This is not 'trivially easy to fulfill'--it is only fulfilled by those activities people choose to engage in. It's intended to apply to humans rather than insects, but in fact I'm happy to accept the conclusion that shit is valuable to flies.

What exactly is your standard? To make a personal object-level assessment of the value of something excluding evidence based on revealed preferences? Are you personally calculating the nutritional value of an apple against the costs of labor and land to determine if growing apples is productive?

"it is very hard to pinpoint what goes wrong when a financial instrument fails to do its function"
Yes, finance is complicated. That doesn't justify concluding that it's unproductive.

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Fwiffo 22 July 2015 10:16 AM
57%

You are saying that if we don't know how the thing works we should assume that it is valuable. I would say that the question remains open rather that the affirmative be the default. If we go by this principle if we start eating foods other than apples we should assume them healthy unless otherwise proved. Thus whena new designer drug which effects are unknown hits the streets and sells like cupcakes we should assume it is healhty or atleast positively impacts its users.

For the question "Whether X provides real value?" To be interesting the answer should sometimes be affirmative and sometimes negative based on X. Usually we are not interested on the real valuableness on things we don't do. Even when limited to things we do, some should still be negatives. Otherwise we can say that "everything we do is really valuable there is no such thing as fake value".

Real value is more complicated than economical value. It doesn't easily accept to single numbers and absolute values. Some people do economically inferior things to attain some of the intangible values. Things like self-expression can be estimated on the shadow they leave on the economics. However things like self-discovery can remain irrelevant to economics. Things like deciding whether to and on what subject to write a wikipedia article is somewhat clunky to model in terms of economics. At the end of the day we must whether this institution "money" is worth the effort and that clearly can't be answer in monetary terms.

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Silent Cal 22 July 2015 02:35 PM
67%

I seem to have led our discussion into some clearly fallacious logical absolute terms.

If a person voluntarily chooses to engage in an activity, I take that as evidence they derive some value from it, because why else would they do it? This evidence can be undermined by a) direct evidence that the activity is harmful/not valuable, and b) reasons to believe the person would engage in the activity even if it had negative value, i.e. a cognitive bias motivating the activity.

So with drugs, we can see the health dangers, and pretty safely say that hyperbolic discounting will cause people to accept too many distant costs to justify the immediate benefits, and maybe also that the low-probablity high-magnitude harms aren't accounted for correctly.

Whereas with food, if people choose to eat it, I take that as a pretty strong sign that they enjoy eating it (for its price). If it's shown to be unhealthy, I might accept that hyperbolic discounting makes them undercount the downside.

Now, from the fact that a number of people write wikipedia articles without compensation, I conclude that a number of people derive value from writing wikipedia articles. I don't see any way in which this is harmful except the opportunity cost of their time. This cost occurs at the same time as or sooner than the benefit, so time discounting isn't an issue; it's a certain cost, so risk estimation isn't an issue; and I can't think of any other cognitive bias that would cause people to write articles if they didn't value doing so. It's only if we refuse to use people's choices as evidence that we have trouble trying to guess whether writing a wikipedia article is valuable.



Getting back to the original question, a lot of people choose to interact with financial institutions. Credit cards seem like a pretty clear case where hyperbolic discounting leads ... read more


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Fwiffo 28 July 2015 06:41 AM
55%

The method you are using is very sensitive on what kinds of methods are used to search for possible explanations for the possibly irrational behaviour. For example the market for miracle cures doesn't have any strong red flag and the method could be employed that religion as a whole seems to be valauble to people and it is not easy to explain religion as being because of single biases.

I for example I were to deside whether I should go with a index found or a managed hedgefund it doesn't that well convince me that a lot of other people have gone with a hedgefund. Crucially some people migth have decided not based on whether other people are doing it but use some other means.

If a miracle cure worker tries to sell me holy water to that cures the common flue and all kinds of headaches, I could reason that because other people are buying it there must be truth behind it. However if I submit the holy water to a medical double blind test it might come back as null effect. Still it could be argued that the miracle cure buyers are infact buying the placebo effect and that the activity has inherent value. If the point of a hedge fund is to generate bigger profits than unmanaged one comparing it to index funds is similar to the medical litmus test. If the result is null profits the profit narrative is false. What comes to mind is that when the money suffers losses they can blame it on the economy but when it goes up they can attribute it to having chosen such a good manager for the funds. Thus when you use a hedge fund and get profits it seems to confirm your earlier beliefs and it is harder to see you would have gotten the gains anyways even without the manager. Just like getting better after consuming a miracle cure.

The profession of a doctor used to be much more low status when the involvement of a doctor didn't have any great health impacts. But even ... read more


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