Thursday, May 10, 2007

The limitations of logic (and the need for passion)

In case you need catching up, 2 of the finer prediction market intellects, Steve Levitt and Robin Hanson took different tacks on the economists petition in favor of rolling back restrictions on prediction exchanges.

Levitt wouldn’t sign, and gave his reasons here.

Hanson repudiated with Levitt’s decision with a bit of logic here.

My initial post on this at Caveat Bettor:

Levitt reminds me of Private Trip in Glory: tear it up. Tear it up! TEAR IT UP!!!

To expand a little on this, my thinking on Hanson’s fair and accurate but possibly weak argument is this: logic only holds in a given paradigm. Thus, if the paradigm is shifting, or we very much want it to shift, an illogical response may be more effective. In the film Glory, the Negro regiment was only paid $12 per month, even though they enlisted for $15 and white regiments were paid $15. Private Trip, played in an Oscar-worthy and award-winning way by Denzel Washington, says “we can stop a bullet the same as a white man”, and he encourages his comrades in arms to tear up their paychecks. Logically, Private Jupiter Sharts tells him “Twelve dollars is a lot of money”–economically speaking, these men could take their reduced wages and express them in speech and other markets, increasing their influence.

But no, they tear them up. They inspire their white officers to tear up their pay, too. An inspiring scene in an inspiring movie, that helps to change the world. The all-black regiment from Massachusetts kicks butt, inspires the creation of several more black regiments through the North, and starts a wonderful tradition of african american service and dignity that continues in american history through the world wars and even to today.

I think Levitt, in his own way, is doing the same thing that Private Trip did when he found out about that first paycheck. Good for him!

Cross posted from Midas Oracle.

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