2013-04-16

Shotgun Theory

Tyler Cowen has an interesting explanation for why people who have been unemployed for a long time can't find jobs: They're worthless. Okay, he didn't call them worthless, he called them worthless on the margin:
I think of this as further illustration of what I have called ZMP workers, a once maligned concept which now is rather obviously relevant and which has plenty of evidence on its side.  It’s fine if you wish to label them “perceived by employers as ZMP workers but not really ZMP,” or “unjustly oppressed and only thus ZMP workers.”  The basic idea remains and of course “stimulus” will reemploy them only by boosting the real economy, such as by raising output and productivity and reeducating, and not by recalibrating nominal variables per se.  For these workers it is not about wage stickiness.  Most by the way would not be ZMP if the U.S. economy were growing regularly at four percent in real terms, but of course that is not easy to achieve, not from where we stand today.
Luckily for us, Bryan Caplan sets the record straight:
The mere fact that you throw an application in the trash doesn't mean you think the applicant has MVP=0.  After all, even if the applicant had a high MVP, you'd still want to throw his application in the trash if his MVPwage wouldn't justify additional search effort on your part. 
Not convinced?  Remember that employers often get hundreds of applications per position.  80%+ quickly end up in the trash can.  Does this mean that employers think that 80%+ of applicants are ZMP?  Of course not.
I concede that Caplan is using a microeconomic argument against a macroeconomic one. That is, the weakness of Caplan's argument is that it relies on the implausibility of ZMP in a specific case to state that it cannot be true in general that large segments of the population are unable to contribute meaningfully to economic development. If we restrict ourselves to a world in which macroeconomics is the only type of economics that exists, then Cowen's theory is a lot more plausible.

This highlights an important concept that often applies to economic theories, but also applies to many different kinds of theories, arguments, and ideas expressed by people in general. The concept is something I call "Shotgun Theory." A Shotgun Theory is an idea that only seems true when it is expressed vaguely.

Do note that a Shotgun Theory can be used to buttress a true claim. In that case, it is merely someone making a bad argument for something that is nonetheless true. Not every "Shotgun Theory" implies a false explanation; rather, Shotgun Theories paint with a brush so broad that they do not actually explain anything. The language is too fuzzy to assert anything in particular.

Shotgun theories pop up everywhere. In epistemology, for example, the claim is often made that perception is reality. This seems true, because all we really know about reality is what we perceive. Therefore, whatever   we take to be true seems like whatever we take for granted. We know the ground is solid because we perceive ourselves walking on it. We can play many interesting thought-games like this. What if the ground is truly liquid, but our perception of reality is such that we don't understand it? What if everything you perceive to be purple is actually blue, but our brains perceive it as purple to help us differentiate between hues? What if there is no such thing as purple? What if we live in The Matrix, and all life is but a dream?

It's fun to think about such vagaries, but they are vagaries, and they disappear the minute we consider specific cases. For example, when we compare patches of ground to patches of liquid, then we know for certain that, at least relative to all liquids worth considering, the ground is solid. Whether purple is truly purple or just universally understood to be purple, it has a different electromagnetic wavelength than blue, so it is different in that regard. And so on.

Academics and theoreticians can often slip into Shotgun Theories, and we should all be very glad that they do. After all, it is only by entertaining the outlandish that we can uncover new ideas and new theories. But of course, once the theory has been established, it is no longer sufficient to refer to it repeatedly and promote it as truth. At that stage, the theorizer must provide evidence to buttress his/her claim. Otherwise, it's just a Shotgun Theory.