Thanks Mark.

Check this out.
Today on Mises.org:

The Correct Theory of Probability
by Murray N. Rothbard

http://mises.org/daily/4128

I want to add something.
if probability means “ignorance” [knowledge that we don't have yet, knowledge we cannot control yet], how can econometricians try to make predictions based on that “ignorance”?

Your paper advances the L.Misesian case against econometrics.

Thanks Mark, your paper made my day!

Thanks for the comment. I agree with you that the Austrians did not say that prediction was impossible– even in singular cases. But, virtually all Austrians, including Ludwig von Mises, have said that numerical probability cannot be applied to singular cases. As Mises wrote, “Case probability is not open to any kind of numerical evaluation.” They reached this conclusion, I argue, because of Richard von Mises’s definition of probability, which was virtually synonymous with the relative frequency method. They have claimed, in other words, that the ONLY legitimate way to generate a numerical probability is through the frequency method. Whether or not it is true that numerical probabilities cannot be applied to singular cases depends upon what the definition of probability is. I claim that this is not true, if we define probability subjectively.

I am going to be presenting a new paper at the Austrian Scholar’s Conference in a few weeks specifically addressing Ludwig von Mises’s theory of probability. I don’t want to spoil the surprise, but one of my main arguments in the paper I will present is that Ludwig von Mises did not give us a general definition of probability in Human Action at all, or anywhere else, as far as I am aware. This is all my papers aim to do: to bring the Austrian School over to the subjectivist side of the definitional debate.

I certainly do not mean to imply that Austrians dismiss prediction as absurd, because obviously they don’t. They just think predictions are something very different from “probability.” This claim depends upon what probability is defined as.

Does this clarify anything?

Cheers,
Mark Crovelli

And you are advancing this case by saying that we don’t [we cannot] know everything about the ways nature [the weather for example] works. There is some stuff we cannot control.

“uncertainty is ascertained to derive solely from our limited mental capacity to comprehend all of the relevant factors involved in any given process, while the process itself is governed by causally deterministic laws”

Derren Brown – the System Part 1
http://www.youtube.com/watch?v=lX94fV4TWbc

It is a trick of mind.

In Human Action, Ludwig von Mises was attacking the mechanistic econometrics.
But all the austrian economists [Ludwig's followers] recognize that predictions can be made.
Predicting is an “art”, not a mechanistic-exact-econometrical ‘positivistic science’. Hoppe explains this very well.

As austrians [Ludwig's followers] recognize, entrepreneurs are good at predictions, because they have better information -as bookies.
So, it is not completely acurate to say or to suggest that Ludwig said that the type of prediction bookies make are impossible.

Maybe there is a confusion in Ludwig’s words. “Probability” and “predictions” sound similar, but austrians talk specifically about “predictions.”

There is something else to be considered:
when you say “These are remarkably accurate numerical predictions about singular events, are they not? If so, then how can the von Mises brothers say that numerical probabilities cannot be calculated for singular events?”

The bookie does not say: “there is a 50% of probability that this horse will win.”
The bookie says: “this horse will win. Based on my information, this horse is the best”

The horse will win or not.
The bookie will not always be right [the horse might break a leg.]
Then we can count the times the bookie was right and the times the bookie was wrong.
And then, based on this we can find an “average”.

In this video:
Praxeology: The Austrian Method
http://www.youtube.com/watch?v=hiXcO3pcR8I
Hans-Hermann Hoppe explains the type of predictions austrians can make. Bookies are ok.

I think you are misunderstanding my point with regard to the boxing analogy. The point is that bookies and casinos generate odds that are remarkably accurate for singular cases. Whether they generate these odds through a sportsbook, or by employing people capable of picking winners, or whatever, the point is that the odds are accurate. Just take a look at the odds on, say, basketball in your local paper. These are remarkably accurate numerical predictions about singular events, are they not? If so, then how can the von Mises brothers say that numerical probabilities cannot be calculated for singular events?

I agree with you on these points. In particular, I hold that probability is an epistemic question. In fact, classes I’ve generally argued for a slightly more radical position than yours in that direction – I hold that regardless of whether or not there is real indeterminism in the world (and I think there’s a good case that there might be, both at the quantum level and because chaos and subtle order) probability is still an epistemic question. I didn’t argue with you on those points because I agree with you on them, although I’d go about establishing it somewhat differently. I’m not, for instance, convinced that the fact that causal determinism is logically necessitated by human action implies that the world is causally deterministic, but I do think it implies that we treat it as such, which is good enough for me.

So, yes, man seeks to assign numerical probabilities to various events, classes, and so on, because of this epistemic uncertainty. But this is also the reason that man assigns verbal probabilities to various events. To use the example I heard raised (I wish I could remember who by) a few years back, if the President proposes nationalization of all industry, it makes sense to say things like “Hans Hoppe is more likely to oppose this than is Paul Krugman” or “Hans Hoppe is more likely than not going to oppose this” or something similar – verbal probabilities – but we would not say or understand “there is a probability of .95 that Hans Hoppe will oppose this.” If someone said this, and I was being charitable, I’d rephrase it in my head to mean “Hans Hoppe is very likely to oppose this” and not try to take it literally. I choose this example because, based on your paper, I think you’ll agree that we can’t apply numerical probability to singular events involving human choice of this sort.

Certainly, though “man seeks to” do something does not imply that man succeeds in so doing. It would be great to attach numerical probability, in a meaningful way, to singular events, but that doesn’t make it possible.

Your examples, I think, were meant to motivate the idea that there are meaningful numerical probabilities for singular events. I cannot agree that they have done so. I think that this claim is not necessary for your more substantial claim, with which I agree. That is, the idea that probability is epistemic need not imply that we can assign meaningful numerical probabilities to singular events. These examples, I think, better serve as cases for illustrating just this fact.

I think you’re trying to approach this question from a technical point of view rather than a logical point of view, and I think that is a mistake. What we are after, (or, rather, what my paper is seeking to identify) is an epistemologically defensible definition for probability. In order to accomplish this task, what we need to do is first of all figure out why man tries to attach numerical probabilities to events or phenomena. As I have argued, and Ludwig von Mises argued, man seeks to employ probabilistic methods because he is uncertain about some event or phenomenon. A vital question is thus raised; namely, why is he uncertain? It is because the events and phenomena in the world are themselves completely random and erratic, or simply because man is not omniscient? For Austrians, this leads us to the unavoidable conclusion that man is uncertain for the latter reason– he is not omniscient, even though everything in the world has a prior and certain cause. And this means that probability is simply a subjective measure of man’s uncertainty about the causes in the world.

This seems to me to be the only defensible way to approach this definitional question.