Remember that Keynes' first major published work was the Treatise on Probability; he does in fact hold a version of a subjective theory of probability, albeit one in which the concept of "weight" can be used to give some sort of rigor to this distinction (which I agree with Raghu is actually more of a continuum) between probability and uncertainty.
best dd > ----- Original Message ----- > From: raghu <[EMAIL PROTECTED]> > To: "Progressive Economics" <[email protected]> > Subject: Re: [Pen-l] Re: Keynes & Freud [was: monetary reform > Date: Tue, 27 May 2008 19:18:03 -0700 > > > I have seen this passage from Keynes before, and I'd still argue that > the categories of risk and uncertainty are not at all sharp. Just to > take one of Keynes' examples: > "the price of copper and the rate of interest twenty years hence": if > I look back at the historical copper prices over the last 200 years, I > can most certainly obtain a probability distribution for copper price > which if necessary can be combined with the expected statistics of > copper supply and demand (similarly obtained from historical data) to > project 20 years into the future. > > Indeed I'd expect quant hedge funds that invest in futures probably do > something like this today (maybe not 20 years). > > Admittedly the probabilities are very imprecisely known in these > instances, but how precise do you need them to be? Is every nickel a > completely fair coin where the probability of a Head is *exactly* 50%? > Is a roulette wheel *absolutely* symmetric to all the numbers? > > It seems to me there is only one way to differentiate measurable risk > from uncertainty: by asking the question "is it useful to think of a > given variable in terms of probability?". That, of course, is > subjective and not sharp at all. > -raghu. > > > On Tue, May 27, 2008 at 6:30 PM, Doug Henwood <[EMAIL PROTECTED]> wrote: > > On May 27, 2008, at 9:18 PM, raghu wrote: > >> > >> I understand the risk v. uncertainty intuitively but is it even > >> possible to give a coherent definition? Are these two categories as > >> sharp as they appear to be? > > > > Keynes, "The General Theory of Employment" (journal article, not the book): > > > >> By 'uncertain' knowledge, let me explain, I do not mean merely to > >> distinguish what is known for certain from what is only probable. The game > >> of roulette is not subject, in this sense, to uncertainty; nor is the > >> prospect of a victory bond being drawn.... Even the weather is only > >> moderately uncertain. The sense in which I am using the term is that in > >> which the prospect of a European war is uncertain, or the price of copper > >> and the rate of interest twenty years hence, or the obsolescence of a new > >> invention, or the position of private wealth-owners in the social system in > >> 1970. About these matters there is no scientific basis on which to form any > >> calculable probability whatever. We simply do not know > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
