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Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts

Game Theory with my Cousin: Battle over Tea & Biscuits

My cousin is preparing his exam. He needs tea. He wants me to go down and make it in the middle of the night. He gains control over my biscuits in my absence and black mails me, nudging me towards a "win-win" situation whereby i make tea  for him to get my biscuits back. For me, this is pure black mailing. I don't want to make tea for him. I'd love him to do so instead since I walked a lot to buy the biscuits. I'd like tea for myself though. Here are the strategies for both of us. I've little to decide which strategy would make me better off. My motive is not to allow him maximizing his utility while trying to maximize my own.

The Contract
My cousin made an offer which I accepted: "within 20 mins leave the room to make tea and I will give your biscuits back to you."

Choosing Best Strategy (or Strategies) for Me & Cousin
(Click to enlarge)
I chose strategy en-rectangled by the green one. Given the information (my guess actually), my cousin is desperate for tea. Missing tea or getting a really bad one would decrease his utility, in turn giving me the pleasure of victory over him, which i'd see as a compensation for the loss I incurred in making tea (time, effort, etc.). It really happened that he didn't take tea because it lacked sugar; i must be overjoyed! (Actually, i didn't like him not taking the tea on moral grounds.)

Discussion with Cousin: Flaw in the Preceding Diagram & the Winner is...?
When I discussed this game with my cousin after the game was complete. He revealed that he wasn't desperate for tea at all; in fact he didn't want it. He loves tea that lack sugar and is strong; just the kind of thing i tried to make. He didn't take tea, the kind of tea he claims he like most, because he didn't want it. His sole goal was to force me into taking trouble of making tea at an odd time. He wanted to see me disrupt my studies.

Removing the wall of information asymmetry, we come to know that the game matrix shown above was flawed because it failed to anticipate all possible moves with all intentions of all players. It failed to take into account what my cousin was really wanting to do, i.e., he never wanted tea, he wanted me to take the pain of making tea in the middle of night!

Finding the Equilibrium Strategy
Was the move that I execute lead all players towards equilibrium - an action that no one regrets? This depends on what our perceived benefits or costs were associated with each action, as I will show.

Situation 1: Equilibrium not reached with original strategy: Cousin wins
Dominant strategy for my cousin. I worse off. Hence, i'd been better off by not making tea, because it would've saved my time.

Situation 2: Equilibrium reached with my original strategy
On the other hand, if at the moment i associated greater utility to a cup of tea with biscuits, i did the right thing. Hence, my original strategy resulted in equilibrium.

Game Theory: A Prisoners' Dilemma Situation in Pakistani Schools

Prisoner dilemma is a game (serious one) where two prisoners are separately given two choices: confess or remain silent. If A confesses, while the other remains silent, A goes free. However, if A remains silent, trusting that his partner won't betray him by confessing, and his partner confesses, he'd 4 years sentence. On the top of that, if both confess, both are sentenced for 8 years! But, if they trust each other, without ever communicating, they get 1 year sentence.

Game Theory assumes that humans are selfish, hence the dominant incentive for both prisoners, who're locked in separate cells with informational asymmetry, is to confess, because none of them would risk trusting a betrayer. The dilemma is: executing the incentive or dominant strategy leads to worse pay offs!

This game is well-known and has various versions. I happened to know a similar game my friend used to play unconsciously.

On a rainy or unusual day, school teachers expect a very low turnout. My friend sees this as an opportunity to stand out from the rest by coming to class to impress his teachers. When he turns up in class, he's always doomed to see more than enough students turning up with the same intention (at least a considerable size of the students). Had he communicated with all and assured them that he won't come, lest others don't come, what would have been the outcome? I presume others would come too, unless the group bonding is very strong. In fact, when i was in 11th class, my seniors were united as a wall. And every other Saturday, literally none would come: girls and boys - without co-education and least outward interaction. Only 2 or 3 students out of 500+ would attend the class. After all, cooperation may be a dominant strategy (perhaps weakly) which requires development and cohesion.

A Muslim View of the Rushdie Affair

A Muslim View of the Rushdie Affair

March 1989


1 Preliminaries

All praise is due to Allah alone, the Creator, Sustainer and Nourisher of the Worlds. I seek the protection of God from the mischief that is in my soul and the evil consequences of my deeds. Those whom God leads to guidance, none can lead astray; those whom God leads astray, none can guide. I bear witness that there is no God except Allah; He is One and has no partners. I bear witness that Muhammad is his slave and his messenger.

As a Muslim, my sole concern is to please my Creator. If my actions and beliefs please God, it matters not at all if the entire world condemns me. If I am disobedient to God, the praise and approval of the entire world gains me nothing. Why then should I seek to explain the behavior of myself and my fellow Muslims to a non-Muslim audience? My efforts are directed to removing obsta-cles to understanding Islam created by slanders and lies. After the last prophet Muhammed, this duty of conveying the message of our Creator to mankind has been assigned to all his followers .

Unfortunately, the task is enormous. Starting with the Crusades, and contin-uing through the era of Colonialism, a tremendous amount of grossly distorted or completely false information about Islam and Muslims has been taken as axiomatic in the West. The misunderstandings regarding Rushdie are but a trivial manifestation of the widespread ignorance (combined with fear and hate, in many cases) about Islam. For a good introduction to Islam written from a Western perspective, see Islam and the Destiny of Man by Charles Le Gai Eaton.

2 Freedom of Speech?

I and my fellow Muslims are perplexed at Western defence of Rushdie in terms of freedom speech. Muslim see the Westerners as acting in bad faith in this issue; freedom of speech is invoked where it suits them, and ignored when it does not. For example,
• The American press was, in general, mildly amused at the discomfiture of the British Government when they banned the book ‘Spycatcher’ by Peter Wright recently. There was no impassioned outrage at the restriction of free speech by Mrs. Thatcher (as opposed to the Ayatollah)

• When Jimmy (the Greek) Snyder uttered remarks offensive to blacks, he was dropped from all major TV networks, and has not been seen since. Presumably, he has suffered serious loss of income. No one has defended his right of free speech.

• A research center in Southern California responsible for propagating the idea that the Holocaust never happened, or else that the numbers involved have been exaggerated, was bombed and burned down. Death threat were made to the personnel. No national outrage at this denial of free speech was visible.

• Very recently, a Chicago art exhibit required people to step on the flag, apparently to properly view the exhibit. The Daughters of the American Revolution promptly came in with the requisite bomb threats. A rec-onciliation was reached by restricting the viewing of the exhibit. Again, the incident (and its relation to free speech and the Rushdie case) went unnoticed in national press.

• During the Nixon adminisitration, General Brown uttered remarks about the excessive influence exercised by Jews in America. This influence can easily be substantiated by reading the memoirs of Kissinger, Nixon, and the more controversial ‘They Dare to Speak Out’, by Senator Paul Find-lay. Ironic proof of his own statement was provided by the subsequent demotion of General Brown.
The list goes on and on, but the above should be sufficient as a sampler. The point is that Muslims regard invocations of freedom of speech as merely a pretext by Westerners to freely heap insults on Muslims and Islam.

We take the view that just as my freedom to move my arm is restricted by your nose, freedom of speech is restricted by the need to avoid damage to society. Libel laws protect individuals from verbal attacks which hold them up to ‘ridicule, hatred, or contempt’. The concept of banning the book (or removing its offensive portions) to prevent this libel is not as ‘alien’ to Western principles as Westerners claim. Indeed, a previous book by Rushdie, which made false allegations about Mrs. Gandhi, was successfully sued and subsequently edited to remove the offensive portions. Again no complaints were registered regarding Rushdie’s right to freely insult Mrs. Gandhi. How then does Rushdie have the right to freely insult deeply the approximately one billion Muslims of the world? In my view, an appropriate resolution to this problem would be for Rushdie to revise and eliminate the sections offensive to the Muslims, showing us the same courtesy shown to Mrs. Gandhi.

3 Who is the Terrorist?

From the strong horrified reactions to Khomeini’s death sentence, one would think that such behavior is unknown in the West. Nobody was horrified about Ronald Reagan’s attempted assassination of Muammar Khaddafi, which suc-ceeded only in killing his adopted child. The murder of a PLO official in his bedroom in Tunis by Isreali commandos did not inspire horrified comments. In both cases, Westerners feel that the murdered men were terrorists and de-served to die, and legal niceties are not relevant. They take upon themselves the ‘White man’s burden’ of trying, judging, and executing these men, but don’t feel anybody of a different race can take similar liberties.

Westerners see Khomeini as a terrorist, while they regard Rushdie as an innocent. In fact, the terrorist in this affair is really Rushdie, and not Khomeini. Whereas nobody has been killed (yet) as a consequence of Khomeini’s edict, well over fifty people have been killed in riots in India and Pakistan directly caused by publication of ‘Satanic Verses’.

Should Rushdie be held responsible for the rioting and deaths that have occured in response to the publication of his book? There is ample evidence (supported by Rushdie’s own comments from his interview on Nightline) to suggest that the book is deliberately provocative. Exactly like the producers of ‘The Last Temptation’, he and Penguin Press counted on such adverse reaction to boost sales.

Let us however, give Rushdie the benefit of the doubt. Suppose that he was indeed surprised by the rioting and deaths that occurred in India and Pakistan, in the violent reaction over his book. How then can we explain his appeal to Rajiv Gandhi to lift the ban on his book, and move towards making India a ‘less repressive society?’ Even a casual observer should realize that if the publication of the book in America caused over 50 deaths in riots, there would be considerably greater violence if it was actually published in India. My own estimate is the number of deaths would range in thousands if we are lucky, and could easily reach the hundred thousand level.

What kind of man is willing to let so many die, for personal motives? Rushdie has a tremendous hatred for Muslims2. Those who are unyielding in their sup-port of Rushdie are also unmoved by the numerous deaths of Muslims. We should remember that the Holocaust was caused by the great hatred of one man for Jews combined with the indifference of many to deaths of Jews.

Many Americans incorrectly categorize Rushdie along with Scopes as being persecuted for expressing his beliefs, which are contrary to religious dogma. Thus they feel the Muslims ‘should read the book before condemning it’, or else, simply ‘not read it if they find it offensive’ etc. It must be emphasized that Rushdie is not expressing a point of view, or a belief. Fantasizing about our Prophet and his companions in demeaning situations (completely out of the boundaries of historical probability), and using derogatory and pornographic language, is insulting to us, regardless of the context (i.e. within a dream) in which this occurs. We do not feel it is appropriate for Westerners to dictate to us what we should or should not find offensive. The correct analogy regarding Rushdie is not Scopes, but for example, trashy pornography regarding the Virgin Mary and Jesus.

4 Should Rushdie be Killed?

Because of deep insults to our religion contained in Rushdie’s book, many Mus-lims are so outraged that they wish to kill him. The teaching of Islam is that in this and all matters, we must surrender our wills to the will of Allah. Thus the question of whether or not Rushdie should be killed becomes, for the Mus-lim, strictly a question of Islamic Law. When we look for precedents, we find examples of all kinds. When during the reign of Omar (the second Caliph in Islamic History), a Christian was slapped by a Muslim for uttering insults about Mohammed, the Christian took the case to court! The ruling went against him, in that the Qazi (Judge) found that civil liberties did not include the right to insult Mohammed, but no penalties were imposed. In Muslim Spain, there was a period during which Christians would come in, publicly abuse the Prophet, be executed, and thereby achieve martyrdom. Eventually Muslims negotiated with the Church to prevent this nuisance. The Church then revoked the status of ‘martyrdom’ for those executed for the abuse of Muhammed, and this stopped.

Why should abuse of the Prophet be punishable by death? Exactly as the Rosenbergs (who may have been innocent) were executed for the crime of treason to the state, so treason to Islam is punishable by death. Rushdie’s case vis-a-vis Islamic law is complicated by the fact that he is a citizen of Britain, a non-Muslim country which has diplomatic relations with Muslim countries. In complex situations, scholars of Islamic law issue rulings (called fatwa’s) which give their opinion regarding the matter. The completely misunderstood ‘death sentence’ of Khomeini, is no more or less than a scholarly finding that ‘Islamic Law sanctions death penalty for Rushdie’; scholars at Al Azhar University in Cairo have issued an opposite ruling. Khomeini did not, contrary to popular impression, put a price on Rushdie’s head (this was done by private citizens in Iran). He did not, unlike Reagan or the Israelis, send out a commando team to execute Rushdie. Surely Khomeini’s freedom of speech, which may result in the death of one man, is as valuable as Rushdie’s, which has already resulted in deaths of over 50. Finally, it must be clarified that his sentence is not binding on Muslims. If by strange happenstance, Rushdie were to enter Iran, he would not be killed on the spot. Rather, he would be tried in an Islamic court. The judge would (probably) take into consideration Khomeini’s fatwa, but may well call for other fatwas from other experts. Incidentally, Khomeini is not, as some have suggested, the worlds greatest authority on Islam. There are many scholars of greater eminence. Khomeini is merely the one best known to the West for obvious reasons.

5 Love of the Prophet

The key to understanding Muslim reactions to Rushdie is the love that all Muslims have for the prophet Mohammed. This and similar statements are routinely misinterpreted by Westerners to be expressions of piety or theological dogma. While the commandments to ‘love God’ and to ‘love our neighbors’ are more remote, love of our Prophet is a concrete reality in the lives of Muslims. One aspect of this love is demonstrated in the following of Sunnah, or the way of the Prophet. The Sunnah includes all aspects, even seemingly trivial ones, of the Prophet’s behavior.

I despair of conveying the nature of our love for the Prophet to a non-Muslim audience. Both in terms of its intensity and its universality among Muslims, it is a phenomenon outside the range of Western experience. It is this love which binds Muslims of different races, cultures, and social status. Odes to the Prophet constitute a special genre of poetry in Muslim languages, and good ones are capable of moving large audiences to tears.

Perhaps it would be more effective to illustrate the kind of effect that the Rushdie book has had on lives of ordinary Muslims. On the eve of the demon-stration in Manhattan against ‘Satanic Verses’, we received a call from an elderly Muslim lady, urging us to go. When she heard of our distaste for demonstra-tions, she began weeping. Her sentiments were ‘that our Prophet should be so insulted in public, and that no one should speak on his behalf, or come to his defence, this is unbearable’. Out of deference to the lady’s tears, I went to the demonstration, which was attended by about ten thousand Muslims. In another incident, I attended a meeting of Muslims to discuss responses to the Rushdie affair. One hotheaded youth was infuriated by our ‘lukewarm’ discus-sion regarding pamphlets, talks, demonstrations, etc. He challenged us, “ Are you cowards or men? That our mothers be called prostitutes, and we should sit on our hands and look the other way?”. It took great effort by the rest of us to persuade him Islam teaches us restraint, and we must obey Allah and not act on our baser impulses. Yet another index of Muslim feelings about this matter is in the (private) responses of the large immigrant Muslim population. Many have had deep regrets, and second thoughts about their decision to settle here, given the obvious hostility to Islam, Islamic values, and Muslims displayed by the Western response on this issue. I have no doubt that among the many Muslims I know who have been toying with the idea of going back, some will be spurred into action as a consequence of this event.

Who was Mohammed, and why does he inspire such affection? We have a wealth of detailed information about his life. Over the short span of twenty three years, he changed the course of history. His achievement was the transformation of a semi-barbaric culture to sublime heights of civilization Our Prophet (and all prophets, including Abraham, Moses, and Jesus) personified the most excel-lent character achievable, and taught us by word and deed how to achieve this ideal. He was compassionate, gentle, soft-spoken, and humble. Until his death he lived a life of great austerity, even though Muslims became quite affluent following political successes. He never turned down a request for assistance, to the extent of giving up the shirt on his back, or his only meal for the day.

6 Closing Prayer

When the prophet Abraham (may Allah shower his blessings upon him) refused to renounce his faith in one God and his opposition to idol worship, King Nimrod had him thrown in a huge fire. God ordered the fire to be cool, and it did not burn Abraham. This story, like all others reported in the Quran, are taken literally as historical events by all Muslims.

A Sufi parable (not to be taken literally) relates the story of a bird attempting to put the fire out using drops of water carried in its beak. The bird explains that its efforts are directed towards God; it does not wish to be accused of standing by idly, while a beloved prophet of God was burning.

I feel much like the bird. I pray that God will accept my efforts, and forgive my errors. I pray that he may heal the rifts between us. I pray that he may lead us all to the love of God, from which springs the love of all creation. All praise is for Allah, the Merciful and the Compassionate.

Download: RUSH6.pdf - on Jun 4, 2010 5:31 AM by Asad Zaman (version 1)
89k View Download.

Chemistry Quiz, Kafka's Diaries & the Need for Islamic Worldview

Even in this blooming mosam (weather) my Chemistry quiz has gone sour... Part of the blame goes to my brain cells usurped while understanding mysterious, highly subjective, 'psychotic' and at times shameless diaries of someone known as Kafka, full of despair, dissolution, hopelessness, blame games, arrogance, but also full of deep reflection, inner investigation and mystery.

After learning the lessons from the 'chemical' battle, I was not satiated, and hence opened up a dictionary on Post-Colonial studies terms.

We should not accept any world-view, whether it is plain medicine or any other physical sciences, let alone humanities, without investigating its world-view. Things are tied with the method of 'discourse' and world-views. This book on colonial studies taught me a revealation which we seldom invoke. The Western medicine is incompitable with Chinese medicine, it said, because in discourse of Western medicine the 'positivistic' view of the body rules. We can also add that modern science is cut off from notions of sacred and Divine (see Seyyed hossein Nasr's Need for a Sacred Science). Hence, it can't accept any part of Chinese medicine until the latter fully is streamlined with the former*.
The book also taught me the (often inseparable) relation between knowledge and power. Those who have brutal power today define which world-view operates in the world, and which view be rejected. Only the offical world-view is the 'truth'; rest are garbage. A person coming from alien system, needless to say, today don't really bother to check and weigh the assertive claims of Western world-views, the dominant power in today's world-view, or whether its claim to 'objective truth' is justified. Such is the dilemma of many, many Muslims today who study science, economics, language, literautre, and other sciences in West and do a very poor diagnosis and propose really irrelevant, and often wrong medicines to their native lands, producing catastrophic results. This at least has been the case in economic policies implemented in Pakistan borrowed from West (read, The War Against the Poor for evidence).
__________________________
* This is what Nasr has been saying for decades that modern science has its own world-view which is anti-thetical to Islamic world-view. Hence, we cannot accpet its assertive claims and absorb its world-view into our system, else we lose potentiality of our system.

Implementation

Today I'd talk about what I just implemented: a thought. I may become too dogmatic in your falconian eyes. But I fear nothing than my own sins. You cannot enjoy and appreciate the quality of this manly act unless you know a little bit about 'neo-classical' (capitalistic) economics that is being completely implemented today from the pulpits of Western stupidity and enterprise, accepted blindly by those who read economics in Western or Westernized universities, usually.

In a nutshell, it began my mental acceptance of what Prof Dr Asad Zaman has shown through his research that modern economics, like other western social sciences, is simply wrong from Islamic point of view and observable evidence. In this lecture he produces evidence that can demolish some of the basic tenets of western economics, and is being demolished in West as well*: The Crisis in Islamic Economics. Judging the arguments, following words of Dr Zaman struck me:
"4. Data on Firms, Consumers CONTRADICTS theories in Samuelson.
That is, economic theories as presented in leading conventional textbooks (Mankiw, Varian, etc.) are basically wrong – these theories do not describe the realities of economics in the real world. That means we can throw it all away without any loss in knowledge to us. What pretends to be concrete and factual is simply incorrect." [Emphasis mine.]
Then he goes on to give a set of examples of the incorrectness of the concepts presented in such books which render it entirely useless.

I took a bold step. And in afternoon today threw two books by Georgy N. Mankiw in the big dustbin near my home's gate, which I had read in economic courses and which I used to refer to in case I needed to know something about economic principles. Next thing I want to do is to inform Mr Zaman of this act of intelligence coupled with a leap of faith.

How do you feel?

Update: I just informed Prof Dr Asad Zaman in one of his discussion forums. you read the thread here.

* For instance, in an article in recent Harvard Business Review, two fundamental doctrines of capitalism/economics have been ruthlessly destroyed by their own scholars in light of evidence of recent global financial crisis: a) Humans behave rationally, b) invisible hand of market leads people to the good of society at large.

'Using Excel to Teach Economics'

Saw this very useful activity-based Excel workbooks for teaching all major Principles of Economics at a very introductory level which even the business students in Pakistan study, 'with emphasis of micro-economics'. Here you can find links to workbooks for Economics and International Economics (440 - which shows that probably its the highest level course at under-grad); plus, published papers on the already mentioned subjects.

If you find it useful please share your feedback.

80/20 - Be the 20!

I was going through this book on Time Management for professionals (*flattered* ;), which hopefully i'll photocopy and distribute among my father's company's gifted employees, i'll learn from them as soon as i marry (well, that's mission impossible for me). Khair, it's all about the '20' yaar, any 'chill-dude' pakistani would happily proclaim.

Pareto was an Italian economist. He "observed that 20% of Italians owned 80% of that nation's wealth."* People, like you and me, really generalized, successfully this ratio of 80/20 proportion to other fields as well. Here are some examples where this rule fits the book mentions:
  • 20% of your products account for 80% of products
  • 20% do 80% of work (that's from the Tipping Point)
  • 20% of people cause 80% of the interruptions (see, that's not a law, for in Pakistan, the "low-trust" great nation of Quaid-e-Azam, 80% cause 80% of interruptions, yeah, that's no exaggeration)
  • 20% of your problems cause 80% of your concerns
So, the book advises to focus on those activities which produce maximally. I got excited. Think about it, if all Muslims pray 5 times a day (which for many is like going millions times a day to mosque, and very time-consuming) sincerely, such that it stops them from doing fuhash - which is only 20% of our life - then Allah will solve 80% of other problems, local, personal, national, international, inter-planet, and inter-galaxy, and on and on. For Allah alone is victorious.

O muslims! you always begin your earthly carrier by solving the biggest question West thinks it encounters - Does God exist? - with an unequivocal Yea to it. Think of your intiha (maximum point of achievement). Be true to Allah. Be not slaves of your lower self. (How can i move you to act? Well. That's what recitation of qur'an is there for...)

* Time Management: 24 Techniques to Make Each Minute Count at Work, Marc Mancini, McGraw-Hill, Professional Education.

An idiot's guide to the Credit System

I fanatically hate and abhor the credit system, although I don't understand it fully, neither do I want to. Some day I'll have to learn economics of it, so that I may contribute a verse, or two. Charles Dickens has got a good way of introducing the generally laymen species to what credit system is all about, and I'll leave you to love it or hate it:
Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay.

Of A (Very) Strange Event

Now. This is not a kind of post which can relate itself to the dubious motto of a book by Gurdjieff who states in effect about his book All and Everything, "Now I am going to tell you something people are not going to believe" or if something really strange is going to happen. Not that. Not that at all. Because his book is nothing but an anti-thesis to its very 'galvanizing' statement.

Once upon a time, once or twice? Once! Once upon a time, I was driving a rickshaw. A customer came by and said that he wanted to go to some place B, which to him was not far from point A, where we're located at the moment. I told him it would cost him 60 something, as I was empty for the time it took me to reach at point A. He fought for 40 something; argued hard in all what's gibberish; and we settled for it. When we reached at his destination. He gave me 100 something. I was amazed, and you ask: Amazed? I ask, "little?".

So I asked him: What for?! He behaved like a true economist-consumer (you've to admit it's a strange thing to happen these days with the passiveness of being a consumer). He said in a very factual and monotonous way, "40 something for bringing me here; 10 something for the time I wasted in arguing with you; and 20 something for what you had to give up to pick me up while we were free of any customer. Finally, take 30 something more - approximately - for the time you are to spend burning carbon empty (it was late at night) from here now on. These are all your 'opportunity costs' that no economist would ever pay you, so please sod off!"

I wish if there exists such an academic person who did everything what he theorized. Perhaps that's why people read fiction to the end, always.

Causality in Economics

Causality (root word 'cause') determines what cause of an effect (or consequence) is. And in order to make a rational decision, the economist must know the independent variable and the dependent variable, parts of a choice leading to a utility, where dependent variable is a consequence of independent variable.

Another way of viewing causality is finding the existence of causality in a given relation or function of two variables, or parameters. It happens, as we are told, that there may be existent an association between two things/events/choices yet no causality is to be found in the ‘relation’. Word ‘relation’ is important here. Because, here we’re not discussing the matter from the view of classical, philosophical cause-effect theory, rather we are strictly concerned with the mathematical relationship between different variables.

In the following paragraph, I’ll show you two different cases where both variables are associated with each other on the graph. You may notice at the end that intuition works better at the basic level. But the importance of rigorous analysis and empirical research shall also be highlighted by the demonstration of idea.

Consider this case: ‘Sugar’ is a dependent variable. ‘Sugarcane’, on the other hand is an independent variable. There is also a natural (that is to assume quite intuitively) association or relation between these two variables. And sugar is dependent to sugarcane (independent), because we cannot think of sugar, without any sugarcane. Therefore, existence of sugar depends on that of sugarcane. Or in other words, sugarcane is the cause of sugar (effect of sugarcane).

Sugar = f(sugarcane, etc) [Sugar is a function of Sugarcane]

Consider the second case where an association between two things is present with the absence of causality given their mode of function

If I draw a graph and show on x-axis 'number of police constables' recruited in a given period, in which the number of crimes taking place in the city had increased. Crimes data shown on y-axis, while police data shown on x-axis. Meaning by, that crime is a cause of increase in the number of police constables. Police and crime have a relation and association no human being can deny. Yet the idea seems absurd. Because police helps diminish the crime, not vice verse. So intuitively we conclude that although there is an association between the idea of police-crime, there is no causality (that police is a cause of increase in crime) established between them.

Here comes the interesting part of the game. Rigorous mathematical and statistical analysis of these two ideas, so that it could be made ascertain where does valid causality lies. Regression models ar built, in-depth research is carried out, many reports are made to establish the truth. Intuition is just the beginning and in the middle, sometimes it is not the end in itself. Sometimes.

(Warning note: This post had no intention towards public benefit. It was a personal matter. And was addressed to my own self. If you have questions to ask please contact the economist-teacher Mr. N. Gregory Mankiw of Harvard University, U.S.A. But if you've answers and something to educate and share, can't you just go ahead and do it, please?)

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