Evidence and causation in biology and economics

1. Evidence and causation in biology and economics Michael Joffe Imperial College London Canterbury, September 2012

2. Structure of the presentation • a concept of causation • epidemiology • physiology • systems in biology • physiological systems • population biology • evolutionary biology • systems in economic theory • conclusion

3. Structure of the presentation • a concept of causation • epidemiology • physiology • systems in biology • physiological systems • population biology • evolutionary biology • systems in economic theory • conclusion

4. A concept of causation I • a causal relationship is one that has a mechanism that by its operation makes a difference • difference-making: a change in the probability and/or timing of an event, or in its magnitude or severity • includes partial/multiple, stochastic and deterministic causation, plus counterfactual and manipulationist accounts • but excludes chains, webs, cycles – single link only • this is compatible with classic accounts of causation in epidemiology (Bradford Hill, Rose)

5. A concept of causation II • not all differences correspond directly to a causal relationship – something has to make a difference, over time • no direct mechanism responsible for the sex difference in breast cancer incidence – it is due to metabolic difference between the sexes – these do play a causal role over time, i.e. upstream causes • mechanism and difference-making are properties of the causal relation, and seen as complementary • discovery of either can come first • a totally convincing explanation includes both

6. A concept of causation III • mechanism: powers/capacities [Cartwright; MDC] • combining mechanism and difference-making is similar to the Russo/Williamson epistemic theory but takes an ontic view: asking what is the source of evidence in the real world • science can uncover evidence of the structure (“what”) and mode of operation (“how”) of a mechanism • and of the difference it makes (“that”) – quantitative or qualitative • asymmetry requires an ontic perspective: beliefs do not alter reality, but reality can alter beliefs

7. “Physiology” • takes a primarily mechanistic view – how the body works – but typically starts from an observed difference (often qualitative): • dietary protein is broken down – how? → pepsin, its structure, etc – not necessarily complicated • a nerve impulse crosses a synapse – how? • the mechanistic evidence is then juxtaposed with more difference-making evidence, e.g. many-one synapses and their quantitative characteristics • physiological systems are evolved => regularity; the difference they make controls their evolution

8. Epidemiology • a difference-making approach: demonstrating that the rate of a disease differs in groups defined by their exposure • causal inference: the demonstrated difference is not due to e.g. chance, confounding or selection • mechanisms are often sought e.g. biomarkers • evidence of mechanism is complementary: how the damage occurs • any postulated cause must be plausible (yellow fingers); in due course the complementary biochemical pathways need to be elucidated

9. Structure of the presentation • a concept of causation • epidemiology • physiology • systems in biology • physiological systems • population biology • evolutionary biology • systems in economic theory • conclusion

10. Physiological systems I • until now, we have focused on a single link • organisms are composed of chains, webs and cycles of causal links – each being a mechanism that makes a difference • the dominant feature of physiological systems is homeostasis: a ± constant internal environment • core body temperature • numerous chemical concentrations • the system property is constancy – a difference-making property

11. Physiological systems II • how does the causal concept of mechanism and difference making fit with a system of this kind? • body temperature maintenance (homeothermy) • shivering is muscle activity (mechanism) that raises temperature (the difference) • sweating is fluid secretion (mechanism) that lowers the temperature (the difference) • so: each link has mechanism + difference-making • the system only has its own difference-making properties: relative constancy due to balancing or compensating (negative) feedback

12. Balancing fb response to external “shock”

13. Physiological systems III • in general, a system of this kind has numerous links, each a mechanism that makes a difference, as well as a characteristic mode of operation – the difference-making of the system as a whole • this can be regarded as system or endogenous causation – the system is relatively insensitive to initial conditions [Forrester 1970; Lane 2007] • a focus on individual links is “reductionist”, in contrast to system “emergent” properties • evidence is obtainable for all three categories

14. Other biological systems I • in population biology/ecology, population growth is exponential (reinforcing, or positive, feedback) • carrying capacity: logistic growth (–ve fb too) • Lotka-Volterra classic predator-prey model: • predation and reproduction are its component links, each with mechanistic and difference-making aspects • the system property is that the population sizes fluctuate systematically – a property of observed ecosystems and of the systems model • this pattern results from balancing feedback with delay, a classic pattern in system dynamics

15. Some biological systems

16. Other biological systems II • in evolutionary biology, a different pattern is frequently observed: • the growth propensity of each tree threatens to obscure the sunlight of other trees, leading them to compete over evolutionary time – they all grow tall • a plant evolves the capacity to poison animals that eat it → some of the animals develop the ability to deal with the toxin, likely → further response by the plant • this is an arms race, a form of reinforcing (positive) feedback, tending to produce exponential growth – although this can be limited by carrying capacity

17. Summary of biological systems • like all causal systems, they are composed of links, each being a mechanism that makes a difference • to be called a system (in this sense), they have to possess an additional “emergent” property of system or endogenous causation – a difference-making characteristic that results from the way that the links combine • this system property is just as real in its effects as its component links – even in systems that are not organised (outside physiology) – not “just a model” • systems can also be subject to exogenous causes

18. Structure of the presentation • a concept of causation • epidemiology • physiology • systems in biology • physiological systems • population biology • evolutionary biology • systems in economic theory • conclusion

19. Economic systems I • the fundamental topic of study in economics is “the” market • system property of convergence towards a stable equilibrium has been recognised since Adam Smith

20. The standard market equilibrium model S price D P1 Q1 quantity

21. Economic systems I • the fundamental topic of study in economics is “the” market • system property of convergence towards a stable equilibrium has been recognised since Adam Smith

22. Economic systems I • the fundamental topic of study in economics is “the” market • system property of convergence towards a stable equilibrium has been recognised since Adam Smith • this is a typical simple balancing feedback system, like those of homeostasis – but in a system that is not evolved or deliberately organised – hence it is an idealisation or abstraction from real economic life – it could still capture the underlying essence though – does it? for all types of market?

23. cost A - quantity supplied A quantity demanded A price A - - // profit/incentive intensity of competition

24. cost A - quantity supplied A quantity demanded A price A - - // profit/incentive intensity of competition A SYSTEM WITH COMPENSATING (NEGATIVE) FEEDBACK – IT TENDS TO MOVE TOWARDS STABLE EQUILIBRIUM

25. a “supply shock” – e.g. a better harvest than usual cost A - quantity supplied A quantity demanded A price A - - // profit/incentive intensity of competition

26. a “demand shock” – e.g. a successful promotion campaign cost A - quantity supplied A quantity demanded A price A - - // profit/incentive intensity of competition

27. a “supply shock” – e.g. a better harvest than usual a “demand shock” – e.g. a successful promotion campaign cost A - quantity supplied A quantity demanded A price A - - // profit/incentive intensity of competition THESE PROCESSES OCCUR OVER TIME, BUT ARE STATIC IN THE SENSE THAT THE ONLY TIME-DEPENDENT ENDOGENOUS PROCESS IS TOWARDS A STABLE EQUILIBRIUM

28. Some economic series

29. Economic systems II • balancing feedback with delay: e.g. construction cycles in property markets; business cycles? • bubbles: trend extrapolation that causes a self-fulfilling prophecy – reinforcing feedback • financial markets: bubbles-prone, highly volatile, and with some endogenous chaotic properties • capitalist growth: firms’ control over the means of production gives them flexibility over costs and the size of the market they can supply – an arms race – reinforcing feedback

30. Economic systems III • balancing feedback is a feature of economic systems, but is frequently joined by other types of feedback, giving the system different properties • neither the conventional view, that markets are always self-correcting, nor the critical view, that they do not have this property at all, is correct • this is not the same issue as “market failure” • fluctuations may occur, due to – ve fb with delay • to understand bubbles, or capitalist growth, it is necessary to understand reinforcing feedback

31. Economic systems IV • the properties of the system primarily depend on its feedback structure • rationality vs. realistic behaviour is a secondary issue – all that is needed to make the system work is some degree of regularity, especially in response to incentives – situational rationality • rationality is useful for mathematical modelling • many economists see theory/models not based on optimisation/strict rationality as “ad hoc” – this is a basic category error

32. Structure of the presentation • a concept of causation • epidemiology • physiology • systems in biology • physiological systems • population biology • evolutionary biology • systems in economic theory • conclusion

33. Conclusion • there are cross-cutting methods of analysis that are applicable across many disciplines • system dynamics – cyclical combinations of causes containing feedback loops – is one; another is complex systems (complexity, chaos) • systems with feedback have characteristic modes of behaviour: endogenous causation, a difference-making property; their constituent links have mechanism + difference-making • different market types have radically different properties, resulting from feedback structure

34. THANK YOU!