Ignacio Torres Ulloa 👾

🇨🇱
PhD student @USC_Econ, Prev: Economics @udechile Philosophy of Science @usach, @JPAL_LAC @3ienews

Amicus Plato, sed magis amica veritas

[Francisco Nunes @FranNunesEcon]

We usually repeat that correlation doesn’t imply causation, which is true. But the reverse, causation doesn’t imply correlation, is ALSO true.

Let X~N(0,1) and Y=X^2. In this example, X causes Y.

But the correlation between X and Y is Corr(X,Y)=Corr(X,X^2)=Cov(X,X^2)/(σ_X*σ_(X^2))=(E[X*X^2]-E[X]*E[X^2])/(σ_X*σ_(X^2))=0. Why?👇

The function h(x)=x^3 is odd:

(-x)^3=-x^3

and the distribution is symmetric around 0, f is even:

f(x)=f(-x)

Thus (x^3)*f(x) is odd (odd*even=odd function) and the integral of an odd function over a symmetric interval is 0.

Thus E[X^3]=∫X^3*f(x)dx=0
(the integral is from -♾️ to ♾️)

The same occurs with the function g(x)=x because g(-x)=-x=-g(x) (it’s odd).

So E[X]=∫X*f(x)dx=0
(the integral is again from -♾️ to ♾️)

Thus Corr(X,Y)=0 because Cov(X,X^2)=0.

Thus we have proven that causation DOES NOT IMPLY correlation.

Q. E. D. ▪️

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

@bugbluered1011 @PaulinaAstrozaS @joseantoniokast Mexico y Brasil son países enormes, top países en PIB en el mundo. Nos daba una chance de ser vistos internacionalmente en la mesa de los grandes.
Ojalá no nos condenemos a la mesa del pellejo.

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

@JorgeAGuevara6 @PaulinaAstrozaS @Minrel_Chile @joseantoniokast

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

Los presidentes de Chile, tarde o temprano, han terminado reconociendo y respetando a los expresidentes. ¿Cuánto le va a durar a Kast este gustito?

[Paz Zárate @Paz_ZarateB]

🇨🇱Esto constituye un error histórico.
El perjudicado es Chile y su política exterior (no M. Bachelet), y los efectos serán duraderos.
Va hilo explicativo 🧵

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

Bad Bunny estaba usando el uniforme de Chile de las Olimpiadas de invierno.

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

@AXELKAISER https://t.co/tU4mv4qoAk

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

@Pancho_Daniel_ Marketing del final de stranger things

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

@Stata Hopefully to finish the PhD

[Jesús Fernández-Villaverde @JesusFerna7026]

Let me explain why I believe modern economics is such a powerful tool for understanding the world. I’ll do this by discussing a great paper by Simone Cerreia-Vioglio, @UncertainLars, Fabio Maccheroni, and Massimo Marinacci, “Making Decisions Under Model Misspecification,” published in the Review of Economic Studies a few months ago.

Imagine I want to drive from UC San Diego to UCLA, but I’ve never driven that route before. I need to build a “model of the world” to guide me, which we usually call a map. Maps are simplified representations of reality. They can’t include every detail if they’re to be useful. Borges, in his short story On Exactitude in Science, makes this point beautifully. (In practice, I don’t draw the map myself—I use an app—but someone still had to make it.)

Because maps simplify, I can’t fully rely on them. Maybe last night’s storm knocked down a tree and closed a street, or there’s construction and the ramp off the highway in LA is shut down.

This uncertainty matters. Suppose I’m driving to UCLA for an important talk at 11 a.m. If the ramp is closed, I might need 15 extra minutes. When should I set my alarm to arrive on time, while still getting enough sleep to give a good talk?

The problem is that I can’t assign precise probabilities to all these contingencies. How likely is the fallen tree? Or new roadwork? Even the best traffic apps can’t capture every disruption, and some might happen after I’ve already left.

In economic terms, my “model of the world” (the map) is misspecified—and no matter how hard I try, I can’t fully fix that.

But sitting down and crying about misspecification doesn’t answer my basic question: when do I set the alarm? Too early, and I’m exhausted. Too late, and I’m late.

Simone and his co-authors offer a way to think about this. They start from the idea that we often hold several structured models of an economic phenomenon, grounded in theory. For example, a central bank might use a standard New Keynesian model and a search-and-matching model of money.

Yet, aware that each model is misspecified by design, the bank adds a protective belt of unstructured models—statistical constructs that help it gauge the consequences of misspecification.

The beauty of the paper is that it provides an axiomatic foundation for this protective belt (and even generalizes it to include a Bayesian approach). It shows that if a decision-maker’s preferences meet certain conditions —reflecting both rational and behavioral features— then those preferences can be represented by an augmented utility function that formally accounts for misspecification.

Crucially, we don’t assume that augmented utility function; we derive it. We start with general, plausible properties of preferences and prove that they imply such a representation.

That’s real progress. Instead of writing endless critiques of expected utility or rational expectations (as many have done for decades, with little to show), we now have a formal way to reason about misspecification—precise definitions, clear boundaries of validity, and awareness of what we still don’t know.

Take, for instance, a brilliant Penn graduate student on the market, Alfonso Maselli

https://t.co/rl2gu95V7t

His job-market paper pushes this frontier further. He studies cases where a decision-maker not only faces model misspecification but is also unsure which model best fits the data and can’t assign probabilities to them—what we call model ambiguity. In my example, the central bank is unsure whether the New Keynesian or the search-and-matching model fits better, and it worries that both might be incorrect.

If you read Simone et al. or Alfonso’s paper, you’ll see how misguided—and, frankly, cartoonish—many of the recent criticisms of economics on X have been.

First: the idea that economists don’t understand math or have “physics envy.” The math in these papers is subtle and advanced—utterly different from what physicists do (neither better nor worse, just distinct). An engineer transitioning into economics would find these tools unfamiliar.

Second: claims of ideological bias are unfounded. I have no idea about the political views of the authors, and I’d be surprised if anyone could infer them from the analysis—beyond vague guesses about typical academics.

Third: This has almost nothing to do with what one learns as an undergraduate, or even in first-year graduate school. If your knowledge of economics stops at an intro textbook, it’s best not to pontificate on the field’s frontiers.

Fourth: Is this science? Debating that word’s boundaries is pointless; every definition of “science” breaks down somewhere.

The Germans solved this long ago with the idea of Wissenschaft—the systematic pursuit of knowledge, whether of nature, society, or the humanities. By that measure, modern mainstream economics is clearly a Wissenschaft: a disciplined, cumulative, and highly useful effort to understand how the world works. Simone and his co-authors have demonstrated that beyond any reasonable doubt.

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

Paper submitted, fingers crossed 🤞

[USC Economics @USC_Econ]

Today we threw our annual Welcome Lunch for new PhD students, faculty, and postdocs and as always, thanks to Annie Le's impeccable taste, we enjoyed fabulous Korean food as well as each other's company 😀

[USC Economics @USC_Econ]

Assistant Professor Simon Quach's work has been covered by @insidehighered - take a look!

[Todd Jones 🦊 @toddrjones]

Here are some ways in which the world has gotten better.

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

Happy that I had the chance to present our paper at the @RIDGE_uy in the Public Economics Workshop. Now it's time to enjoy Lima and its incredible food 🇵🇪 🔥.

[TasteAtlas @TasteAtlas]

Chilean Cuisine Day, known as "Día de la Cocina Chilena" in Spanish, is celebrated annually on April 15th. 🇨🇱

Learn more about traditional Chilean cuisine: https://t.co/ZhRb2rwxS8

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

Success!

[Ignacio Torres Ulloa 👾 @IgnTorresUlloa]

In Mexico City 🇲🇽 to present our paper about the relationship between State workers and immigration at the HUMANS LACEA conference. See you all there!

[Timothy Dhalleine @tdhalleine]

Por qué Chile 🇨🇱 es un país tan especial? Aquí mi respuesta, 11 años después de mi llegada a este hermoso país. #Chile

[Keaton Patti @KeatonPatti]

Marco Rubio??? Really???

[King Crocoduck @crocoduck_king]

bro somebody PLEASE tell me how to read this, who tf is winning