Is Economics A Science?

Discussion in 'Business & Economics' started by Mind Over Matter, Dec 4, 2011.

  1. Faure Registered Senior Member

    The reason why the question of whether economics is a science is important because economists try to get a lot of mileage out of their claims that economics is a science. This gives their discipline an aura of scientific rigor that it does not possess, and often serves to allow economists to obfuscate un-empirical normative claims under the guise of a positive field (with an ample dose of technical language and mathematics to impress people who assume anything written in a mathematically rigorous manner is very Impressive and Scientific).

    For instance, monetary policy is based on economic theory that is totally unscientific in nature. There have been no major advances in macroeconomic theory, and for every major proposition x in macroeconomics there are "scientific" defenders of x and "scientific" defenders of not-x. Its almost literally impossible to follow decent scientific methodology when trying to explain and predict macroeconomic phenomena. Even technical advances in the field (like dynamic stochastic general equilibrium theory, etc.) have not done much.

    Even microeconomics struggles to even approximate a rigorous, empirical science. There are growing areas (behavioral econ, experimental econ) that are scientific, but most microeconomic theory is just not experimentally testable and is essentially just a field of applied mathematics. Financial microeconomics (the stuff that still basically follows the Valrasian paradigm) is a good example. If there was less fetishizing of mathematical notation and the bogus idea that economics is a hard science, maybe people wouldn't be so happy to put their retirement portfolio in the hands of a financial manager whose recommendations are based on a misappropriation of physics to attempt to model market behavior.

    Luckily, more and more people are taking the view that mainstream economics is not a science. To be sure, there are still quite a few people who look and see ALL THAT THERE FANCY MATH LOOKIN STUFF, are dazzled by it, and then dig in their feet and decide that economics is a hard empirical science, but those people are becoming fewer and fewer in my view.

    If we can ditch the idea that economics is a hard empirical science then our macro policy can receive the input it deserves from historians, ordinary people, etc., and our micro models can be viewed with more suspicion so that we are more appropriately wary when they undergird hundreds of billions of dollars in the economy.
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  3. joepistole Deacon Blues Valued Senior Member

    I see you don't use the dictionary either.

    Apparently you missed the whole Keynesian and Post Keynesian movements - the last 80 years of economics.

    "Keynesian and Post-Keynesian economists, and their Underconsumptionist predecessors criticize general equilibrium theory specifically, and as part of criticisms of neoclassical economics generally. Specifically, they argue that general equilibrium theory is neither accurate nor useful, that economies are not in equilibrium, that equilibrium may be slow and painful to achieve, and that modeling by equilibrium is "misleading", and that the resulting theory is not a useful guide, particularly for understanding of economic crises.[8][9]

    Let us beware of this dangerous theory of equilibrium which is supposed to be automatically established. A certain kind of equilibrium, it is true, is reestablished in the long run, but it is after a frightful amount of suffering.
    —Simonde de Sismondi, New Principles of Political Economy, vol. 1 (1819), 20-21.

    The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.
    —John Maynard Keynes, A Tract on Monetary Reform, 1923, Ch. 3

    It is as absurd to assume that, for any long period of time, the variables in the economic organization, or any part of them, will "stay put," in perfect equilibrium, as to assume that the Atlantic Ocean can ever be without a wave.
    —Irving Fisher, The Debt-Deflation Theory of Great Depressions, 1933, p. 339

    Robert Clower and others have argued for a reformulation of theory toward disequilibrium analysis to incorporate how monetary exchange fundamentally alters the representation of an economy as though a barter system.[10]

    More methodologically, it is argued that general equilibrium is a fundamentally static analysis, rather than a dynamic analysis, and thus is misleading and inapplicable.[11] The theory of dynamic stochastic general equilibrium seeks to address this criticism." - Wikipedia

    For those not unfamiliar with the Theory of Dynamic Stochastic General Equilibrium Theory, it was developed in 1800's and debunked my modern economists. So for you to represent it as modern scholarship and theory is either outright ignorant or, at best, deceptive.

    I assume you mean the The Walrasian Paradigm and not the Valrasian Paradigm? And if so, how is that in the least bit relevant? Two, you appear to be confusing economics with a crystal ball. Economics is not a crystal ball. It cannot predict the behavior of politicians or terrorists or any number of other extraneous factors that could have significant impacts on markets and economics does not attempt to make those predictions.

    This is just more bunk, unsubstantiated claims and an apparent fear of empiricism, reason and math.
    Last edited: Dec 23, 2011
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  5. Faure Registered Senior Member

    I see you don't understand what a dictionary is.

    Apparently you missed the whole learning to read and learning to think parts of school, as well as the meaning of a parenthetical example, as well as my x and not-x comment. Oh and its also apparent that you don't understand what dynamic stochastic general equilibrium is, and its apparent that you have no acquaintance at all with the serious scholarly work of any of the economists you cite, beyond the undergrad textbook and economics blog level (even that is pushing it). Its even further apparent that you don't have any acquaintance at all with modern econ if you think Keynesian and post-Keynesian wholly characterize the last 80 years of economics, or that their existence has anything at all to do with the argument I made, or even that their existence does anything to refute the efficacy of my DGSE example.

    In short, its apparent that you have almost no idea what you are talking about. You have enough of an idea about economics to think that you have an idea of economics, but you're hopelessly lost and clearly just another kid who thinks LOOK AT ALL DAT DER MATH AND FANCY WORDS and thinks thats a sufficient condition for a discipline's being a science.

    It reminds me of the new age garbage that throws around the word "quantum" and thinks that makes their thoughts all deep and grounded in contemporary science...

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    First of all, kiddo, stop trying to frantically read and subsequently copy and paste wikipedia articles to make it seem like you know what you are talking about.

    Second of all, kiddo, if you're going to frantically read and subsequently copy and paste wikipedia articles to make it seem like you know what you are talking about, USE THE RIGHT ARTICLES! :roflmao: There is a huge difference between general equilibrium theory and DSGE theory, as anyone who has done graduate work in econ should understand.

    Now go run along to wikipedia to try to pretend like you understand DSGE. :wave:

    Its relevant because its the methodological underpinnings of a good deal of modern financial economics (which you'd know if you had beyond a cursory education in the subject, which you obviously don't). Its relevant because it is a good example of the failure of many parts of modern micro to live up to its scientific pretensions.

    Since you don't even know the fundamentals of the subject I won't go into an explanation of the specific, formal features of the models that are unscientific.

    Its not that I fear those things, its that I respect them and am conversant in them enough that I am not just dazzled by them. Obviously, in a discipline like physics, high level mathematical formalism has been immensely useful, necessary, and justified. But economics ain't like that, for the reasons I've mentioned and for reasons that no amount of DUDE LOOK AT A DICTIONARY or DUDE LOOK AT THIS STUFF I PASTED FROM WIKIPEDIA will refute.

    This may be my last post here since it looks like one of those "trying to teach a dog calculus" type endeavors, but I might continue if joepistole keeps committing so many little howlers!
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  7. joepistole Deacon Blues Valued Senior Member

    LOL, oh my.

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    How impressive. You like your fellows cannot have a reasoned, honest discourse and provide evidence for your extreme views so you resort to your old standby fallacy, ad hominem. Oh and for added effect, add some emoticons and don't forget to use large type, bold type, and colored fonts. Unfortunately for you they are not a substitute for reason and they do not provide support for your argument. But when you don't have an argument and you don't have evidence, well all you have is your illogical arguments, special fonts and emoticons.

    The facts are that you don't know squat about economics, finance and science. And it is obvious you have missed the last 80 years of economics - that whole Keynes and post Keynes thing.

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    By all means, stick around the forum. I look forward to some entertainment and amusement. And when you have time, you might want to brush up on the last 80 years of economics. And learn the difference between a crystal ball and economics.
    Last edited: Dec 23, 2011
  8. Faure Registered Senior Member

    Well clearly ol' joe has given up and resorted to the old tactic of accusing the opponent of committing an ad hominem to avoid any sort of point by point rebuttal. For the record, I decided to take the tone I took because of ol' joe's ridiculous combination of:

    1) clearly knowing nothing about his subject matter
    2) clearly thinking that he knows a lot about his subject matter

    As an example of 1), he obviously doesn't have a clue what DSGE is (although I'm proud of him for not copy and pasting wikipedia as a way of pretending to know like he did earlier).

    One hilarious irony is his whole rhetorical tactic for avoiding the substance of my argument--arguing that I am missing Keynesianism and Neo-Keynesianism--is just crazy. Even a cursory glance at wikipedia (his favorite source for pretending to know things) would confirm that a huge chunk of the work in DSGE is Neo-Keynesianism... in fact, DSGE has been one of the most fertile grounds for some of the biggest thinkers under the Keynesian and Neo-Keynesian paradigm.

    And even if he was right about Keynesianism (which he isn't), and even if he was right about DSGE (which he isn't), that still wouldn't begin to touch the main substance of my argument.

    I cannot remember the last time I've seen the Dunning-Kruger Effect so vividly illustrated!
  9. joepistole Deacon Blues Valued Senior Member

    LOL, poor Faure. Facts are a bit rough on you aren't they? That is why you have to go for the old ad hominem and emoticons.

    Here is the bottom line, you have dropped a lot of shit; made some grandiose unsupported statements and been proven wrong. One would think that instead of going for the illogical arguments, you might want to provide a reasoned response. But I think we both know why you cannot provide a reasoned response, because you just don't have it in you.

    Before you start pointing fingers at others and making various unsupported claims, I suggest you take a long look at yourself. It seems to me you have just provided a very good description of yourself (i.e. Dunning–Kruger Effect). And imagine that, you referenced Wikipedia.

    By the way, if you are going to reference paradigms, you might want to get the paradigm names straight (e.g. Valrasian Paradigm).

    Instead of wasting your time on ad hominem, I will suggest to you again that you brush up on the last 80 years of economics and reiterate to you the difference between a crystal ball and economics.

    Let me also remind you that there is a difference between dynamic stochastic general equilibrium theory and dynamic stochastic general equilibrium modeling that is in limited use today. Most economist use more traditional macroeconomic modeling. So your citing of DSGE theory was inappropriate as it appears your are referencing DSGE modeling. It does help to use the appropriate words and appropriate names.

    Additionally, you keep confusing economics with a crystal ball. There is a difference. You claim that because DSGE models don't make accurate predictions, economics is not a science. DSGE is just one method of macroeconomic modeling and it is not even a widely used method and it is certainly not justification for calling economics a non science as you have done.
    Last edited: Dec 23, 2011
  10. Faure Registered Senior Member

    dude, you don't even know what DSGE models are! You said they were invented in the 1800s... you are *obviously* just looking this stuff up on the internet as soon as I mention it and playing it off like you know what you're talking about.

    You're harping on inane accusations of ad hominem, my misspelling by one letter of a methodological program, and even without all that, what you are saying is LITERALLY NONSENSICAL.

    Here are a few points for you to try to chew over. Oh and don't forget to google some more stuff on DSGE so you can continue to try to make it look like you have a clue:

    -Your distinction between "DSGE modelling" and "DSGE THEORY" is nonsensical to anyone who actually has training in the relevant fields. What you are TRYING to do is make up for the fact that you accidently looked at the general equilibrium theory wikipedia page when you were trying to look like you knew what you were talking about, and now you are going to try to make this innane distinction because the wikipedia article on DSGE refers to "modelling". In other words, we have even more evidence that you are desperately trying to look educated by frantic googling and reading wikipedia.

    -Your attempting to put DSGE in *contrast* to Keynesianism and Neo-Keynsianism is further illustrative, because anyone with even an undergrad education in this would know that *many* of the major figures in DSGE are Keynesians and Neo-Keynesians!

    -"most economists use more traditional macroeconomic modelling" is a totally innane statement to anyone with any serious acquaintance with contemporary research.

    -Even if your dumb little statements about DSGE were true, you don't even have the basic rational capability to understand what role DSGE had in my larger point! Go back to where I first mentioned it, kiddo. It was used as an *example* of *one* technical advance in the field that has not resulted in an increase in its predictive power. I never made any claim at all that DSGE was what everyone used. Do you understand what an example is? If you don't, feel free to ask one of your junior high teachers, kid.

    As for your latest idiotic rhetorical flourish, namely the claim that I think economics ought to be a crystal ball, I never claimed anything like that. I did not claim that economics needs perfect predictive success in order to be considered a science.

    I suspect I'm going to have to do a statement by statement annotated breakdown of my post #121... but then again it probably isn't worth it.

    Now lets see what new facts about DSGE ol' joe has discovered in this latest round of googling...
  11. joepistole Deacon Blues Valued Senior Member

    Dude, you never mentioned models. You mentioned theory. You know if you want people to take you seriously, then you might want to start by using the correct terminology.

    Oh you did more than that. You did not use your words appropriately for starters confusing a theory with modeling techniques. There is a difference.

    You mean Google as you did?

    Ah back to the ad hominen. Two if you want to be taken seriously, then you should use the correct terminology.

    Well I suggest you back to read your original statement., post 121.

    "For instance, monetary policy is based on economic theory that is totally unscientific in nature. There have been no major advances in macroeconomic theory, and for every major proposition x in macroeconomics there are "scientific" defenders of x and "scientific" defenders of not-x. Its almost literally impossible to follow decent scientific methodology when trying to explain and predict macroeconomic phenomena. Even technical advances in the field (like dynamic stochastic general equilibrium theory, etc.) have not done much." your post 121.

    One, monetary policy is not based on an economic theory that is totally unscientific in nature. Two, your are saying there has been no major advances in economics, ignores the entire last 80 years of economic advances. And you are referencing that theory developed in the 1800's to back up your claim - highly illogical. Even if you premise were true, which it is not, your reasoning is illogical. A little logic and reason would be appreciated. Economic models are based on assumptions about future events because economists do not have crystal balls and cannot be expected to have them. But the can predict what will happen if X occurs, ceteris paribus.

    Three, you don't seem to understand the difference between modeling and theory. I suggest again, that if you want to be taken seriously you use the language more precisely and perhaps a trip to the dictionary would be helpful to you in that regard.

    Four, you are citing as evidence a modeling technique that is not widely used in economics with the implication that it is representative of the science. And as pointed out, it is not. You are creating an error of composition.

    And finally you are citing the inability of models to predict macro economic events like fraud, supply shocks and political events means that economics is not a science. No science can make such predictions or be reasonably expected to do so. Macroeconomic models are based on a set of assumptions regarding the future. And economists do not have the crystal ball that would be necessary to make the predictions you expect of the science. So your expectations of economics is similar to that of using a crystal ball. And as pointed out to you, that is not a reasonable expectation or standard. Science is a systematic process of processing information in order to gain a greater understanding. It does not mean that a particular study is complete and all knowing. Because that is clearly not the case with any of the sciences.

    Again, poor Fauve, you need to rely on the ad hominem because you cannot play on a field of reasoned discourse. Maybe one day you will grow up, but I won't hold my breath.

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    Last edited: Dec 23, 2011
  12. Faure Registered Senior Member

    1. On DSGE. Please provide a single citation that demonstrates that DSGE was developed in the 1800s. Face it, you got caught trying to fake like you knew what you were talking about. You copy and pasted quotes that had nothing at all to do with DSGE and now you are harping on a nonsensical distinction between "dsge theory" and "dsge modelling".

    2. On Keynesianism. You obviously don't have beyond a grade school understanding of Keynesianism if you think that it has nothing to do with DSGE or that my citation of DSGE as an example constitutes an ignorance of Keynesianism. Nearly everyone involved in DSGE is commonly described as either a neo-Keynesian (e.g. Mankiw) or a post-Keynesian (e.g. Fisher).

    3. On ad hominems. Notice this cute little rhetorical technique that joe uses with regard to ad hominems. Whenever I say something that he has no response to (for instance my pointing out, correctly, that he was going to harp on an innane and uneducated distinction between DSGE modelling and DSGE theory), he just whines about ad hominems to avoid engaging my point. Note further that YOU, joe, were the person who started with the negative tone with your "you clearly don't understand economics" statement. While you, like the intellectual coward and lightweight that you are, choose to undertake a passive aggressive ad hominem, I'd rather just openly point out that you're unbelievably dumb.

    4. Notice that when joe's not just expressing his near total ignorance of the subject (like by confusing DSGE with static equilibrium analysis from the 1800s, or by thinking that DSGE and Keynesianism are incompatible), his arguments are often just assertions!

    (Notice the most likely thing he'll do here is block quote this and accuse me of ad hominem again to avoid engagement)

    Gee whiz what a great argument! Monetary economics is scientific because monetary economics is not unscientific! Brilliant reasoning there kiddo!

    I've said that there are no major advances that have increased the predictive power of economics. I specifically stated there have been new technical tools developed (like DSGE), but that those tools have not increased predictive power.

    DSGE was not developed in the 1800s. Please provide a single citation of someone using dynamic stochastic general equilibrium in the 1800s.

    This is not an argument, this is just a babbling assertion from an intellectual lightweight trying desperately to seem informed about a subject he clearly has no serious training in.

    In order for a discipline to be a hard, empirical science, it has to have serious predictive power. It does not need to be a crystal ball able of perfecty predicting everything, but it does need some predictive power about real world phenomena. The major theories of contemporary macroeconomics have no serious advances in predictive power over that of basic macroeconomic reasoning. In other words, the discipline of economics has not made recent advances that have resulted in a major increase in predictive power. Not only does econ rely on the ceteris paribus clause to try to explain away its lack of success, but they also rely on assumptions that are not just false but often false in a way that causes predictive failure.

    (my bet, he replies to the above point by some combination of assertions like "it is a science!" "you're illogical!", and "its not a crystal ball!")

    Thats not true at all. Rather, you got called out for using the wrong wikipedia article to try to pretend like you knew what you are doing, and then you desperately looked for an ex-post justification for what you did, so you are harping on an imaginary distinction. Allow me to put this little garbage to rest:

    DSGE theory is the theory of developing models to undertake equilibria analysis to take place non-statically and with an eye towards making room for exogenous events and shocks and the like. There is no meaningful distinction between DSGE theory and DSGE modelling for people who actually have training int his field. You are just harping on this imaginary distinction to try to make it look like you didn't just copy and paste wikipedia to pretend like you knew what DSGE was. Please provide a single citation of work in DSGE (theory or modelling I don't care) being done in the 1800s. My guess? If you don't avoid engaging with this point by a barrage of assertions ("youre illogical!", "ad hominem!", "crystal ball!"), you'll probably cite some work in static equilibrium theory that has very little at all to do with DSGE. So my pre-emptive advice is DON'T forget the D and S part of DSGE when trying to come up with examples from the 1800s.

    I cited DSGE as an example of a technical advance in macro, which it is.

    And please provide some evidence that it is not widely used in macro. It is in fact widely used in scholarly work in economics. Sure, it isn't used in blog postings or undergraduate textbooks, but that is hardly the forefront of the discipline!

    No, I never mentioned that. Although you are right that it cannot predict those things, if it was limited to that then macro could still be scientific. But its not limited to stuff like that. Macro folks cannot even agree over, for instance, whether there is such a thing as a multiplier effect in the real world.

    Its not just that macro fails to make some predictions, its that advanced macro theory and its technical methods have almost NO predictive power.

    That is a terrible definition of science. Science is not a "process of processing information", its a set of methodological tools for predicting and explaining phenomena.

    This is becoming less fun and more boring as I'm just repeating myself and getting the same ignorant replies ("NOT A CRYSTAL BALL!", "AD HOMINEM!", "DSGE IS FROM THE 1800S!"). Since nobody except illiterate joe (feel free to cite that and whine about ad hominems again) seems to be reading this, I think I should bow out! Feel free to have the final word, and don't forget to insert plenty of garbage about crystal balls and ad hominems! Oh and make sure you claim that I am citing a theory from the 1800s... as if repeating yourself over and over without argument makes you correct!
  13. joepistole Deacon Blues Valued Senior Member

    I think you need to go back and read my previous point. Repetition does not make improve your position.
    Oh boy, more ad hominem. Boy am I scared.

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    And the issue here is not my knowledge of Keynesian economic theory. It is yours, and it is your apparent inability to understand the difference between a theory and a technical model/a tool.

    Oh and just what is it that you think I have no response to? The fact is I have responded to all of your silliness and ignorance. Nor do you apparently understand the concept of an ad hominem fallacy. I suggest you Google it.
    Well it does help when you use the correct names and words to denote the issues you are addressing. Your incorrect references are not my issue, they are yours.
    Totally inane, not to mention wrong.

    A good example of you making stuff up and some seriously deranged thinking on your part.

    You are tweaking it a bit, but you used that as justification for your claim that economics is not a science. And the alleged lack of advancement in predictive power of a particular tool or study is not a distinguishing characteristic of a field of science. In other words, you argument here is inane.

    Repetition gets you no where, as per your fist paragraph, this has already been provided. And it helps if you are clear in your use of the language, something that you have failed to do to date. You should not expect to have people understand you when you are so sloppy and incorrect in your use of the language and the citations you use to support your grandiose claims.

    Oh goodie, more ad hominen as a substitute for reason and evidence.

    Ah no, it does not. Show me where in definition of science does it say that a study has to have "serious predictive power". It doesn't. And for you to say that economics has no predictive power is just wrong. I will give you a clue, billions of dollars are not spent by private and government enterprises on economics each year to create economic models and forecasts for absolutely no reason at all. They have much better things to do with their money than spend it on economic forecasts with "no predictive power".

    While you are looking up the definition of science. Please show me the clause where it says that advancements have to occur within a certain time frame else the field looses its status as a science. I will give you a clue, it doesn't.
    Oh what a surprise, another inane and erroneous statement.

    No this is you being sloppy with your claims and references.
    Gee more repetition, why am I not impressed? I suggest you go back and read my many previous responses.

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    No you don't seem to understand the difference between a theory and a model. There is a difference. Further, as I previously pointed out the theory has been debunked by modern economists. There is no way in hell you can integrate all of the real world functions to create a model to mimic a real economy. There are too many exogenous factors and that gets us to the crystal ball you seem to expect of economics.
    I suggest you go back and read through my previous posts. This has already been addressed. This is just more inane repetition on your part.

    This is you creating your own unique definition of a science. Two I am sure you will find dissension in every scientific endeavor. But that does not mean the field of study is not a science as you have claimed.

    Now you are back to blaming economics for not being a crystal ball. Economics can predict what will happen Ceteris paribus, if all things remain equal. But it cannot predict exogenous that affect the model. That is an unrealistic expectation and certainly not a disqualify economics as a science as you seem to think.

    Well I suggest you tell Websters and the other makers of dictionaries, because that is not how they define a science.

    So the bottom line here is that you are making stuff up again to fit your preconceived notions and biases.
  14. hansda Valued Senior Member

    I think from my " Theory of Money-flow " , this can be said that ; Economics has the potential of Science .
  15. Michael 歌舞伎 Valued Senior Member

    I knew this debate was going to go Etymological over Epistemological.

    A couple things noteworthy I caught, that Faure mentioned, that I think are worth reiterating is remembering what a Dictionary IS (Science did exist before Webster was born Joe) and the notion that various economical models are TOOLS. While the first is self evident, the second is a little more abstract as we normally think of tools more as something we use to bash open a shell to get what's on this inside. No one would look at a Microscope and say, this thing IS Science. No one would look at a wrench and say, this IS Science.

    Lastly, Science, the term, does have different meanings to different people. The way Joe is wishing to use it, pretty much makes it useless as a terminology for me, an actual Scientist. By Scientist I mean, I go into a laboratory, train researchers to do research. My research, which is medical research. In order to train new scientists I need them to have an intimate understanding of things like independent, dependent, control variables, statistics, methodology, as well as the tools they'll need to use. Science has to have a much more rigorous meaning than simply "Knowing" or "Knowledge". One wonders why would anyone want to take a perfectly meaningful word and make it so broad as to be useless? Perhaps not meaningless, but more than useless, actually harmful as it's destroys the rigorousness that made it useful to scientists to begin with. Why? Ideas like deduction and induction are actually kind of useful to get your mind wrapped around when thinking about posing new questions. And sure, people who are a philosophers of science may have an even more nuanced meaning for the word Science (even for ideas like falsifiable), however, for those of us in the laboratory training new budding researchers, Science the definition needs to remain useful. If not, then it'll completely loose it's meaning as in the way Joe wishes Economics were - which it isn't.

    While I may not be familiar with all the nuances of the various mathematical models economists use, it's obvious they are not, nor can be, used Scientifically, the way a microscope can be.

    Merry Chist's Mass

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    Last edited: Dec 26, 2011
  16. joepistole Deacon Blues Valued Senior Member

    No there is a reason why we have dictionaries and it is not to decorate shelves. It is to ensure we have a common and precise means of communicating with each other. The fact that folks on the "conservative" end of the political spectrum are in constant need of redefining the dictionary to justify their political ideology, speaks loudly to the inadequacy of that ideology.

    Two, using the strict crystal ball definition of science, science does not exist at all. And that is clearly not the case.

    Economics, nor any other science, can account of exogenous factors. That is why almost every scientific forecast involving large complex systems requires a ceteris paribus clause. An astrophysicist or astronomer cannot tell you when the next large asteroid will collide with the Earth. Nor can the geologist tell you when or where the next large earthquake will occur. But that does not mean astrophysics, astronomy, or geology are not sciences.

    The other issue that plagues sciences involving complex systems is the accuracy and speed of available data. It is very common to see key economic statistics revised because the published data is incomplete on the date of publication. As more complete data becomes available it is not uncommon to see some very large swings/revisions in the statistic (e.g. Non Farm Payroll numbers published by the BLS). And those revisions can have some rather dramatic and material impacts on economic forecasts.
  17. Michael 歌舞伎 Valued Senior Member

    On the "conservative" spectrum? :bugeye:

    That makes zero sense. I mean, completely, zero sense.

    No, what I see here is an attempt to make it appear as if economics applies the same rigorous methodology as science - it simply does not. Mathematically modeling past events is not the scientific method. Again, you're confusing inductive and deductive reasoning. I'd also suggest this fits your personality. YOU predicted we'd have 3% inflation in the coming year - and that this was good. You may be correct. But, it's just a guess. What's interesting is you look at the past and expect the future to be the same. It probably brings you a sense of control and therefor a semblance of security.

    That's no science. Some questions are amiable to the scientific method others are not. What will be the inflation in 2012? No one knows. It may be, as I predicted 8-15%. I also think 2012 could just as easily be a deflationary year. As an election year, perhaps the Feds will pull out all stops, sacrifice 2013, and keep 2012 at 3% - so that people can feel a semblance of security and vote for their man Obama again.

    NOTE: Obama has done more to advance the conservative cause more so than any other previous POTUS. He's 100% in the pocket of Big Finance, continues the War for Big Oil, could give two shits about Civil Rights. Luckily most Obama sympathizers have come to the realization they made a huge mistake voting for him in the last round.

    NOTE2: The future will not always resemble the past

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    See, this is where "Economic" theory is very much unlike Chemical Equilibrium theory which will be as true today as it will be tomorrow and the next day on into the foreseeable future.
    Last edited: Dec 26, 2011
  18. Michael 歌舞伎 Valued Senior Member

    In my opinion the Central Reserve has WAY too much influence on our daily lives. WAY too much. I mean WAY WAY WAY too much. Surely anyone with two cents can see that. It's also somewhat misrepresented with the word "Federal" which gives the illusion it's being managed by our representatives - who probably are too stupid to know anything anyway, but regardless.

    I've seen the horrible effects Central planning has had on all sorts of economies; from Communist countries (I've visited 3) to places like the USA, AU, ENG and Japan. North Koreans really think, just like you Joe, that Big Brother knows best and they live in the prosperous nation that has ever existed. Like you, they're living in an illusion.
  19. ElectricFetus Sanity going, going, gone Valued Senior Member

    In an perfect world people look at the data and formate a hypothesis from it, but in fields, particularly those ones integrated into politics, one derives a hypothesis en vacuum and then tries to find evidence to validate that hypothesis, disregarding or playing down all counter evidence. Economics is a sciences but its the most corrupted of the sciences and its theories and assumptions were most influences by ideology and unbiased thinking.
  20. wellwisher Banned Banned

    A good example is the law of supply and demand. When supply goes up based on a flat demand price is supposed to fall. When construction goes flat, according to the theory, merchants are supposed to drop price due to unused supplies, but instead have also chosen to increased prices for construction materials. The reason is with demand down, revenues are falling. To avoid debt they raise the price to make more money off the fewer customers that are still available. This law is not enforceable and can be broken at will.
  21. joepistole Deacon Blues Valued Senior Member

    You have a valid point. Economics is the study of how resources are allocated within a society. So it is rather natural that it some individuals will attempt to advantage themselves by politicizing it to some degree (e.g American conservatives movements embracing the Austrian School). I think the resurgence of Austrian economics rather clearly demonstrates your point.

    But that does not mean economics is not a science.
  22. joepistole Deacon Blues Valued Senior Member

    Nice fantasy, I don't suppose you have any evidence to back up your claim?
    The bottom line here is that the Laws of Supply and Demand can only be broken in the minds of conservatives (those that need to corrupt economics for the benefit of their political leadership). And mind you, the laws of supply and demand apply only to competitive markets.

    By the way, there is not one law of supply and demand. There are four laws of supply and demand.
  23. Telemachus Rex Protesting Mod Stupidity Registered Senior Member

    It's possible that a merchant could raise prices in the hope of increasing revenues, but the supple and demand model is not exactly what you think. First, the typical model is for the market as a whole—all the merchants selling the same good versus all the buyers of that good. It is not a model to be used by an individual merchant in setting his own prices or for forecasting his own inventories (unless that merchant is a true monopolist and is the sole seller of the good or service in question).

    Assuming he were a monopolist, though (and prevented for whatever reason from price discrimination), then the point of supply and demand is this: if you increase the sales price you will get more revenue per sale, but you will also make fewer sales due to customers being unwilling to purchase the good or service at the new, higher price. The model can show you the point at which you maximize profit, and simply raising prices is not the way to do that. Of course, the merchant could be short-sighted and do the wrong thing, but the model in that case merely shows what would have been the optimal action for the seller to take, it is not a prediction the actual behavior of an individual.

    The theory is that, when dealing with a competitive market (many sellers and many buyers) that the model works to explain the function of the market as a whole, because, on average, sellers and buyers do the "optimal" thing, rather than the stronger assumption that every buyer and seller always does the optimal thing.

    That said, on the main question, having studied and worked in a field that used economics day-to-day, I'd say that economics aspires to being a science. Economists often do try to make use of the scientific method, but just as often they fail at it and simply apply a "rationalist" approach. By "rationalist" I mean this: they develop certain basic assumptions that seem correct, they then use these assumptions and pure logic to develop a (usually mathematical) model of more complex phenomena, they then assume the correctness of the model. Some may go further and test the model against the real world, but few abandon their model that they so painstakingly constructed just because the real world doesn't seem to obey it. Most simply try to figure out how to tweak the model to better fit the world, and the results can remain underwhelming for a very long time.

    I find economics fascinating, but I liken it to a less accurate version of string theory. The math is beautiful and the theory often elegant, but it's largely conjectural. With string theory, of course, you could use it to predict outcomes in quantum mechanics since string theory is constructed to be consonant with QM (as it would have to be, since quantum mechanics is such a strongly accurate theory...if string theory didn't mimic is, then we'd just know that string theory was wrong). With economics, it's usefulness to make predictions is far more limited.

    Economics appears to be at its strongest when explaining past phenomena, but then there is always the danger that the "explanation" is really a "just so" story made to fit the facts and the models together. But if the models aren't that useful in predicting future events, then there is no reason to assume they really explain how past events unfolded. That's why things like the Great Depression (probably the most studied event in economic history) are the subject of ongoing academic controversy. There are plenty of theories about what caused it, and no single consensus. Same for the ongoing economic woes. Lots of theories about the root causes, most of them plausible, not really much certainty about the specifics among most academic economists. (That point can be somewhat obscured if you look to politicians and more partisan economists, many of whom express great certainty about the root causes, even though the varies sides contradict one another. Suffice to say "It was the Fed/Fannie Mae/Quants and their Models/Subprime Mortgages/Credit Default Swaps/Securitizations/Shadow Banking System/Deregulation/Community Reinvestment Act/Predatory Lending/Over-Leveraging/Etc." are all in the category of plausible factors, but uncertainty abounds still.)

    For the record I was a professional, rather than academic, economist. My job was to feign certainty about things that I could never be certain of. No one wanted to put their money into a brokerage whose economists would say, honestly, "We can't make a prediction here except to say that it will go up or down." Never trust an economist from an investment bank or a brokerage, as they are really just marketing tools. The dishonesty of it is what led me to quit and find a new field.

    My hope is that economics is struggling towards the light and will eventually develop a sound scientific basis. (That said, results to directly apply the scientific method to economics, so-called "econophysics" have been underwhelming to me...and largely ignored by most mainstream economists in any event. At the other end, things like prospect theory and other additions from behavioral economics have been very influential, and that almost seems to be entrenching mainstream economics even further into the "social science" rather than "hard science" category.)

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