We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

Economist have taken positive empiricism one step beyond and formulated economic theory from empirical regularities; Okun’s law, the Phillips curve or, more recently, the popularity of Rogoff and Reinhart’s debt-to-GDP tipping point. Economists, also, have little restraint in throwing up graphs showing empirically causal relationships between economic variables.

This is, however, taking economics way beyond what it can do, yet, few professional economists take to the airwaves to denounce this bastardisation of the science. Empiricism can support an economic theory, but it cannot prove or disprove an economic theory.

Frank Hollenbeck

Tweet about this on TwitterShare on FacebookShare on TumblrShare on RedditShare on Google+Share on VKEmail this to someone

15 comments to Samizdata quote of the day

  • staghounds

    Economists are like racetrack touts. If they really knew how an economy works, they would be in there betting, not selling their knowledge to me.

  • Alsadius

    This is a surprisingly anti-science viewpoint. Empiricism cannot prove things, because it could always be disproven later, but it can certainly disprove theories. Quite spectacularly so with cases like communism, for example. And even on the “proof” side, it’s often a good starting point. Economics is far more complex than physics, and thus it doesn’t tend to be amenable to laws that are both simple and universal, but evidence is still important, and it still trumps theory.

  • Phil B

    Economics is as much “science” as Astrology. Especially as applied to whole countries (or continents if you take into account the EU).

  • Runcie Balspune

    Economics is as much “science” as Astrology.

    Economics is like astronomy, using economic theory to predict or control is like astrology.

    Especially as applied to whole countries.

    Agreed. But then you are referring to fiscal economics, consider the work of people like Al Roth who’ve made a difference, it’s not all about money.

  • Bruce

    Economics: The Dismal “Science”.

    Thank-you, Thomas Carlyle

    There is/was also, apparently “Gay Science”: song and verse writing.

    Not to forget “Social Science”: a contradiction in terms.

  • bobby b

    Economics is certainly a science, but one in the very early stages of development.

    Right now, economics is where weather prediction was 100 years ago. They sort of knew the right questions to ask and the right measurements to pay attention to, but they’ed not yet worked out how to take into account the thousands (or more) of variables affecting tomorrow or next week, and they couldn’t write the software until they knew what the variables were, and they needed better computing power to handle them all.

    Just because we keep looking at ideas and end up saying “no, that’s not it” doesn’t mean we won’t get there.

  • Nicholas (Unlicensed Joker!) Gray

    Economists are no more immune to the temptation to solve problems than anyone else. How else are they going to get famous unless, like Keynes, they write about governments doing stuff?

  • Bruce

    “Just because we keep looking at ideas and end up saying “no, that’s not it” doesn’t mean we won’t get there.

    Reminds me of an(other) old “joke”

    Viz:

    What’s this?

    CLICK, CLICK, CLICK, CLICK.

    “Is that it?”

    CLICK, CLICK, CLICK, CLICK.

    “Is that it?”

    Answer: Ray Charles with a Rubik’s Cube.

    The actual problem is that “economists”, like many of their ilk in other such “sciences”, seem to always to have a “solution” in search of a “problem”.

  • Alisa

    The actual problem is not with economics as science, but with economics as applied science – AKA engineering.

    but they’ed not yet worked out how to take into account the thousands (or more) of variables affecting tomorrow or next week

    More like millions, rather than thousands (as in millions of individuals making individual decisions) – but I agree that just because we are incapable of accounting for such a large number of variables now, does not mean that we will not be capable of it in the future. Although personally I doubt it, and hope to be proven right about that.

  • Paul Marks

    As Ludwig Von Mises repeatedly explained (in a tradition going back to Richard Whately and others) – economics is not an empirical subject, it a subject based on logic (such things as “A is A” are not subject to “empirical verification”).

    To say (for example) “let us see if imposing an edict demanding the prices be below market prices creates a shortage” or “let us see if imposing a minimum wage, by edict, above the market price creates unemployment” is demented. Of course imposing a price below the market price will eventually produce a shortage, just as of course imposing a wage above the market price will eventually produce unemployment – that is the part of the very DEFINITION of the term “market price” – i.e. the price at which either goods or services “clear” i.e. are sold.

    However, the “economics is empirical” people do not even believe their own doctrine – as can be seen by their ignoring of any “empirical evidence” that does not fit their beliefs, their “studies” being rigged accordingly.

    Someone who says that imposing edicts that demand that goods be sold at below market price does not create shortages over time, or that imposing edicts that demand that labour (services) be sold for above market prices does not create unemployment over time – is, at best, insane and should be regarded accordingly. As should their “empirical studies” which “prove” that 1+1=68. that water is dry, and that A is not A.

  • NickM

    The reflected sound as of underground spirits is not a science.

    1. It is intrinsically value laden. Do we wish prosperity or equality for example. How do we define either? And what is “the good”? It is intrinsically value-laden. Such decisions have to be based on principle and not faux empiricism. Anyone who says otherwise is getting into the mire of utilitarianism which is a philosophical viewpoint and thus not a scientific one. Do I know any of you well enough to know what you really want? Do you know me well enough?

    2. Yes it is both complicated and complex (two different things). This is a serious problem. I shall quote bobby b, above…

    “Right now, economics is where weather prediction was 100 years ago. They sort of knew the right questions to ask and the right measurements to pay attention to, but they’ed not yet worked out how to take into account the thousands (or more) of variables affecting tomorrow or next week, and they couldn’t write the software until they knew what the variables were, and they needed better computing power to handle them all.”

    The more computing power you chuck at a problem the less actual understanding you have of it. You gain predictive power at the expense of understanding based on principles. That is a Hellish deal to make. I have much more time for those that argue for, say, free markets because they are right than someone who has a “model to prove it”.

    The analogy with weather is wrong. Why? Weather is a physical system. Yes, it is not an easy one and both complex and complicated but it is still a physical system. Economic activity is a human system. There is a difference. The latter involves free will. That means irreducible complexity or we are just the fleshbots Paul Marks mentions (a lot). Now if we are then why care? Of course that can be answered by saying that we are programmed to care. Or pretend to care. The material difference is immaterial.

    Unless one believes in agency and old fashioned things like good and evil and that agency is ultimately unknowable (how do you take something apart with itself?) nothing really makes sense.

    I have fenced myself into a corner here. I need to think more on this.

  • NickM

    PS. I wrote that whilst unaware of Paul and Alisa’s comments. Got there before me folks! Damn!

  • Alisa

    All problems are physical, Nick – it’s just that the psyche of people other than ourselves (including will – i.e. impulses, emotions and thoughts) is so complex as to be beyond our physical reach, at this point in time.

  • bobby b

    It is intrinsically value laden.”

    I have to disagree with this one point.

    To be able to say “if the economy is moving at this speed, with this mass of value, and weather takes down crop yield over this percent of the world, and we add $Y to the economy through QE, then the likely resulting inflation rate will be X” is fairly values-free.

    To then extrapolate that result out to how it might affect certain people, and to opine on the advisability of that QE, is certainly values-laden.

    But I would argue that the proper scope of economics is defined more by the first statement than by the second set.

    We interject values when we decide what to do with what econ can tell us. Before we do that, it’s just an incredibly complex math problem.

  • Julie near Chicago

    Alisa, Paul, Alisa.

    Quite. :>))