Is Economics a Science?

http://www.project-syndicate.org/commentary/robert-j--shilleron-whether-he-is-a-scientist

by cs702 • 13 years ago

20 66 13 years ago

I'd say that if it isn't a system of discovering truth by repeatable experiments, it isn't a science. Ergo, economics isn't (at least not on a macro scale).

That doesn't make it invalid. There are other ways to discover truth; eg, reasoning, mathematical proof, or detective work. The latter applies the knowledge gained from science, but the crime itself isn't repeatable.

Then again, given how divided economists are on basic questions, there must be a lot of blarney in the field.

tristanz• 13 years ago

Astronomy and cosmology are not science?

jljljl5• 13 years ago

There are fields in economics (e.g., behavioral) that attempts to produce insights and theories through repeatable, controlled experiments. The assumption that no scientific testing or experimentation happens in econ is overgeneralizing.

I actually don't think repeatable experiments is a necessary characteristic of science. I would argue that science is more about generating falsifiable hypotheses that can be tested through some method, whether through repeatable experimentation or through observation (what you call detective work).

zurn• 13 years ago

Is it really useful to strictly guard the word "science" to only apply to natural sciences? Linguistics, history, economics, climatology etc are all able to usefully apply empiricism along with other methods. You can just say natural science when you mean it specifically.

Mikeb857• 13 years ago

Then again, given how divided economists are on basic questions, there must be a lot of blarney in the field.

There really isn't that much disagreement. Just alot of pundits masquerading as economists (who may have an undergrad degree) who use 'economics' to justify their absurd political idealism.

If you ask economists who actually make a difference (central bank economists, investment bank strategists), and make decisions that actually affect people, I bet there'd be alot more agreement.

jljljl5• 13 years ago

There are divisions between some major economic theorists who aren't just pundits. For example, read some of the disagreements between Nobel Prize Winners like Robert Lucas and Paul Krugman.

Of course, disagreement in a field has nothing to do with the validity or science like nature of the field itself. Consider, for example, the disagreements between Gould and Dawkins in the field of biology. Does this mean biology is not a science?

mlyang• 13 years ago

Research institutions like the MIT Povery Action Lab try to make economics research as experimentally rigorous as other research -- but I think even this fails to make economics a true science. Economics is concerned principally with correlations that have no reason to be universally and timelessly true-- just a snapshot of current (and transient) social phenomenon and the corresponding correlations within that snapshot. Correlations (and policy efficacies) that are found fundamentally rest on shifting psychological, social, cultural, and political trends. Physics, on the other hand, even in correlative experiments aims to find relationships that are timelessly and fundamentally true-- and provide the foundation for other scientists to discover what those fundamental truths are that drive this correlation. Such truths don't exist in economics.

tanzam75• 13 years ago

So then, by this logic, most social sciences aren't sciences.

A lot of psychology, for example, rests on experiments run on 19-year old college sophomores in Western countries. Are these actually universal human traits, or do they change depending on cultural trends?

ysn772• 13 years ago

So climate change is not a science, huh? Theory of evolution isn't either?

Theodores2• 13 years ago

The "Nobel Memorial Prize in Economic Sciences" came along in 1968, therefore it is not a 'real' Nobel Prize. As for the question, Betteridge's law applies:

"Any headline which ends in a question mark can be answered by the word no."

chmullig• 13 years ago

Any headline which ends in a question mark can also be answered by the word yes. Whether either is correct is another matter entirely.

otikik• 13 years ago

It can also be answered by the word "tnetennba". The point of the previous observation is that the correct answer is "no". Basically because putting something preposterous in an interrogative way in the header is a very easy way of link-baiting.

jljljl5• 13 years ago

>> The "Nobel Memorial Prize in Economic Sciences" came along in 1968, therefore it is not a 'real' Nobel Prize.

People keep saying this like it's some profound insight or knock against economics.

The Nobel Memorial Prize is still one of the highest possible awards in the field. It doesn't diminish Schiller's standing just because it wasn't one of the original Nobel Prizes.

It's sort of like pointing out that "Best Animated Feature" is not a real Oscar because they only started awarding it in 2001.

Theodores2• 13 years ago

To people that hate Chicago School Economics and know a little bit about how the "Nobel Memorial Prize in Economic Sciences" came in to being, it will always lack legitimacy. Just because you don't like, know or accept that doesn't mean you have to imagine it is any different.

Your analogy with the Oscars is spurious. If Nobel wanted a prize in economics, tiddlywinks, synchronised swimming, aromatherapy or anything else he probably would have mentioned it in his will. Economics existed in the days before he popped his clogs so he could have had a prize for it if he wanted, but he didn't. Sometimes you have got to respect a man's will, not twist it into something it isn't. That is dishonourable.

As for the Oscars, technology changes and the "Best Animated Feature" award is there to recognise those CGI extravaganzas - nobody can really argue with that. They haven't branched out and given an extra Oscar for "Best Economist in a Government Think Tank" or anything weird like that, have they?

Allegedly members of the Nobel family have called for the joke that is the "Nobel Memorial Prize in Economic Sciences" to be stopped, I guess they have had a bit longer to think about it than you have.

st0neage5• 13 years ago

It is a profound knock against the "there is a nobel prize for it, therefore it is science"-logic.

ThomPete2• 13 years ago

No economics belong to the field of social science (neither a science).

atmosx9• 13 years ago

Can anyone give me a fair example of something positive produced of of economics? Some sort of phenomenon we didn't understand before?

If it's a science, which is ridiculous to believe so, what good has done to the human kind?

Competing chemistry and physics or engineering to math is hilarious. The logistics of a large magazine can be easily handled by someone who has never has no idea about "economics". Would trust a non-architect to build you a house? Or a physician who has no idea about chemistry? A cryptographer that doesn't know what a prime is?

Blah...

Mikeb857• 13 years ago

The effects of welfare and various forms of economic stimuli? The effects of international trade, currency and central bank policies?

And of course, large investment banks derive alot of benefit from the study of economics. Was just listening to Abby Joseph Cohen on Bloomberg radio yesterday - she's an economist and a senior investment strategist at Goldman Sachs - they obviously make alot of money through understanding economics and making correct predictions. While you can argue about the benefit to society, it's clear that economics can produce prediction models that work.

dalai• 13 years ago

Do they actually have prediction models that work? Goldman Sachs is not an outside observer. Every time they make a public prediction they are also affecting the outcome. The same goes for several well-known economists. Even if the prediction is not public, Goldman Sachs is quite capable of influencing a lot of people to get the outcome it wants.

atmosx9• 13 years ago

First thing: Goldman Sachs makes a lot of money because they are making the rules, not because they are good at anything.

Secondly: The economist Stimuli to which you are referring, and the effects of international trade can be read up-down-sideways depending on which part of the Earth you live. They are not universally good as a huge part of the USA-EU middle class believes. If the USA were not imposing rules that give an extremely unfair advantage to USA (oil for example) corps, they may not be so omnipotent.

That said, Goldman Sachs is really the worst example I can think of. Even in Lehman's case, the USA gov let Lehman fail but GS was too big to fail. Paulson (ex-GS) called Blackfain (Goldman Sachs CEO) in order to examine Lehman's book because he knew better. Of course Blackfain and Paulson (who had huge amounts of stock of at GS) decided to let Lehman fail and create a huge gap at the market, while saving AIG who owed money to GS and GS of course. Indirectly, they ensured huge profits for GS by killing the competition and that...

Now, what economics have to do with GS and the financial sector is beyond me. I don't see any theories applied there... It's all monopoly, a win-win situation: You buy high-ROI financial products and if things get out of hand, don't worry: You're too big to fail ;-) that's one hell of an economic theory. Too bad you can't apply it elsewhere... (oh yes, there are no laws that can be bend in chemistry or physics...)

LukeWalsh• 13 years ago

You can't dismiss an entire subject matter as nonscientific just because many of the major players aren't advocating scientific methods of exploration.

At its root, science is about testing, observing, forming conclusions, and retesting. It just so happens that in the subject of economics you have an extremely large number of variables because of human behavior.

While concrete conclusions are difficult to come by, we should absolutely continue trying to understand things that we do not currently. Consider a future where the entire human brain could be mapped, and we entirely understood behavior. In this case studying economics and decision making would be much more realistic.

Just because our tools are extremely limited doesn't mean we should stop observing, and that very act is true science.

wuliwong• 13 years ago

I'm not sure as to what defines a field as "science" nor do I found it a very interesting question. What I do find interesting is the desire to apply the scientific method in economics.

The issue comes with the "testing" portion of the method. One is unable to setup economic experiments to perform these tests. Economists can make claims about historical events but they must a priori decide which data to ignore and which to include in their analysis. Things like this lead to two seemingly cogent, logical analysis of the great depression with one concluding that the Fed was the cause of the depression and another claiming it to be the savior. They both may have sound logic but their a priori assumptions were different.

In physics, you rarely have this scenario as experimentalists can setup artificial testing situation where they have control over how variables change. They can systematically change variables and observe the effects. A great deal of the work in physics goes into the explanation of the magnitude of effect variables have on results, largely to justify why certain effects can be ignored.

Ludwig von Mises wrote extensively about the problem attempting to apply the scientific method economics. He felt economics was fundamentally different from a field of study such as physics. I tend to agree with this. Side note, I have a Ph.D. in physics and am just an amateur economist. :)

atmosx9• 13 years ago

Your way of approaching science applies to Astrology as well. Do you consider daily horoscopes, online tarot readings, psychic readings, etc. science too?

ps. If concrete conclusions were not found the last 5,500 years, I don't believe we will find them in the next 5,500.

pseut2• 13 years ago

Can anyone give me a fair example of something positive produced of of economics? Some sort of phenomenon we didn't understand before?

Gains from trade between two countries even if one of them has an absolute advantage in producing every good.

firstOrder• 13 years ago

The idea of comparative advantage for trade between countries was first spelled out in 1817 by David Ricardo in "On the Principles of Political Economy and Taxation". He used the example of the Portuguese trading their wine for English cloth, and said that it was to both countries advantage to be engaged in such free trade.

Well, two centuries later, how did that wind up? As Joan Robinson pointed out "the imposition of free trade on Portugal killed off a promising textile industry and left her with a slow-growing export market for wine, while for England, exports of cotton cloth led to accumulation, mechanisation and the whole spiralling growth of the industrial revolution".

In science, theories have to follow the data, the real world, reality. In economics, the examples and data have to be twisted to fit the theories. The OP article said the author article has a Nobel Prize in economics which of course if false, Nobel's bequeath to his prize foundation included Physiology/Medicine, Peace, Chemistry etc. but not economics - after he died people invented an economics prize and stuck Nobel's name on it so to try to give it the allure given to the other prizes. Economics uses to be called in more honest times political economy, that it was given the more scientific name economics or economic sciences was a sign of it becoming less scientific - Ricardo may have been wrong about comparative advantage, but at least he tried to take an honest look at the economy. Nowadays the theories he made which were disproved by history are held up as models, while his better ideas have been supposedly "debunked".

Economics is not a science. In its normal form it's mostly a propaganda arm for some force in society trying to justify its actions. I suppose in some sense economics could be a science, but only in the sense of being a branch of anthropology dealing with political goings on - a branch of anthropology the study of which would itself be highly politicized. One reason science works is that no astronomist gains or loses by saying the next nearest star than the sun is Proxima Centauri. It is light years away, and has little effect on things, and thus objective observation and scientific consensus are easy to achieve. If a star closer than Proxima Centauri were observed, after some time needed for verification, surely the entire astronomical and scientific community would get behind the idea that the newly observed is now the second closest star to earth. Economics fundamentally deals with the question of how the pie gets divided up, in which case scientific consensus is impossible and objectivity goes out the window. It is one of the rare subjects on which you're better off reading the material from two centuries ago - Adam Smith, David Ricardo, Benjamin Franklin, Jean-Baptiste Say, John Stuart Mill etc. - then that of today, because they were generally objective and fair, while most economic writing today is either partisan, or written under the influence of highly partisan ideas.

ysn772• 13 years ago

You are clearly ignorant about economics. Would you trust a non-economist to manage monetary policy?

icebraining• 13 years ago

I wouldn't, but I'm not sure I'd trust an economist either.

atmosx9• 13 years ago

No you are clearly disillusioned if you believe that an economist understand is the only one who can run a monetary policy. Understanding how currencies work is not easy to grasp at first, but surely any educated man will do.

And what does this has to do economics being a science anyway? Do you think that if you will apply the same economic policies in two different nations, you will get the same result? Please, don't make me laugh. Theories are made to explain outcomes and every school (Austrians, Socialists, Communists) justify their failures by trying to explain things that they totally don't understand.

xiaohanzhang14• 13 years ago

You win the prize for the most ignorant question of the week!

First, a science tests and explains natural phenomena. I'll draw from all walks of life to display the good it's done for human kind:

- Personal Finance: How do we know diversifying your investments gives you the optimal risk-reward in a given timeline? - Public Policy: Why do governments prevent monopolies from forming? - Jobs: Why do you have a specific job title instead of being a Jack of All Trades? - (American) Football: Why do most coaches punt on fourth down, even when they shouldn't? (risk aversion) - Population: Why has the birth rate been declining?

Second, your analogies make little sense. The architect doesn't build the house, the construction crew does. Regardless, each specialty (hmm, that specialization again?) plays an important role in building a house.

Blah...

atmosx9• 13 years ago

Personal Finance: How do we know diversifying your investments gives you the optimal risk-reward in a given timeline?

You mean that you have to study in order to to come with a straight answer right? Study economics OR do the math?

Public policy: I don't know why monopolies should not be formed. But I guess you do, right? :-) Care to explain?

Jobs: Why do you have a specific job title instead of being a Jack of All Trades?

You probably see a connection among Jack-of-All-Trades and economics as a scientific field, which I do not. Enlighten moi please.

Population: Why has the birth rate been declining?

Because they apply policies based on things that politicians and other ignorants (economists) think they understand, when the examples we have at hand shows they clearly DO NOT understand the how and the why. All they offer is a translation after their policy had failed miserably for the n-th time.

Second, your analogies make little sense. The architect doesn't build the house, the construction crew does. Regardless, each specialty (hmm, that specialization again?) plays an important role in building a house.

Really? Have you take a closer look at Wall Street to see how many % of the population working there (financial sector) studied economics and not physics or some other math-intensive science?

How many doctors do you know without a degree in medicine but with a degree in physics?

dreamdu5t2• 13 years ago

No, economics isn't a science. It cannot discover truth using repeatable experiments.

Economics is statistics mixed with political philosophy. Usually political philosophy using statistical regressions on historical data to advance their political claim.

jljljl5• 13 years ago

>It cannot discover truth using repeatable experiments.

Behavioral Economics is a field that attempts to do exactly this.

Additionally, repeatable experiments is one method of falsifying claims, but it is not the only method. Observational studies and prediction testing can serve as a means to falsify claims.

Tycho• 13 years ago

Economics may not ever become a science. But is science becoming economics?

nfoz2• 13 years ago

Anyone have a link to a scientific economic paper?

grimtrigger2• 13 years ago

Is this a joke?

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1752366

nfoz2• 13 years ago

Nope, that's great, thanks. Here we plainly see game-theory science being conducted in the name of economics. If this is considered an economic paper, then economics indeed can be considered a science.

(Of course not all economists are scientists, and not everything an economic scientist says is a scientific result or conclusion, but these disclaimers shouldn't be necessary.)

skwirl• 13 years ago

If you were to claim economics is not science because it rarely involves repeatable experiments, you would have to throw out a large chunk of what we commonly think of as science. Did we discover that the moon orbits the earth with repeatable experiments? Did we discover black holes, the existence of dinosaurs, the big bang, the causes of earthquakes, the causes of volcanoes, the cause of hurricanes, etc. with repeatable experiments? Do you want to throw all that out as nonscientific nonsense?

It took us a long time to discover such basic things as the fact that the Earth goes around the sun despite the fact that people had been trying to figure it out for millenia. For much of that time, research was hampered by politics and the unwillingness of people to accept the consequences of possibilities beyond what was widely held as true, some of the same problems pinned by many on economics today.

Economics is a discipline that is really in its infancy. Like astronomy, it is going to rely on observation much more than experimentation. Like astronomy, it is still a science, and like astronomy, it always has been and always will be, even if we draw inconclusive, politically tainted, or wrong conclusions today.

ThomPete2• 13 years ago

Of course you would and we should throw all those who are not proper sciences out. Come up with a new name as to not confuse and miss use.

It belongs to sociology, psychology, anthropology and so on.

Noting to be ashamed about but lets just call a spade a spade.

mgraczyk• 13 years ago

All of those discoveries you listed were originally confirmed with repeatable experiments. In fact the the existence of black holes and the occurrence of the big bang were only hypothesized as explanations for the results of other repeatable scientific experiments.

It wasn't hard for Galileo to show that the earth orbits the sun. His methods and results would still be acceptable to the scientific community if he did the experiments today. Just because the public didn't accept his work did not make it any less scientifically valid.

kbenson• 13 years ago

I think what you mean is they were eventually confirmed by repeatable experiments )even if eventually was shortly after the theory in some cases). Science begins with theory. It's appropriate to criticize people presenting theories as likely without evidence, but it's important to distinguish theory that is intended to be tested, but just can't or hasn't been yet from that which doesn't really expect to be tested.

moocowduckquack2• 13 years ago

You can practice economics as a science. For example, the book "Critical Mass" by Philip Ball ( http://www.philipball.co.uk/index.php?option=com_content&vie... ) includes a fair amount of economics from a thermodynamics perspective. However most of economics is not approached in this fashion and is more comparable to Axel Leijonhufvud's satire "Life Among The Econ" ( http://www.econ.ucla.edu/alleras/papers/life%20among%20the%2... ).

st0neage5• 13 years ago

There is no Nobel prize in economics.

dbecker• 13 years ago

What do you call the thing described here: http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economi...

st0neage5• 13 years ago

Fraud. "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel"

It is not a Nobel Prize. It's deliberately misnamed to make it look like it is.

steauengeglase• 13 years ago

Most fields within economics fall within social science, not natural science. That doesn't make a non-science, but like psychology there is a lot of weak ground for shills and hacks to cause major damage.

I'd rather know Shiller's ideas on how to throw out the bad ideas in the public consciousness than if his field of study will make it in the long term. Policy is too often treated more like a religion than an implementation of tested ideas.

grimtrigger2• 13 years ago

Prediction markets offer a possible solution.

mrow842• 13 years ago

I agree with this analysis. One way to characterise the problem is as a lack of verifiability, which, interestingly, has been much touted recently as a problem in science more generally.

I think that the verifiability problem in economics is, however, more pernicious than that for other sciences precisely because of the subject area which it addresses, namely the economy. The standard of evidence for the implementation of some economic policy is, quite generally speaking, vastly lower than for the application of other scientific advances, and the impacts of either can be large. This means that unverified or even unverifiable policies can quite easily be implemented in the real world, and then cause significant damage, as steauengeglase mentioned.

If we are incapable of verifying that a given policy might work, because the theory it is derived from is so incomplete as to ignore the things which might cause the policy to fail, then why should we consider that policy's adoption? It is surely far more sensible to generally apply well-tested ideas, and conduct small-scale policy trials to expand our knowledge.

The obvious problem with this latter approach is that the "well-tested ideas" are very often derived from distinctly inequitable modes of thinking. I would still contend that adopting and then adapting those ideas is preferable to applying radical ideas that ignore most of the system they purport to explain.

ffrryuu• 13 years ago

It is just an attempt to justify our unjust system, it is definitely not an science.

Fando• 13 years ago

What a pointless argument. It is clear that economics is both a science and not a science. Yes, it has overlapping parts with other sciences, but also parts which are unique to it, such as the human element, which make it difficult to fit into the category. But such fitting is not what matters. Let's move on to the real issue. That economics is difficult, which makes a large part of its application ambiguous, vague, subjective, hard to test, and etc. Through these properties, which are not prevalent in other scientific fields, economics lends itself nicely to exploitation by the natural human flaws. These flaws have to do with subjectivity which arise as a result of ambiguity and lack of fundamental understanding. For this reason, I consider economics to be a much more difficult field than other, more scientific fields. Of course, but what's next. How do we evolve the field to be more useful. How do we begin understanding it intrinsically. I don't know. But it would probably include a fundamental innovation in the scientific method itself which accounts for the human flaw to exploit ambiguity. But perhaps not. Perhaps it would eventually be ousted like an idea and replaced by a better hypothesis and working model.

moocowduckquack2• 13 years ago

The defense of economics by comparing it to string theory is a novel one, however last time I checked nobody has tried to impose the conclusions of string theory on a population, so the consequences of playing with maths in that field are much less severe (edit - unless the playing with maths proves successful, in which case all bets are off).

atmosx9• 13 years ago

The most famous British political satire TV-series is "Yes Prime Minister"[1]. Believe the IMDB 8.2 doesn't make justice to this masterpiece which most often than not proved to be spot-on about how matters of the state are approached by politicians.

Here is a snippet from Episode 1, season 2:

----------------

Late in the evening PM at home. Bernard, PM’s personal secretary, enters the room:

PM: All the cabinets have got to make cuts in their spending plans.

PM’s wife: Bernard would you like a scotch?

Bernard: Yes, I can have a large one please!

PM’s wife: Another triple!

PM: Humphrey should have seen this coming and warn me.

Bernard: I don’t think Sir Humphrey understand economics prime minister. He did read the classics you know.

PM: Well that’s the thing. He is head of the treasury.

Bernard: Well prime minister, I’m afraid he is in even greater disadvantage understanding economics. He is an economist.

----------------

I never heard of a more accurate description of an economist.

[1] http://www.imdb.com/title/tt0086831/

X4• 13 years ago

It is a meta-science. Not a nature science. I think that's it. Yes it's still a science. The reason it's not thought really scientifically is a different problem, common to this field.

Is Economics a Science?

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