Wednesday, November 2, 2016

Jason Smith — A list of valid and not so valid complaints about economics


Useful summary of many points already made in previous posts. 

Information Transfer Economics
Jason Smith

7 comments:

Ben Johannson said...

There's a difference in an assumption made without a claim to realism and an assumption made which one knows to be false. Economics does the latter as a regular feature. Jason is, once again, missing the forest for the trees.

Ben Johannson said...

Also, his defense of mathematics in economics relies upon his own opinion that it "is appropriate."

For. What. Exactly? What problems have been solved, what understanding has been gained in the last 40 years of formalistic fetishism? Economics is no more a beneficiary of calculus than sociology.

Kain said...

I'm with Ben here. The defense of unrealistic assumptions and of "mathiness" is quite silly, although he at least admits he hasn't quite come to terms with the Romer critique. Of course the "No math" critique of Austrians is ridiculous and very few would dispute that.

Tom Hickey said...

I'm with Paul Feyerabend and Richard Feynman on this. We don't want to erect rules and structure that inhibits science but we don't want to be airheads either. It is not a matter of whether Jason Smith has the right answers as much as is he asking the right questions.

As far as I can see, he is saying that physics has been asking these kinds of question for a long time and has come up with heuristic answers that guide what physicists do. He has compared this with economics. Economics didn't really get hyper-mathematical until Samuelson, and economic history based on reliable data is quite limited. This is a huge contrast.

I think it is a useful pursuit and so do a lot of others since these are his most viewed posts, even thought the purpose the blog is to explore information transfer economics, which I also find interesting.

I don't see any problem with an approach that is math-heavy as long as those using it are honest about it and also know what they are doing. Some investigations work out and other don't. Knowing about both outcomes is useful.

The way it looks is that heavy math has limited use in econ in comparison with physics based on the current state of the discipline. As Smith has observed the historical data is to limited to conclude much.

Lighter math approaches may result in more successful outcomes but less precise.

Some aspects don't lend themselves to math methods and are better pursued with conceptual models, which can also be rigorous logically.

Some matters relevant to economics are more properly the subject of psychology or sociology.

Postkey said...

Inductive methodology {as 'used' by the natural sciences and most scientific disciplines} is the basis of this economist's approach.

"The critics of neoclassical economics agree that economics should be about economic reality and should be demonstrably relevant to it. This will strike the non-economist as obvious. However, it is not obvious in mainstream economic thinking: the neoclassical school of thought is based on the deductive approach. This methodology argues that knowledge is brought about by starting with axioms that are not derived from empirical evidence, to which theoretical assumptions are added (again not empirically backed), and on the basis of which tools of logic (mathematics) are utilized to prove theoretical results. There is an alternative approach. This approach examines reality, identifies important facts and patterns, and then attempts to explain them, using logic, in the form of theories. These theories are then tested and modified as needed, in order to be most consistent with the facts of reality. This methodology is called inductivism."

http://www.palgraveconnect.com/pc/doifinder/view/10.1057/9780230506077

Matt Franko said...

" This methodology argues that knowledge is brought about by starting with axioms that are not derived from empirical evidence, to which theoretical assumptions are added (again not empirically backed), and on the basis of which tools of logic (mathematics) are utilized to prove theoretical results. "

Textbook Darwin 101....

Neil Wilson said...

"economic history based on reliable data is quite limited"

There is little reliable data. What data there is is the output from a 'mark to model' policy paradigm. It describes the movements of a man in a straitjacket. It is utterly useless for showing how things work when the straitjacket is removed.