Thursday, May 21, 2015

Gavin Kennedy — 'Mathiness' In Economics Is A Dead End

Adam Smith expert Gavin Kennedy on Justin Fox's post at Bloomberg on Paul Romer on "mathiness."

Many of us tend to put all the blame on the Chicago School that drove Keynes and the rest of heterodoxy out of the mainstream but it was MIT's Paul Samuelson probably more than anyone that drove economics in the direction of being a "science" and therefore math-based, which led to formalism over realism and absorption with model creation instead of causal explanation (which is what science is actually supposed to be about). 

There's plenty of blame to go around. No need to get bogged down in who is most to blame. 

Adam Smith's Lost Legacy
'Mathiness' In Economics Is A Dead End
Gavin Kennedy


circuit said...

The elegant mathematics that Samuelson et al brought to the discipline is not the problem. Even before the math (i.e., without the math), you could find economists who made no sense at all and who presented policy prescriptions because these were based on unrealistic assumptions about economic phenomena.

The real fault lies in the majority of economists' belief system and the assumptions they make, such as the idea that current income doesn't matter, which has plagued the discipline since Milton Friedman popularized the permanent income hypothesis. This effectively killed Keynesian economics, which paved the way to the nonsensical new classical "revolution", real business cycle economics, and the problematic new keynesian view.

Even with math, Samuelson was much closer to Keynes because he favored the use of assumptions based on realistic behavioral foundations.

NeilW said...

The problem is that economists are really high priests of various religious factions and won't admit it.

Less Scientists than Scientologists.