Lars P. Syll — Mathematics and economics

Many mainstream economists have the idea that because heterodox people — like yours truly — often criticize the application of mathematics in economics, we are critical of math per se.

This is totally unfounded and ridiculous. I do not know how many times I have been asked to answer this straw-man objection to heterodox economics....

There is another issue in the use of math with respect to economics. That is translating what a model says and implies for policy formulation.

For example, do policy recommendations based on a model exceed the the scope of the model? From a practical and historical perspective, this is a big one.

Conventional economists explain that their models did not foresee the global financial crisis because the event was the result of "exogenous shock," which means "beyond the scope of the model." Yet, they continue to use the conventional approach as if it were a universal truth because it a formal model, and, worse, won't listen to "heterodox" views because "the methodological debate is over."

It's true that heterodox economists did not "predict" the global financial crisis with precision as the outcome of a model — "put a number on it." But they did foresee a crisis as highly likely and warned of it developing for reasons that are not included in the models being used by conventional economists — at central banks, for instance, where the most sophisticated macro models are developed.

Alan Greenspan even blew off a warning from the FBI that mortgage fraud was rampant in the US housing market several years before the crash. The chairperson of the Fed is the chief financial regulator as well as overseer of monetary policy. Greenspan, whose ideology was lax regulation, did nothing because he saw nothing to be concerned over in his model. Isolated "froth" he called it. Many still regard him as a wizard anyway.

Philosophers are often caricatured as "ivory tower intellectual" and abstract mathematicians as stumbling over obstacles in their path that go unnoticed because they are eyes are fixed upward.

What about conventional economists?

Lars P. Syll’s Blog
Mathematics and economics
Lars P. Syll | Professor, Malmo University

Timothy Taylor — Some Thoughts About Economic Exposition in Math and Words

Avoiding mathiness and economism.

Conversable Economist
Some Thoughts About Economic Exposition in Math and Words
Timothy Taylor | Managing editor of the Journal of Economic Perspectives, based at Macalester College in St. Paul, Minnesota

Jason Smith — Mathiness in modern monetary theory

I feel a debate coming on.

Information Transfer Economics
Mathiness in modern monetary theory
Jason Smith

Bill Mitchell — Mainstream macroeconomics in a state of ‘intellectual regress’

At the heart of economic policy making, particularly central bank forecasting are so-called Dynamic Stochastic General Equilibrium (DSGE) models of the economy, which are a blight on the world and are the most evolved form of the nonsense that economics students are exposed to in their undergraduate studies. Paul Romer recently published an article on his blog (September 14, 2016) – The Trouble With Macroeconomics – which received a fair amount of attention in the media, given that it represented a rather scathing, and at times, personalised (he ‘names names’) attack on the mainstream of my profession. Paul Romer describes mainstream macroeconomics as being in a state of “intellectual regress” for “three decades” culminating in the latest fad of New Keynesian models where the DSGE framework present a chimera of authority. His attack on mainstream macroeconomics is worth considering and linking with other evidence that the dominant approach in macroeconomics is essentially a fraud.…

Bill Mitchell – billy blog
Mainstream macroeconomics in a state of ‘intellectual regress’
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Lars P. Syll — Steve Keen, Noah Smith and heterodox ‘anti-math’ economics

Responding to the critique of his Bloomberg View post on heterodox economics and its alleged anti-math position, Noah Smith approvingly cites Steve Keen telling us there is

a wing of heterodox economics that is anti-mathematical. Known as “Critical Realism” and centred on the work of Tony Lawson at Cambridge UK, it attributes the failings of economics to the use of mathematics itself…

Although yours truly appreciate much of Steve Keen’s debunking of mainstream economics, on this issue he is, however, just plain wrong! For a more truthful characterization of Tony Lawson’s position, here’s what Axel Leijonhufvud has to say:

Lars P. Syll’s Blog
Steve Keen, Noah Smith and heterodox ‘anti-math’ economics
Lars P. Syll | Professor, Malmo University

Lars P. Syll and Ramanan reply to Noah Smith on the use of math in econ

Noah Smith — like so many other mainstream economists — obviously has the unfounded and ridiculous idea that because heterodox people like yours truly, Hyman Minsky, Steve Keen, or Tony Lawson, often criticize the application of mathematics in mainstream economics, we are critical of math per se.

I don’t know how many times I’ve been asked to answer this straw-man objection to heterodox economics– but here we go again.

Lars P. Syll’s Blog
Noah Smith — confusing mathematical masturbation with intercourse between research and reality
Lars P. Syll | Professor, Malmo University

So it is not that neoclassical economists have great mathematical tools. It’s that by failing to incorporate the framework of flow of funds, they are showing their incompetence in mathematical reasoning.

Math is a tool box filled with various tools fit for different purposes. The art of using tools involves not only knowing how to use each tool properly but also how to choose the right tool for the job.

The Case for Concerted Action
Economics Without Mathematics?
V. Ramanan

Note: Noah Smith is a troll.

Mike Sankowski — Not Everybody Does It And Feynman Integrity

If you haven't been following this recently — and I haven't — here is  a short update on the debate initiated by Paul Romer on "mathiness." 

Romer and Krugman (Saltwater) are winning. The ball is in the Freshwater court.

Monetary Realism
Not Everybody Does It And Feynman Integrity

Mike Sankowski

Jason Smith — Prescott and Lucas aren't Romer's problem

A physicist explains what's wrong with a lot of economics "as science," and it is not just "mathiness."

Information Transfer Economics
Prescott and Lucas aren't Romer's problem
Jason Smith

More on mathiness and economics as science

More on mathiness and economics as science. Fast and furious now.

Information Transfer Economics

The irony of Paul Romer's mathiness

Another mistake from Romer

Jason Smith

Lars P. Syll’s Blog

Paul Romer is ‘busy’ …

Lars P. Syll | Professor, Malmo University

Econospeak
A Veritable Epidemic of Mathiness
Peter Dorman, Professor of Political Economy, The Evergreen State College

Paul Romer doubles down.

Paul Romer
Protecting the Norms of Science in Economics

Lucas on blueprints as physical capital

Update:

Naked Keynesianism
Some Brief Thoughts on Paul Romer and Mathiness
Matias Vernengo | Associate Professor of Economics, Bucknell University

Econospeak
Mathiness, Growth and Increasing Returns
Sandwichman