“Not even wrong” is not praise

Spectacular. My first book was reviewed by one person who read only the first three pages (or rather the review referred only to the first three) and another who gave up half way through and spent most of the review criticising me for holding the view that the book was arguing against. But neither of them was openly deeply confused about the work that they, themselves, have devoted their lives to. The big risk of academic blogging is usually that it will become apparent that you don’t know what you are talking about beyond your area of expertise, not that you reveal that you don’t know what you are talking about it within your area of expertise. Poor chap.

Harry,

My impression is that Stephen Williamson’s area of expertise is The Economics of Stephen Williamson. His usual line of attack on other economists is that they have failed to follow his methodological precepts.

I think my favourite Williamson post is the one linked below, in which he tells us that Paul Krugman is ignorant of a basic principle of international trade. Where he found the principle in question I’ve no idea, though I did ask.

http://newmonetarism.blogspot.com/2010/09/can-nobel-prize-be-revoked.html

Wow.

Science is supposed be based on, you know, data?

What do they teach them at these schools?

Another key ingredient of modern macro is calculus. However, calculus itself has no implications for the real world, and thus is “not even wrong”. Clearly, then, we should reject derivatives, integrals, optimality conditions and all that as unfalsifiable nonsense.

(sarcasm off)

Williamson is saying that DSGE has no implications because there is no such thing as *the* DSGE model. Once you specify preferences, technology and endowments, you get *a* DSGE model, whose assumptions and implications can be criticized. DSGE is simply a framework to construct models, which can range from “fluctuations are optimal” RBC variety to Keynesian-like models with room for government intervention, to models with financial frictions and linkages between finance and real economy. If you are criticizing DSGE in general, does that mean that you prefer instead static, deterministic, partial equilibrium models? I don’t think that would be a progress.

With EMH, I guess the point is that any test of EMH is a joint test of an asset pricing model as well. In that sense, EMH alone is not testable. But that has been known for at least four decades, so it’s not exactly breaking news.

“Market efficiency is simply an assumption of rationality. As such it has no implications. ”

What a very odd thing to say….

Assumptions always have implications.

the heart of the economics profession is what a marxist might say – to propagandize

The task of economics
Is to propagate a bluff:
That the poor have too much money
And the rich have not enough.

ejh that is awesome. Did you write that? I fully intend to steal it at the next opportunity and would like to be able to attribute it correctly.

(Originally here http://twitter.com/#!/ejhchess/status/97565004034871297)

Even among practitioners who think of themselves as left-leaning or technocratic, the entire enterprise of academic economics is rightist propaganda. It suffuses every page of every textbook, shot-through warp and weft. Megan McArdle is Brad DeLong’s daughter, and it’s past time we all admit it.

We’re approaching “someone is wrong on the internet” status here. Commenters wanting to draw conclusions about the “Right’s Strategy” might want to notice that he styles himself a “modern monetarist” making him a believer in something akin to the MMT magic, not any current rightish economist theory.

“Also, unless I’m reading it wrong he is Canadian.”
Blame Canada?

Sebastian, it’s not that such subtleties have escaped my notice, rather that the distinction-without-a-difference factor has overwhelmed my appreciation for the niceties. Honestly, I’m not quite the flaming radical that Landru appears to be, as proof of which I would offer my hope that Prof. Quiggin’s circumspection and ejh’s doggerel may yet engender offspring viable enough to point us to a better future.

geo @ 25

Oy! That Fish! He’s the kind of Fish, it seems to me, that one mafioso might send to another to announce events of (no) great import.

William,

Why are you putting me on the right wing? Like all people who grew up in Canada, I’m a socialist, and have never voted Republican in my life (or expect to).

Steve

Yeah, Sebastian, but even those — your A) — who don’t know which side their bread is buttered on, or aren’t sufficiently orthodox to snag a gig from the usual suspects, are part of the great flux over the nearest historical precipice. Or so Gramsci would tell you.

MarginalRevolution is a high profile economics blog. Calculated Risk is a high profile economics blog. Half Sigma is a high profile economics blog. Hell Megan McCardle has a high profile economics blog. Billyblog is a sort of high profile economics blog. Stephen Williamson: New Monetarist Economics is not a high profile economics blog. I couldn’t find him highly ranked on any of the rankings systems. In fact I couldn’t find him ranked at all on any of the ranking systems (though the only one I would expect to track someone so small is TruthLaidBear which is currently having some sort of database error).

Actually I think John Quiggin really ought to embrace the portrayal of him as the Crocodile Dundee of the economics profession. Perhaps wear a floppy hat with corks dangling from it.

SW @ 30

To be fair, 1) I’m not an economist, and 2) all I’ve read of your work at this point is the blog post in question here. That said, I think I have a right to wonder what sort of socialist could have written what you wrote in that post. Unfortunately, I’m off to another town for the day, and can’t take the time to make the details of my wondering public at the moment, but since I think you deserve to hear them, I’ll do my best to provide them later in the day.

Really? I find myself following links to his blog every couple of weeks or so. Though I’ve never heard of Half Sigma until this second, so maybe my view is skewed.

Has anyone else had the experience of trying to explain mainstream econ to non-econ colleagues, and they just can’t believe it’s so flimsy? This might be useful.

I have a vague memory, from one of these bloggy things over the last year, of a StephenWilliamson-like person saying there’s economic theory, and then there are many possible real worlds, and if the one we live in doesn’t quite measure up to the theory, so much the worse for it. Anyone else remember this?

John Quiggin: “That’s right, Williamson not only defends the EMH on the basis that it’s not even wrong, but follows up by making the same claim about the whole of modern macro.”

This makes perfect sense if you understand that right-wing economics is fundamentally not a science, but a religion. Williamson is complaining that you’re not respecting the non-overlapping magisteria principle.

“On some level, it seems obvious that economic growth benefits all residents of a country.”
Except it doesn’t. Just ask most Americans, who’ve barely seen zero-growth in real wages, and that’s been obliterated by debt.

On some level, it seems obvious that the world is flat.
Except it’s not.

Hayek forced Popper to concede that his “falsifiability” criterion of science had been falsified. See Popper’s autobiography and Hayek’s papers “The Theory of Complex Phenomena” and “Degrees of Explanation”.

One can offer alternative, contingent causal mechanisms to explain complex phenomena which are not “falsifiable” in any useful sense.

The opposite of “vacuously tautological” is NOT “falsifiable”.

Re the EMH”: Williamson is demonstrably incompetent when it comes to many literatures in economic science, including the contemporary history of economic thought,

An economist who is only an economist is an incompetent economist — Stephen Williamson proves this in spades.

Williamson has no understanding whatsoever of how to provide a causal explanations, or how it might be possible use a tautology to help with understanding causal phenomena in the social realm.

Williamson is the poster boy of the complete failure of contemporary economics to produce a non-pathological explanatory strategy. A tautological equilibrium math construct cannot provide a contingent causal explanation and doesn’t provide a contingent causal mechanism. See Hayek 1937, 1941, 1945, 1946, 1955, 1962, etc., etc.

At one point in Zombie Economics, I tried a Popperian (or maybe Paulian) smackdown, saying that some defenders of EMH used arguments that effectively rendered it unfalsifiable. I thought that was a bad thing, but apparently at least one reviewer disagrees. Following my stoush with Murdoch, a commenter pointed me to this piece by Stephen Williamson of Washington University at St Louis, who has apparently been asked to review the book for the Journal of Economic Literature. Williamson claims that I am badly confused about the EMH, and that

What!?!?!? You mean a theory really does have to be falsifiable? That it really has to make testable (and hopefully useful) predictions?

Quelle surprise. As a sorting mechanism, it would be really nice if people would explicitly say up front whether or not they endorse this idea. I get the impression that for a lot of folks this feature of the scientific method is very useful if the facts and theorizing support their side . . . but can be conveniently ignored if not.

That’s right, Williamson not only defends the EMH on the basis that it’s not even wrong, but follows up by making the same claim about the whole of modern macro. Those are, quite literally, his only criticisms of these chapters. His commenters (none of whom seem particularly favorably inclined towards me) try to suggest that isn’t the most effective line of attack, but he comprehensively misses the point.

About four election cycles back we had a candidate running on the platform that local developers didn’t get enough input into city planning policy, and that if she was elected to the city council, she would try to change that.

And you know, she got a lot of letters in the local rag praising her for being honest and up front. Even from known lefty characters. Of course, on election day, she lost to her opponent by an embarrassing fifty plus percentage points.

The point here being that this is the sort of thing which is very much a 21st century sort of debate.

He also wrote a book. A text book. On macroeconomics.
Amazon rates it 3.2 starts with six 5s and six 1s.

Unsympathetic – Wash U is an outstanding institution in many respects. I have no idea what its standing is in Physics (nor in Econ) but as an undergraduate institution, its on par with the Ivies. In biomedical research, its one of the leading institutions in the US.

Okay, Professor Williamson, I’m back, and as promised, here are the reasons for my (mis?)taking your criticism of Zombie Economics for a right-wing polemic:

1. You open with a long, folksy name-dropping preamble, David Brooks-style, the point of which seems to be something like: He may be the Wizard of Oz, but I never heard of him.

2. Then you double-down with that Australian farm team… crack, which sounds very like the sort of snottiness that Henry Luce once learned from The Economist, and practiced thereafter with precisely the sort of patrician verve that has distinguished the economic arguments of the Right in this country for more decades than I’ve been alive.

3. Once you arrive at the substance of your criticism, your complaint seems to be that Professor Quiggin has attacked mathematical models which are, after all, simple value-free analytical tools. What you neglect to mention is that his complaint is actually about the uses to which those tools have been put by people who pretend to have no axes of their own to grind other than the maximum efficiency of the capital placed in their charge. Recent events have shown, however, that this pretense is at best a disingenuous abdication of responsibility for some pretty awful consequences, and at worst a self-serving lie.

4. You’d rather ply your trade in the U.S. than in Malawi. So would many who will never get the chance. You’ve never heard of imperialism, I take it.

5. This is priceless:

If I wanted to, I could take this evidence as supporting the hypothesis that government is really bad – so bad that it can even screw up privatization.

So could Newt Gingrich, Arthur Laffer, Mitch McConnell, etc. I doubt anyone to the Left of Dwight Eisenhower would — or could — take it that way.

6. And finally, this:

It’s unfortunate that some of the people who write so much about economics for the general public spend so little time reading about what economists actually do, and attempting to understand it.

Indeed it is. Fortunately for us, Professor Quiggin isn’t one of them.

One thing about Williamson and Levine ( and also Fama) is that they were trained as mathematicians. Consequently they seem to be rather clueless about empiricism, and seem to believe that one can understand reality by pure thought. Another quirk seems to be the confusing of tautologies with causal explanations. Fama, for example, has spent almost his entire career talking in tautologies, and it was no surprise when he made an ass of himself by claiming to deduce implications for fiscal policy using a NIPA accounting identity.

@ivansml:
” If you are criticizing DSGE in general, does that mean that you prefer instead static, deterministic, partial equilibrium models? I don’t think that would be a progress.”

Eh? Most certainly not.
See this piece by James Morley of Macroadvisers. The criticism is both general and specific – he considers Smets-Wouters .

On the calculus analogy: Do you even understand the difference between mathematics and science ( or social science). Are you defending macro by claiming it is a branch of mathematics?

@61

That was pretty helpful. But isn’t the problem here that Williamson’s critique isn’t particularly clear? Going from the comment “Market efficiency is simply an assumption of rationality. As such it has no implications. If it has no implications, it can’t be wrong” to the elucidation you offered is quite difficult(at least I didn’t find the way before you pointed to it); there are many different theories about scientific method, how should I know that Williamson prefer one where “theory” is a thing without implication? I am even inclined to think that someone saying that probably does not mean the same thing that I mean with the word “implication” (since everything implicates itself). Perhaps he means that it can’t be shown to be wrong because it doesn’t implicate anything else (or something which is observable to be true or false), not that the theory can’t be false because it has no implications. But why should I as a reader have to do all this boring interpretive work when I could be playing EU3 instead?

This is the problem with Williamson’s critique: it is to short to be a critique. Perhaps that explains why the responses it has gotten on this and other blogs have been derisive. Vague short statements do not encourage charitable interpretations, neither do polemical texts on the internet.

Williamson seems unable to grasp that the criticism being made does actually apply to the whole approach.

Market Efficiency, Rational choice etc. are useful abstractions that can in certain circumstances provide models that correlate well with reality I don’t think anyone seriously doubts that fact.

What rational people do however object to is the claim that Market Efficiency and Rational Choice etc are inviolate principles of the universe. Markets are not theoretically efficient and humans are not rational choice actors or even close to being so.

In fact decades of psychological research in my specialty (computer security) demonstrates that humans are exceptionally bad at evaluating risks and taking appropriate measures. Thus $80 billion spent last year in the US attempting to prevent terrorist attack (average number of deaths per year since 9/11, in the hundreds) when a fraction of that money spent on preventing road deaths, reducing obesity, medical research or pretty much anything else would have vastly better returns.

Rat Choice is a demonstrably false and useless model of human behavior when considering how people evaluate and accept risk. However it works pretty well in other parts of the field, for example estimating likely prospects for deployment since in those cases the defects of the model tend to cancel each other out and in any case the models themselves are pretty rough.

So what is being attacked here is not the use of a particular modeling tool. What is being attacked is the religious devotion to an idea as a perfect and immutable law of economics the truth of which is only disputed by idiots and fools of no reputation or credibility.

Making an idea an axiom does not make it beyond dispute. If the axiom falls then so do all the conclusions that are drawn from it. The laws of mechanics allow me to predict the motion of a ‘solid’ object moving in an Newtonian universe but we know for a fact that what we perceive as ‘solid’ objects are actually anything but, they are associations of quantum particles moving in a universe that is quite definitely not Newtonian.

People do the same thing equating Pareto optimal with the desired outcome. A comforting approach for people whose objective is to perpetuate the status quo, to be sure.

@PHB
You get to the heart of the matter.
The fundamental problem with Williamson (and Levine, and Lucas, and Prescott, and Sargent) is that they believe that Rational Choice Theory is sufficient to explain all human behaviour. And therefore, macro should only be studied in a rational choice framework. No other framework is allowed. And this is believed based not on empirical evidence, but pure faith.

@Bruce Wilder,
While you are undoubtedly correct in your implication ( if I read you correctly) that DSGE is a framework and therefore cannot by itself have any implications for the real world, the problem is the convergence on a particular approach as the only valid approach.

Here is Ricardo Caballero (MIT):
If we were to stop there, and simply use these stylized structures as just one more tool to understand a piece of the complex problem, and to explore some potentially perverse general equilibrium effect which could affect the insights isolated in the periphery, then I would be fine with it. My problems start when these structures are given life on their own, and researchers choose to “take the model seriously” (a statement that signals the time to leave a seminar, for it is always followed by a sequence of naive and surreal claims).

The quantitative implications of this core approach, which are built on supposedly “micro-founded” calibrations of key parameters, are definitely on the surreal side. Take for example the preferred “microfoundation” of the supply of capital in the workhorse models of the core approach. A key parameter to calibrate in these models is the intertemporal substitution elasticity of a representative agent, which is to be estimated from micro-data. A whole literature develops around this estimation, which narrows the parameter to certain values, which are then to be used and honored by anyone wanting to say something about “modern” macroeconomics. This parameter may be a reasonable estimate for an individual agent facing a specific micro decision, but what does it have to do with the aggregate? What happened with the role of Chinese bureaucrats, Gulf autocrats, and the like, in the supply of capital? A typical answer is not to worry about it, because this is all “as if.” But then, why do we call this strategy microfoundations rather than reduced-form?

My point is that by some strange herding process the core of macroeconomics seems to transform things that may have been useful modeling short-cuts into a part of a new and artificial “reality,” and now suddenly everyone uses the same language, which in the next iteration gets confused with, and eventually replaces, reality. Along the way, this process of make-believe substitution raises our presumption of knowledge about the workings of a complex economy, and increases the risks of a “pretense of knowledge” about which Hayek warned us.

http://pubs.aeaweb.org/doi/pdf/10.1257/jep.24.4.85

If Williamson had half the smarts he thinks he has, he wouldn’t be at the Washington University at St Louis.

Hyman Minsky spent most of his career there. And the very smart sorta-Post Keynesian Steve Fazzari is, or was until recently, chair of the economics department. So their record on non-zombie economics looks pretty good. I guess the place has changed tho – one of those efforts to move up the rankings by spending lots of money to recruit second-tier people from top tier schools.

Re DSGE, it’s clear that these models are not useful for answering any interesting questions about actual economies. Nor, despite the name, do they actually incorporate any kind of general equilibrium. Cosma Shalizi has an excellent brief overview, with links to longer critiques, here. I’m not sure the uselessness of DSGE models is really captured by saying they’re unfalsifiable. On the other hand, I haven’t read the relevant chapter of John Q.’s book; he probably has more to say about them than that.

And what’s the alternative? Structuralist models that describe relationships between aggregates directly and don’t waste time with fake microfoundations.

And they are fake. Making consumption, say, the result of intertemporal optimizing by a single representative agent, as DSGE-type models do, gets you no closer to the microstructure of the economy than just saying aggregate consumption is a function of aggregate income and leaving it at that.

The existence of rival explanatory systems with incommensurable entities and conceptions was shown by Kuhn to refute Popper’s deductivist paradigm of “science” married to his “falsifiability” criterion of “science”.

But Hayek had shown the same earlier, using various examples of the explanation of complex phenomena, where the achievement is the explanation of complex patterns, and where no particular predictions at particular points in space and time are made.

Popper conceded Hayek’s counter-example against the “falsifiability” criterion of “science” — there were explanatory sciences like Darwinian biology which provided a contingent causal mechanism with tremendous explanatory power, but without the capacity or aim to provide particular “falsifiable” predictions of particular events at particular points in space and time.

Any who demands “falsifypiability” or “testability” as a criterion of “science” or explanatory power is a crackpot. He isn’t a scientist or any ally of science. He’s a fraud attempting to enforced bad & failed philosophy.

Unfortunately, this is what many economists are — they are enforcers of failed & incompetent philosophy and they are not scientists.

I note that Williamson first learned his fraudulent / fake image of “science” directly from Lipsey’s textbook of the 1960s which claimed that “positive science” was defined according to a “testability” criterion, a fake picture of “science” which woukd rule out Darwin, and which doesn’t pass the smell test in the wake of what Kuhn explains about rival explanatory systems.

Learning — conceiving thing never before conceived and understanding things never before understood — takes one outside of the stipulated givens of any formalism or math equation or deductive system.

That ultimately, is the point Kuhn made in his crushing of Popper, and Wittgenstein made in his crushing of Russell, Carnap, Plato & Frege.

And it is the point Hayek made against mathematical equilibrium economics in his landmark 1945 paper “The Use of Knowledge in Society” and associated papers and books.

Entrepreneurial learning in the context of changing local conditions and price relations is the central causal explanatory mechansim in economics — and it cannot be capture in an stipulated math equation or stipulated “given” historical empirical data set.

Contra Quiggin, we aren’t interested in individual “behavior” — which can be explained by a stipulated or “given” set of belief & desire states and a bit of stipulated math and logic.

We are interested in learners — going outside of any stipulated or “given” set of beliefs and desires connected by math and logic.

@ejh, #14: A born classic! And as they say: It’s funny because it’s true.

#74:

there were explanatory sciences like Darwinian biology which provided a contingent causal mechanism with tremendous explanatory power, but without the capacity or aim to provide particular “falsifiable” predictions of particular events at particular points in space and time

On the whole, Darwinian biology indeed doesn’t have the aim of providing falsifiable predictions (at least AFAICT), but it itself is falsifiable.

@John Quiggin:
Not before, but now I’ve found a copy and skimmed quickly through that chapter. It reminded me of Krugman newspaper writings – well written with nice and captivating story, yet bit light on actual arguments and specifics (but maybe that’s necessary in popular writing), and I didn’t find anything in particular that would change my opinion. Do you have something specific from that chapter in mind?

@Herman
So if macroeconomists use inappropriate versions of GE, then maybe the solution is to introduce appropriate version of GE. If you want models with multiple goods and sectors, or heterogeneous consumers, or incomplete markets, or whatever, I’m sure you could find at least some recent research in that direction. You know, macroeconomists didn’t spend last three decades worshipping Kydland & Prescott (1982).

I saw papers that you linked to – Morley provides some relevant, but specific criticisms. Caballero points to some interesting research, but his main point is basically “There are DSGE models which ignore X and there are other models which explain X, but no we cannot combine them because that wouldn’t work. Why? Because I and Hayek say so.” Not very helpful in my opinion.

ScentOfVioletswrote,

Greg’s criticisms sound like much recycled and very stale arguments from going on a century ago.

I’d be interested in hearing more. I don’t know enough details to judge Greg’s posts on their own, though of course you’re right that Darwinism is falsifiable per se.

Aside: on those infrequent occasions I come to this blog, I enjoy your comments.

Sebastian H @35: You’re saying that Half Sigma — written by the man behind Libertarian Girl — is a high profile economics blog? Good gravy. With all the nasty things I’ve said about [some] economists, I wouldn’t want their discipline to be represented by someone like that.

The Popperian idea of falsifiability is unjustly popular in outside of academic philosophy.

If by “unjustly popular in outside of academic philosophy” you mean “that’s how scientist’s do things”, well, yes, you’re right.

Looking more closely at this it becomes obvious that this isn’t going to cut it, for a number of different reasons. The most famous being the so called Quine-Duhem thesis that it is impossible to conclusively falsify any theory. But without conclusive falsification there isn’t much left of the Popperian falsification concept. Therefor there will be no slam-dunk arguments against theories by pointing out that they aren’t falsifiable, because as it turns out no theory is.

Something besides your statement that theories aren’t falsifiable would be nice. Here’s one: I only see one cat and two dogs in the room. I theorize that the other animals are on the couch in the living room. Checking the living room . . . nope. No animals there. Theory falsified.

I suppose you could say this doesn’t prove anything; how do I know I’m not really suspended in a vat of chemicals with all my perceptions “really” being a set of signals being piped directly into my brain by some fancy wiring. And on that level I’d agree with you.

And then – just like the billions of other people in this world – I’d continue to behave as if my senses and observations do in some sense accurately report what’s really going on[1]. Because that’s not the conversation we’re having. As I’ve already noted, the overwhelming majority of scientists use the falsification criterion.

[1]And does nothing more than relabel sensory experiences as being just that and nothing more. A sterile exercise.

And they are fake. Making consumption, say, the result of intertemporal optimizing by a single representative agent, as DSGE-type models do, gets you no closer to the microstructure of the economy than just saying aggregate consumption is a function of aggregate income and leaving it at that.

People talk about economists having physics envy. Another way of looking at it is a comparison of economists with all those “futurists” running around rapping about how the Singularity will happen sometime in the next fifty/twenty/ten years. What they’re really saying is that it’s going to happen before they’re dead. Iow, it’s not just their faith that you can mathematize economics (heck, I share that belief to some degree.) It’s their faith that it’s going to happen in their own lifetime.

But you know, the modern physics and chemistry that we have couldn’t have happened before all those pre-mathematical facts were gathered. Take for example, oh, the caloric theory of heat. As you may recall from high school, the caloric theory said that heat was some sort of (self-repelling) fluid. As it turns out, of course, the theory was wildly wrong. But that didn’t mean that the caloric theory wasn’t useful; quite the contrary. It gave us the Carnot cycle heat engine, which most people think is a pretty big thing ;-)

Nor was it hard to falsify the theory in the end. Note, however, that even though it was falsified, we still didn’t have a good, quantifiable, mathematical theory of heat until much later.

Anyway, my analogy for the state of economics as a science in the early 21st century. Come to that, it Keynes believed something very similar fifty and more years ago. Oh, and so did von Neumann. Hmmm . . . maybe these guys were on to something.

ScentOfViolets wrote, People talk about economists having physics envy.

I thought the physicists looked at economics and said “why aren’t you closer to your data and emphasizing theory so much?” I.e., what economists really have is math envy.

I thought the physicists looked at economics and said “why aren’t you closer to your data and emphasizing theory so much?” I.e., what economists really have is math envy.

Sounds right to me.

I’d like to thanks Stephen Williamson for his review. Reading it has persuaded me that the Zombies are still alive, and I need to contribute to the effort against them by buying your book.

@BertCT(46)

I think the idea is that all other things being equal, growth always helps everyone even if the immediate benefits go to the rich. The problem is that the idealized case is used to justify trickle-down policies which are not ideal. All things never seem to get around to being equal.

The last 20 years in the US didn’t just see money materializing in the pockets of the rich. The money got there because labor costs declined due to free trade and technological advances. Those who sell the more common varieties of labor in the US have lost out, and whatever might trickle down is not making up for it.

The trickle-down proponents always leave out the steps where things are taken from the poor.

Liberal,
I think it is physics envy. Statistical mechanics is a statistical extrapolation of the behaviour of large accumulations of matter based on the quantum mechanical properties of individual particles. Without knowing exactly what any specific particle will do, you can make remarkably accurate predictions about what the whole system will do.

That’s an economists wet dream – if you know what people are like in general, then you can know what the economy will do despite not knowing what any specific person is doing. Unfortunately, economists extrapolate from “people act rationally in their own self interest”. That’s like physicists extrapolating from “electrons and protons are equal in mass and opposite in charge”. GIGO.

two canadians arguing:

1c: That’s it for you, buddy!
2c: I’m not your buddy, guy!
1c: I’m not your guy, pal!
2c: I’m not your pal, buddy!

repeat endlessly….

The deductive ideas ala Carnap & Popper is dead as a competent picture of what science does — it’s more archaic than an ox wagon as a mode transportation.

Greg Ransom @106,

But it’s easy to conceive of observations that would show the statement “natural selection is the only possible force behind the evolution of complex design” false. All you’ve done in 106 and 107 is appeal to authority and make claims.

…adding, that I agree with PHB in 108 that scientists don’t operate in a manner which emphasizes falsifiability. Certainly evolutionary biologists don’t, AFAICT. But that doesn’t mean evolution and natural selection aren’t falsifiable.

liberal @ 110

Irreverent, but not, I think, irrelevant: If God were to whisper in Michele Bachmann’s ear the location of the divine blueprint for archaeopterix, and she in turn were to hold it aloft for all to see on the floor of the House, would Popper then be exonerated, and the rest of us revealed to be the little people that we are? All dispute ended, et nunc, et semper, et in saecula saeculorum? Is that the story here?

No, scientists do not follow Popper’s principles, not even close. Many believe that they do however and more importantly, scientists aspire to that level of rigor.

Really? So when Einstein made his prediction about how much the Sun would bend starlight, GR wouldn’t have been falsified if it had turned out to be wrong?

Scientists do not in fact develop falsifiable theories and then attempt to test them.

!?!?!?!?! Not only wrong, but weirdly wrong.

What happens in most cases is that the theory is fitted to the facts. It is pretty rare that a completely clean test of a theory is possible. What distinguishes real science from pseudoscience is that (1) real scientists have theories that attempt to make predictions and (2) real scientists are willing to allow others to question their assumptions.

This seems to be something of a muddle as well. I’m guessing that what you’re trying to say is that scientists do other stuff besides come up with testable hypothesis. Well, yeah, that’s certainly true. But it’s all part of the scientific method.

Or are you going to say now that scientists don’t really follow the scientific method either? Let’s get a capsule summary so we can all agree on what we’re talking about; from the wiki :

Scientific method refers to a body of techniques for investigating phenomena, acquiring new knowledge, or correcting and integrating previous knowledge.[1] To be termed scientific, a method of inquiry must be based on gathering empirical and measurable evidence subject to specific principles of reasoning.[2] The Oxford English Dictionary says that scientific method is: “a method of procedure that has characterized natural science since the 17th century, consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses.”[3]

Although procedures vary from one field of inquiry to another, identifiable features distinguish scientific inquiry from other methods of obtaining knowledge. Scientific researchers propose hypotheses as explanations of phenomena, and design experimental studies to test these hypotheses via predictions which can be derived from them. These steps must be repeatable, to guard against mistake or confusion in any particular experimenter. Theories that encompass wider domains of inquiry may bind many independently derived hypotheses together in a coherent, supportive structure. Theories, in turn, may help form new hypotheses or place groups of hypotheses into context.

Seems pretty straightforward to me. If you want to quibble and say that hypotheses are not theories, fine; I’ll give you that bone.

Actually it’s rather understandable why it’s popular.

Very much so. Operationalism and logical positivism won the day, way back when. That victory was to my mind immortalized with Einstein’s response to a question about what time “really” was: Time is what clocks measure.

@Lemuel Pitkin #93:
Within your example, if I was arguing against Bible-founded models in general, then I would have to find arguments that would focus on features that all such models have in common. Problematic assumptions in specific models, or their poor forecasting performance, or their misuse in political debate is not enough for such a general critique (call it the problem of induction if you want). Clearly I would have to argue that the framework itself is flawed and that building economic theory on quotations from old religious texts is not a good approach. When you are criticizing DSGE models in general, I expect the same level of generality, but so far I have seen no such thing. But anyway this whole debate is somewhat silly – what is important about a particular model is its assumptions and implications, not the acronym under which it is labeled.

Ivansml, it sounds like you recently spent some years studying macroeconomics in a program that emphasizes DSGE approaches. I’m sorry you wasted your time.

In fact I still am “wasting my time”. Whether it is really waste, I will be able to say in a couple of years. But what I do know so far is that micro-founded models make more sense to me than all IS/LM/AS/AD diagrams from undergraduate courses.

@PHB #109:

Herman summarizes my argument better than I did: We are not arguing against the use of rat choice, EMH or whatever as a tool, we are arguing against the notion that they provide a complete, perfect and absolute model that is sufficient to analyze every situation.

And who thinks that they provide a complete, perfect and absolute model? Not any economist I know. All economic models are at best a crude approximation of reality, and any good economist is aware of that. If some get carried away and misrepresent economic theory for political goals, by all means they should be called on it. But that doesn’t allow you to proclaim whole subfields as pseudo-science and “cult” based on your straw-man caricatures.

@Herman #119:

Again, my main point is about methodological pluralism. People should be allowed to work on many different approaches – old fashioned ‘mechanical’ models, agent-based models, various forms of VARs, even partial- equilibrium models. Premature convergence to a particular methodology without overwhelming empirical justification only discredits the practitioners and the field.

Fair enough. I’m not saying that DSGE is the only way to do research in macroeconomics (and if some people do, then yeah, they should loosen up a bit). On the other hand, it might be useful to have a benchmark providing some “common language”, and right now that benchmark seems to be micro-founded models.

what I do know so far is that micro-founded models make more sense to me than all IS/LM/AS/AD diagrams from undergraduate courses.

And what I know is that the IS/LM and AS/AD models help us understand the behavior of actual economies.

I think it’s quite telling that you defend DSGE here on the grounds that it “makes sense”. You don’t write something like, these models clarify why monetary policy has become less effective, or the conditions under which the balance of payments shocks lead to large falls in output, or how much oil prices have contributed to recent changes in output, or anything like that. Because DSGE models aren’t helpful in answering those kinds of questions, and everyone knows it.

From Digby – A Course in Miracles. Fun stuff.

One has to wonder about the long-term effects that the many hours spent standing in front of the mirror practicing his/her game has upon the principled souls committed to winning new supporters for candidate X. Explains, in part, the quasi-religious faith some still place in lawyers.

@ivansml

Of course no economist is going to actually admit to a pseudo-scientific approach. But that does not mean that approach is not common in the field. What people do and what they think they do is often two different things.

Its like the people who will tell that ‘of course’ nobody in the Bush administration believed torture is justified – If it is justified then it can’t be called torture.

In this case we have this Williamson who (1) attempts a smackdown of Quiggin by claiming to outrank him on credentials and then (2) in the next breath is belittling Krugman who happens to have at least one more Nobel prize than Williamson has or is ever likely to receive.

On what planet is that remotely credible behavior. I note that Krugman has delivered a smackdown of his own on his blog pointing out that (1) Quiggin is rather better known in the field than Williamson and (2) this mode of argument is stupid in any case.

This is really bizarre cult like behavior. It may be extreme but this mode of discourse has become quite common in the field and worse has bled into the public debate. Now the K-street whores who peddle this nonsense can be dismissed as ‘fake economists’ but there is also the recently uncovered string of Koch brothers professors peddling fake economics in an even more insidious fashion.

@Scent

Had Einstein been able to test his predictions the first time round the theory would have fallen as he only had special relativity. But his starting point was not to create a falsifiable theory, his starting point was to explain an existing set of experimental results that could not be explained and to ‘save the appearances’.

It is possible to show that scientific communities apply a vaguely Popperian approach: Experimentalists try to identify falsifiable elements of theories and test them. Theories that cannot be tested are not very interesting to experimentalists. But individual scientists do not apply Popper as a scientific method.

In short, real scientists don’t need to ask themselves about scientific method or worry about whether they are applying it. The question of whether Physics or Chemistry are ‘science’ does not need to be asked. The question only arises when dealing with a pseudo-science.

By the way, I’m not a naive Popperian (Lakatos seems much more sophisticated to me, and I have a fair bit of time for Kuhn). But when a supposed scientific theory has no testable implications, it is time to call old Karl P out for the smackdown.

An excellent point. Very few people stop at Popper. But it’s just these sorts of discussions that pop up with such distressing and increasing frequency that justifies hauling KP out and employing him as a crucifix.

So long as I’ve broken down and am commenting: Popper’s ideas about falsification are inspiring, but if you take them seriously they run into all sorts of problems. For instance, no non-degenerate statistical hypothesis can ever be falsified in Popper’s sense. When I say that the half-life of U-238 is 4.5 billion years, what I really mean is that each nucleus of U-238 decays according to an independent Poisson process, with a 50% probability of decaying after 4.5 billion years. According to Popper’s definition of falsification, this is not falsified, in Popper’s sense, if half of a one ton sample of U-238 has decayed in one day. Indeed, no finite-duration history of decays can falsify any hypothesis about half-lives. I submit that a philosophy of science which has this sort of problem is simply unable to handle modern science, where “modern” begins around 1860, with Darwin and Maxwell. There are more sophisticated falsificationist accounts, to which I am highly sympathetic, but the fact is that lots of exemplary science does not meet Popper’s standards of falsifiability.

SoV, I think you are on a week’s break. Not objecting to the content, but you are flooding threads again.

Ah, sorry, I thought that was only on the “Henry” threads. In any event: if eight different people respond directly to what I write, and in a way that invites a reply, how would you suggest I handle this in the future?

One last point: Cosma, you could just as well say the same sort of thing about the frequentist approach to statistics. A coin comes up heads twenty times in a row? Forty? Eighty? You can say with some justification that this doesn’t “prove” that the coin isn’t fair. But most people are going to say – based on insufficient evidence – that it isn’t. Iow, there is a distinction to be made between the philosophy of science and the way science is actually done.

Before Hayek and Kuhn, Einstein said that physical theories are the free creation of the human mind, constrained by the facts. (He may have said “scientific theories” and if not, he probably would have agreed with that extension as the reason is the same.)

@ Scent_of_Violets #116: When Einstein’s prediction about the degree of bending of sunlight was tested by observations during the solar eclipse of 1919, the measured numbers did not agree with his predictions exactly. They agreed with the Newtonian predictions much less. This was and is called the confirmation of general relativity, but the decision to call it confirmation was not based on exact agreement. (More accurate later measurements indicate that Einstein was indeed right but they were not available in 1919.)

NASA teachers’ guide: “It’s interesting to note that there is some question as to whether or not the equipment and results of the 1919 eclipse expeditions really had the sensitivity to detect the starlight deflections that Eddington claimed.” Also, the observing conditions were not great. I think the weight of opinion is that the numbers concluded from the observations were valid, but not very precise. See A. Pais, “Subtle is the Lord …” (a great book), where the eclipse observations are discussed very carefully.

In view of this (and other considerations) it is hard to see exactly what Popper’s falsifiability means in practice. Being explicit: Observed numbers rarely (if ever) match predicted numbers exactly; how much deviation is required before a theory is “falsified”? Turning it around, how much deviation is allowed when a theory is “confirmed”? Neither can be zero.

In my (unoriginal) view the purpose of a scientific theory is to provide explanation. That doesn’t mean any valid explanation is scientific. It also doesn’t mean there is no hypothesis testing. It does mean that testing predictions is not the only criterion for evaluating a theory.

So I disagree mildly with Quiggin @ 125; explanatory power doesn’t necessarily mean testable implications. As Einstein said, there are many possible theories that will survive the tests; we choose those that make better sense. And I agree with PHB @ 129’s first paragraph: Einstein was not aiming for testability, he was aiming for a better (in this case, more comprehensive and unified) explanation than existing theories gave, and in particular to overcome the inconsistency between the speed of light limitation (special relativity) and Newtonian action at a distance. (Analogously, special relatively aimed to overcome the contradiction between the finite speed of light in Maxwell’s theory and the infinite speed of action at a distance in Newton’s theory. It gave only a partial answer; hence general relativity.)

Last word: Lakatos’ book is delightful. It’s also controversial. I don’t know why; maybe someone else does?

PHB @139: For my sins, I have read Popper on statistical hypotheses and their evaluation, and on probability. I admire him greatly in general, and think the world would be a much better place if everyone would just sit down and read The Open Society and Its Enemies already, but on these matters he was useless. His escape hatch for rejecting statistical hypotheses is to allow us to make a “risky decision” to regard them as falsified by evidence which they predict to be very improbable, though possible. But if “risky decisions” are the standard for falsifiability, what, pray, is not falsifiable? Even someone like Braithwaite (Scientific Explanation, 1953) was much more insightful; it is no accident that Braithwaite, unlike Popper, actually paid attention to statisticians like Neyman.

People tend to miss the fact that it is exceptionally rare for real science to meet that standard.

But there’s a reason for this. Science is a very idealistic enterprise and tends to attract idealists (not in the philosophical sense, but in the common language use of the term “idealist”). But not only that, science as a career requires an enormous amount of preparatory effort and sacrifice, and the effort and sacrifice continue. It’s an underpaid and under-respected profession in our culture.

Pretty much wherever there’s a profession that requires great sacrifice against long-odds of success you have a highly romantic, mythologized view of the profession with associated deeply internalized self-images of its practitioners. You see this quite obviously with medical doctors. But also with creative artists and even politicians. Certainly police officers and firefighters. The military.

There’s a huge emotional investment in this romanticized self-image. It’s part of why someone does this sort of thing and, more important, it’s part of why they continue to do these sorts of things in the face of professional adversity.

We teach children a highly romantic and idealized view of what science is and how it works and the people that go on to become scientists internalize this view.

No one here who has been critical of Popperian falsification has, for example, asserted any sort of strong relativist philosophical position about the nature of reality and the associated implications for science. But from some of the reactions, you’d think they had. From the reactions, you’d think that in pointing out that falsification isn’t actually as useful a standard as commonly thought and that, in practice, falsification playing a central role is the exception and not the rule, someone had claimed that science was a sham and there was no distinction possible between good and bad scientific theories and practice. But of course no one has said anything of the sort. The funny thing is that science succeeds just fine in its positivistic enterprise even when, perhaps especially because, it doesn’t actually work the way that many scientists think it works. If every scientist had to strictly follow the scientific method; a lot less science would get done. Philosophers of science and science studies researchers who challenge these naive notions about science aren’t, in general, criticizing science as an enterprise. They’re criticizing a misunderstanding about science because, like scientists, they’re interested in how things really are, how things really work, rather than making or defending normative assertions about how science must work because they specifically have some emotional investment that it be a certain way.

I find the claim that scientists don’t know how science works bizarre. Maybe they have a Whig view of history that predates their careers, but given that they have to succeed in a competitive environment, I doubt people who are full of idealistic illusions make it to tenure.

If you take Popper’s ideas too faithfully, then of course you end up with something that doesn’t match the reality too well (particularly for probabilistic events, as Cosma points out). And maybe that’s the standard in philosophy — if your ideas can be misapplied by a hyper-exact robot then they are wrong. But falsificationism has clarified to scientists what it is that they are in the business of doing, and that is ultimately Popper’s contribution.

People are missing here why the DSGE or more specifically the rational expectations revolution took off. Keynesianism had failed, so there was a need for a policy effectiveness thesis. Quiggin does a good job showing how the thesis evolved from Friedman to Muth to Lucas and Sargent. But this was not a purely intellectual development of ideas. The ideas followed practical failure; freshwater hegemony resulted from the disarray that Keynesians suffered as a result of the fact of policy effectiveness. Eventually the failure of policy to remedy unemployment at a cost tolerable to the prevailing forces within society resulted in the naturalization of unemployment, Reagan kicking off his presidential campaign in Philadelphia Mississippi, and the reversal of the civil rights movement. The radicalized gaps in wealth and employment have again widened in this crisis.

Eventually the failure of policy to remedy unemployment at a cost tolerable to the prevailing forces within society resulted in the naturalization of unemployment, Reagan kicking off his presidential campaign in Philadelphia Mississippi, and the reversal of the civil rights movement.

Which is probably why, while Krugman and DeLong are in the business of resurrecting Keynesian insights, if not Keynes himself, a pitiful few of us are looking again at Marx. It may or may not be true that there’s currently no political leverage available for the redress of economic injustice broadly considered, but one thing does now seem to be true that hardly anyone in the developed world believed to be true in 1960 — technocracy is just not worthy of our trust. And never mind what flavor is currently being offered. It’s not the taste we should be worried about, it’s the nutritional value.

#150 — the inability to find a powerful-enough constituency for the appropriate remedies is a huge problem then and now. It’s certainly why I find myself a lot less sympathetic to self-proclaimed center-left technocrats than I once was.

That’s simply a different topic than the insights into macroeconomic distress that Keynes provided, nor the effectiveness of the proposed remedies when they’re actually tried.

There are aspects of Marx that I find genuinely interesting, and I certainly don’t want to get into any highbrow red-baiting, either. But there really is a continuity of cluelessness between Austrians and Marxists on the business cycle.

It’s pretty rich hearing about practical failure from these quarters, too — where are the successful results of pursuing these alternatives? They don’t exist in the real world.

bh @ 152

It’s not Marx’s economics, or his pretense to a science of history that entice — at least in my case — nor is it really the politics. It’s a) the notion that we must seriously confronting the agility of capital, which is as global and anonymous as it was in his day, while labor remains chained by all sorts of cultural imperatives, b) the quite ably-presented assertion that all God’s chillun deserve to eat, and that an ermine-trimmed robe is NOT a sign of God’s grace, and c) that the charity of the powerful, or their technocratic apologists, is no guarantee of anything that matters.

Walt @148: I find the claim that scientists don’t know how science works bizarre. Maybe they have a Whig view of history that predates their careers, but given that they have to succeed in a competitive environment, I doubt people who are full of idealistic illusions make it to tenure.

I don’t know about that; baseball players have to succeed in an even more competitive environment, and some of the best of them clearly don’t understand how baseball works. (See the Fire Joe Morgan archives.) I’d expect scientists to be more reflective than baseball players, but even so I wouldn’t necessarily expect them to be the best at analyzing their practice; being good at a practice doesn’t necessarily translate to being good at describing it. Not that I want to come down on either side of this argument.

In something I know a little more about first- and second-hand, it does seem to me that many if not most mathematicians subscribe (or used to) to a sort of formalism or logicism or mix thereof — the idea that everything they were doing was disguised set theory and could be translated back into set theory if you had enough time — and that their practices didn’t conform to that at all.

Keynesianism was certainly perceived to have failed,

This is rather different from your earlier claim taht it actually had failed. It’s an interesting question in intellectual history whether even the weaker claim is correct; I’m inclined to think that it’s not. But I think it’s quite clear that the rise of approaches based on intertemporal optimization and rational expectations had nothing to do with any advantages if those approaches for forecasting and policy. Even insofar as right-wing economics provided a convenient ad hoc justification for Volcker’s efforts to crush labor, it was monetarism, not rational expectations, that did the work.

@Lemuel Pitkin: Wasn’t rational expectations part of NAIRU, and thus the argument for monetarism?

Hartal,

Meaning, I wanted to make clear that’s not what I’m doing — that my criticisms of Marx aren’t misinterpreted as, for example, the work that some ‘center-left technocrats’ have done on Chris Bertram. As you are apparently doing now.

I’d apologize for being unclear, except that it didn’t seem to confuse anyone else. And I’ve seen you do this pretty much any time there’s criticism of Marx by anyone, right down the projection-y intimations that the other party has gotten themselves excessively worked up.

This long speech touches on the failure of “Keynesianism” in the 1970’s stagflation and the rise of DSGE models and “New Keynesians”, if somewhat indirectly. Money quote:

“Let me begin therefore here by distinguishing between the three major lines of Keynesian thought that did in fact get it right—that had bearing and application on the events through which we have just passed. And I will honor the well remembered and beloved by identifying these lines with Wynne Godley, Hyman Minsky and Galbraith père.

Godley, of course, worked in the Keynes, Kuznets, Kalecki, Kaldor tradition of macroeconomic models attentive to national income accounting identities and to consistency between stocks and flows. The virtue of this approach is clarity and a comparative lack of overreaching ambition. Models of this type say nothing false which may not seem like much, but it’s a huge advantage over the starting position in mainstream economics which consists of nothing which is true. And the models direct you to check whether factual claims make sense given everything that they may imply.”

http://my.firedoglake.com/selise/2011/08/01/james-k-galbraith-the-final-death-and-next-life-of-maynard-keynes/

As for Marx, it’s not a resurrected Marx, but more a deconstructed Marx that’s relevant nowadays. I don’t want to get back into these arguments which have already been gone over here, but this is the sort of thing one learns in school and if one is a diligent student and takes notes, one never learns to question: “the LTV is a fundamentally-discredited Ricardian artifact, as far as I’m concerned.”

john c. halasz 08.06.11 at 7:37 pm

That’s a great quote. I was a student of Eisner’s, and he did a lot to shape how I think about these issues. There’s also no question that a number of younger professors considered him an anachronism, which was galling at the time, and looks even worse in retrospect. But so many of the issues were the same, really. Every few months, we got to see Bob go on the TV and argue with deficit moralists, just like his intellectual descendants do now.

A number of the participants at CT, principals as well as commenters, are economists. I am not. I came to this debate during the Vietnam War, when I realized, somewhat belatedly (I was born in 1943), that my friends and I, lower-middle class for the most part, and being educated at little cost to ourselves at state universities in the U.S., had been raised like prized lambs, and now were to be sent to the slaughter. More to the point, we were being sent to slaughter others, not so prized, who’d done nothing to us, it seemed to me, except stand in the way of someone’s ideology.

Quite simply, that ideology had to be investigated and questioned, if any of us were to retain any sense of ourselves as citizens. It was a case of trying to make the lie turn into the truth, so to speak. During most of the rest of my life, it was the political consequences of that imperative which engaged me (when I wasn’t completely occupied by making a living.) The economics came later, in the search for motives — what and whose they were. It didn’t matter much — to me at least — that I was already beyond the reach of any formal education in economics. We go where we have to go.

My contention here, as an amateur, is that the economics has led once again to politics, and there, as in Marx’s time, is where it’s stuck. I find Keynes et al. persuasive enough when it comes to the correct policy approaches to the potential horrors of capitalist business cycles. When it comes to how we can ever put such policy approaches reliably and permanently in place, however, I think we’re still stumbling in the dark. Marx thought that social democrats were deluding themselves. As I’ve said before in these threads, after looking at the broadest possible implications of 2007, I have to conclude that he was more right than wrong.

I don’t think I really disagree with you, bh. After a lifetime of this, I don’t have any answers, nor am I likely to come up with any persuasive ones in the time left to me. That’s someone else’s job now — perhaps yours or your colleagues’ — which is why I come to places like this. Not to offer advice, but to find out how you’re doing.

Still, I do know something about what questions to ask, and I also know when I’m hearing answers that don’t address significant aspects of our dilemma. About the best that anyone not in a ditch somewhere with an AK-47 has come up with could probably be summarized by the Galbraith address cited by John C. Halasz in no. 164 above. It is not necessary to hope in order to persevere, the signoff he takes from William of Orange, is pretty thin gruel, but it does at least have the virtue of taking all the variables into account.

Keith, it’s easy to document the fact that economists have attempted to create “science” based on various false pictures of “science” taken from philosophers and from rumors heard in the hallways of actual science.

I don’t disagree with you, but I think that’s largely beside the point. In a way, all young sciences are cargo cults to some degree. Your criticism is certainly true of many fields which are today, indisputably rigorous sciences.

More relevant is just how far the current state of economics still is from a respectable degree of scientific integrity. Recent events have demonstrated quite clearly that it’s still quite lacking.

First, as has always been the case, economics is almost absurdly ideological. That this is so is no surprise—like many other social sciences it can’t help but be. Imagine if there were a truly serious attempt at constructing a social science specific to theism. (Something like, but distinct from, an anthropology specifically concerned with religious belief, its practice, the associated institutions, and their history.) Contemporary theology flirts with this from time to time, in certain circles; but for the most part the study of the nature of religion and its implications is captive to the religious and their biases. It’s difficult for a non-ideological theology to be anything other than marginal. If it’s not marginal, it’s dominated by the ideological. That’s not an exact comparison; but economics explicitly deals with social institutions that involve strongly held normative ideas about people and the world, strong ideologies. Both the practitioners and those who support them bring those ideologies to the table.

Related to that is the second problem, that economics as a field receives its chief support from people and institutions who have very strong vested interests in validating and supporting their ideologies. I’m personally inclined to believe that were this not the case, the biases of the practitioners themselves could be (more) adequately managed within the academic context, as is more the case with some of the other social sciences. The other social sciences are still far more profoundly influenced and distorted by ideology than are the non-social sciences, but less so. Right now economists have strong professional relationships with both business and government and that badly compromises their scientific integrity. If physics had a great deal to say about public policy, then the large numbers of physicists on the payroll of the US government would be equally problematic.

Third, though, is the problem specific to your (implicit) invocation of cargo cults. The last few years have demonstrated a truly egregious failure by the freshwater school of thought, which has embraced what appears to be, and what it believes actually is, increased scientific rigor in the form of highly sophisticated mathematical analysis and theory. But it’s failed descriptively and predictively, while in contrast the supposedly lesser rigor of New Keynesianism has succeeded. That this has not even in the least been a challenge to the freshwater school demonstrates how badly non-scientific it, and by extension, economics is.

People often talk about other sciences, and especially economics, as having physics envy. But I think that this truism hides a deeper truth—physics, especially the early development of physics—is really in many ways a poor model for the development of a science. In fact, both Newton and Einstein are poor models for the development of a science; those two narratives privilege solitary, contemplative brilliance and in regard to problems which are almost crystalline in their conceptual clarity. Even chemistry isn’t much like this. Certainly biology and the social sciences are far from like this. But just within the domain of physics and chemistry and associated foundational problems, you might expect that the development of atomic theory or QM might inspire a popular narrative about how science works…but they don’t. They should, they’re more representative. But they don’t because they’re not nearly so romantic. Indeed, consider just how much the institutions of science themselves privilege the notion of individual brilliance—the idea of PIs, prizes, even just grant awards. Science is intensely collaborative and yet both popular culture and science itself are almost obsessed with individual genius.

I mention this because the economists in the freshwater schools and elsewhere who put so much effort into formulating elegant and brilliant mathematical models do so because they’ve internalized this notion that what a scientist really is, is a contemplative genius with a chalkboard. But that’s by far the exception. Most of the real world isn’t amenable to that sort of investigation and, in fact, most of science doesn’t work that way. Most of what science is, is the gathering of large amounts of data by many people, often working across generations, and careful analysis.

All that said, I take exception to the casual dismissals of the validity of economics as a science that appear in the comments here and so often elsewhere because, first and foremost, they’re usually motivated by ideology. It’s not much different from how people who find their cultural values implicitly questioned by some research in one of the other social sciences reflexively dismiss it, or all social sciences, as being cargo cult sciences. To the degree to which an economist, somewhere, validates such people’s intuitive notions and values related to economic activity, then they aren’t so quick to pass judgement. It’s self-serving.

Secondly, as I wrote, all sciences struggle in their early development with such problems. Just because economics hasn’t made its way past the things I describe above, doesn’t mean that it can’t or won’t. There’s plenty of people drawn to economics out of an authentic scientific impulse, some of them manage to retain this through their educations and beyond. Some of them will make important contributions to creating and ensuring its integrity as a science. I’m not inclined to throw the baby out with the bathwater, because it is still a baby.

I don’t think we need the formal falsificationism of Popper to recognize what distinguishes scientific thinking from ordinary story-telling: what distinguishes science is,
1.) a focus on the analysis of functional mechanism;
2.) critical method uniting a social effort.

Human nature seems to run in a counter-current to science. People seem to naturally want moral narratives: our first instinct is to demand an “explanation” of what it all “means”. And, social communities tend to seek a common faith to unite them.

Darwin’s genius was his stubborn insistence on identifying a mechanism driving the evolution evident in natural history and the variety of life, which many others had already observed. And, he didn’t fully identify a mechanism — molecular genetics would only begin that work a century later; Darwin simply outlined the mechanism: descent with modification. Before Charles Darwin, people could see the outlines of order in comparative anatomy, in the geologic record, in the classification of species, etc., but their ability to infer mechanisms tend to bog down in the imperatives of meaning and story-telling. People like Lamarck or Erasmus Darwin wanted species to “want” to adapt, or to strive against adversity, or to have a kind of intention. And, biologists still talk that way, today, ascribing to a species, “strategies” of adaptation, as a kind of convenient fictive short-hand — that custom is certainly a testament to our instinctive need to spin out moral narratives.

Astronomy struggled for centuries to emerge out of astrology. Kepler’s day job was as a court astrologer to the Hapsburgs, spinning out elaborate narratives concerning the omens portending in the starry skies. Newton was an amateur, but dedicated alcemist, presumably convinced that the “meaning” of elements, hidden in esoteric knowledge, had power.

Economists, as a group, do seem to have some considerable difficulty accepting that their proper objects of study are social/political mechanisms. Many slip easily into preaching a kind of religious faith, touting the transcendent meaning of “free” markets, the “freedom to choose”, etc. It seems to me that the Efficient Markets Hypothesis is an example of economists having some glimmer of genuine insight into how financial markets work as mechanisms, and then, slipping back into a religious faith that such markets are unquestionably and perfectly efficient: clearly a religious article of faith immune to critical method and a “zombie idea”.

The bio-physicists, who would analyze a baseball pitcher’s throw or a ski jumper’s jump, do not stand in the same relationship to their subjects, as an economist does to the businessman or the financier . . . or the government regulator of markets and business. I’m not sure that the economists will ever be able to lose their role as secular priests and oracles — at least, not in the way that the Roman Church eventually lost their responsibility for the calendar to international standards bodies, and the astronomers left the astrologers to write newspaper columns. The moral legitimacy of economic institutions is an inherent aspect of their ability to function as social mechanisms. In a mass democracy, lots of people are going to understand what is being decided in a moral short-hand narrative of one sort or another; hopefully, this does not entail believing a complete fairy tale, so much at odds with the necessity of economic function that civilization collapses by following it. The conviction with which the Euro was touted, or the balanced budget amendment rears its head or a debt-ceiling crisis can be ginned up on a moment’s notice, worries me. The guild mentality, with which economists with technocratic ambition, protect their fellow incompetents, is also not a hopeful sign.

Popular ridicule and expressions of healthy contempt, however, don’t have to come only from the populist right, and might have salutary effect. That’s why I cheer on Quiggin, and Yves Smith and Steve Keen and Jamie Galbraith and even the MMTers on occasion.

But science is a deliberate, conscious process. Sure, physicists can’t explain how their brains work in coming up with ideas, but they can explain how over their careers they’ve seen an idea go from being new to being either rejected or accepted. And maybe the very top researchers are fooled by how objective and meritocratic the system is, but science is full of junior professors who are all too aware of what’s involved in getting a job as a tenured professor. I know both physicists and economists, and neither group seems to have any illusion as to how the process really works.

If you look at physics over any reasonably long window, things match falsificationism pretty well. People propose theories, they get tested, and they either get confirmed or falsified. Theories are not completely rigid, so one single experiment doesn’t settle the question, but as soon as a certain amount of data gets collected and certain simple variations on the theory get tried, the theory gets abandoned.

Economics works very differently, and Lakatos’ explanation of progressive or degenerating research programs fits better.

Out of morbid curiosity, I’d like to see Williamson’s full Journal of Economic Literature review. Is it available online?

Theoretically Curious, you know that NBER papers are not actually publicly available, right?

Anyway, the micro evidence is that people are not rational utility maximizers. Life cycle models are in fact notorious failures in that regard. I don’t see how you can read that paper as describing the results of a basically successful research program.

Greg Ransom, you’re just wrong about Hayek “disproving” the Popperian model of the improvements of scientific knowledge. I have no idea what Hayek actually said, but your version is just wrong. (Kuhn has accurately demonstrated that the Popperian model is not how scientists actually behaved, but Popper remains correct that for knowledge to advance, it must be done in an essentially Popperian fashion.)

Your specific example is wrong and I’d like to be clear about that for the audience. The Darwinian theory of evolution makes numerous falsifiable predictions, mostly relating to what combinations of genetic features will be found in nature — no creatures with insect legs and frog heads, for instance. (And indeed, stuff caused by viral activity means that the original version of it is false, and it had to be revised to the modern theory of evolution by including viral activity.) The theory also makes some rather impressive predictions about the “design” of things found in life: specifically, that “new” anatomical and metabolic features will be jury-rigged from ancestral designs for other things — that there is nothing “designed to purpose”. This has been amply shown over and over again to be true, and a discovery of a genuinely properly designed organism would immediately raise suspicions that it had *not* evolved, but had in fact been genetically engineered.

Falsification is for real. (Although it’s a silly term, since “falsified” hypotheses are usually replaced by modified hypotheses, not wildly different ones.)

@Nathanael.

You are mischaracterizing economics by attacking a straw man. There are lots of data collection efforts and lots of worry about model fit. Just open an economics journal and you will see this. The division between freshwater and saltwater is also misleading as it doesn’t accurately reflect the reality that, methodologically, most schools have pretty much converged.

Williamson and Ivansml argue that DGSE broadly is a technique, and thus no more subject to falsification than, say, Markov chains, molecular dynamics, or PCR.

I submit that if PCR had failed in making useful observations of how much of each DNA base there was in a sample as often and as badly as economics has failed, we’d call it falsified and use something else.