Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Time To Stop This Pretence – Economics Is Not Science

Recommended Posts

http://www.telegraph.co.uk/finance/comment/10390981/Time-to-stop-this-pretence-economics-is-not-science.html

The Nobel prize in economics isn’t really a Nobel prize. There are five of those – in physics, chemistry, medicine, literature and peace. These “true Nobels” have been awarded since 1895, the year before the death of Alfred Nobel – the Swedish industrialist who made his fortune, famously, by inventing and selling dynamite.

It was only in 1969 that the Swedish Central Bank began dishing out a medal each year for research in economics, awarded in Nobel’s name. It remains separate from the main prizes established in his will – and so it should. That’s because Nobel was a scientist – and economics, categorically, is no science.

Aside from physics, chemistry and medicine, “peace” deserves a look-in. Perhaps Nobel only included it to assuage his guilt, given that his family accumulated part of their wealth selling arms, but it’s still a worthy cause. Similarly, had this enterprising Swedish polymath excluded “literature” from his original list, he may have seemed unrefined.

The annual “Nobel prize in economics”, though, often shared between two or three winners, is a posthumous add-on. As an economist myself, I admire many of its 75 recipients – some of whom have even taught me. But I still don’t think that economics, as a field of research or human pursuit, belongs with the other five Nobels and some of the awards made in recent years illustrate why.

..

My early 2014 nomination is a Peruvian economist called Hernando de Soto. He encouraged a property ownership revolution in his native land, undermining racketeering thugs from groups such as Sendero Luminoso (the Shining Path) by empowering the poor.

So successful was he that, as he once told me, the guerillas blew up his think tank. So de Soto showed a lot of guts, then survived a brush with dynamite. That’s an economist worthy of Alfred Nobel’s approval.

Perhaps we could get those guerillas over here to work there magic on the BoE?

Share this post


Link to post
Share on other sites

The committee awarding the "Nobel" prize in economics seems really rather confused. Schiller and Fama are making contradictory arguments. One of them, logically, must be wrong, yet the committee has given them a joint prize based on a single brilliant idea. How does that work?

Share this post


Link to post
Share on other sites

Carney and Broadbent just need to keep tweaking the controls of the coconut and palm leaf contraption they keep in the basement and everything will come right.

Cargo cult science

"So we really ought to look into theories that don't work, and science that isn't science. I think the educational and psychological studies I mentioned are examples of what I would like to call cargo cult science.

In the South Seas there is a cargo cult of people. During the war they saw airplanes land with lots of good materials, and they want the same thing to happen now. So they've arranged to imitate things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head like headphones and bars of bamboo sticking out like antennas--he's the controller--and they wait for the airplanes to land. They're doing everything right. The form is perfect. It looks exactly the way it looked before. But it doesn't work. No airplanes land. So I call these things cargo cult science, because they follow all the apparent precepts and forms of scientific investigation, but they're missing something essential, because the planes don't land."

Edited by zugzwang

Share this post


Link to post
Share on other sites

Why isnt it a science?

I always thought science could tell us something *will* happen. If I subject water to temperatures of below zero, it *will* turn to a solid.

Yet global warming alarmists are called 'climate scientists' and cant give an accurate figure on their predictions, just high and low estimates. Call it what it is, guesswork. Luck. Tarot card reading.

To me it seems science can be anything. Rot started with 'social sciences' Maybe its just a 'soft' science.

Share this post


Link to post
Share on other sites

Some involved in economics use pretty sturdy mathematical/statistical methods and techniques like: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2012_1/funda_h_sezgin1.pdf

But I doubt most people look properly at the assumptions of the subject and indeed the statistics (independent and identically distributed variables for example) and just use the methods that they think will give the correct results, to a degree which suits their views (even Fisher said 0.05 was just a convenient number for significance). Plus of course the old adage 'garbage in, garbage out' which applies to the data. I would love to see the sensitivity and uncertainty analysis of any major economic Nobel winner. Maybe they put it in the appendices of their papers?

NB: I retract my claim of wanting to see the sensitivity and uncertainty analysis of any economics Nobel winners, that would be at least 30-60 minutes of my life that I could be looking at porn.

Share this post


Link to post
Share on other sites

Some involved in economics use pretty sturdy mathematical/statistical methods and techniques like: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2012_1/funda_h_sezgin1.pdf

But I doubt most people look properly at the assumptions of the subject and indeed the statistics (independent and identically distributed variables for example) and just use the methods that they think will give the correct results, to a degree which suits their views (even Fisher said 0.05 was just a convenient number for significance). Plus of course the old adage 'garbage in, garbage out' which applies to the data. I would love to see the sensitivity and uncertainty analysis of any major economic Nobel winner. Maybe they put it in the appendices of their papers?

NB: I retract my claim of wanting to see the sensitivity and uncertainty analysis of any economics Nobel winners, that would be at least 30-60 minutes of my life that I could be looking at porn.

yeah right ;) loads of punter have a 'system'

so embarrassing

Share this post


Link to post
Share on other sites

Why isnt it a science?

I always thought science could tell us something *will* happen. If I subject water to temperatures of below zero, it *will* turn to a solid.

Yet global warming alarmists are called 'climate scientists' and cant give an accurate figure on their predictions, just high and low estimates. Call it what it is, guesswork. Luck. Tarot card reading.

To me it seems science can be anything. Rot started with 'social sciences' Maybe its just a 'soft' science.

They all can be studied in a scientific way, just that the results/predictions are quite uncertain. Climate is an extremely uncertain topic with a high amount of uncertain variables, so any proper scientist couldn't give you an accurate figure on future predictions, just a figure and maybe a Monte Carlo run on all possible scenarios which gives a higher and lower bound. I'll find a few pdf papers if you're interested on actual sensitivity analysis, its quite a new field of development (maybe 30-40 years ago or sooner, which is young for a science topic - think of E = MC^2, which is from 1905!). I do agree that all the climate, economic, possibly health and some other fields of exploration are less well-developed than the basic sciences but that may be more to do with their advocates over-empathizing their importance due to getting research money/basic introspection illusion/expectation psychology/other factors - such as political interference. But the basic science behind the assumptions probably still stand. You just need to have a proper statistics understanding to dissect what is assumptions and what is more plausible. Probably the best thing to do is disregard any headline of any media source and go into the actual contents and dissect them.

Share this post


Link to post
Share on other sites

yeah right ;) loads of punter have a 'system'

so embarrassing

The only punter I can think of is Neil Jenkins! His system was brushing the mane of an invisible horse (best I can do at this wee hour):

Share this post


Link to post
Share on other sites

Why isnt it a science?

I always thought science could tell us something *will* happen. If I subject water to temperatures of below zero, it *will* turn to a solid.

Yet global warming alarmists are called 'climate scientists' and cant give an accurate figure on their predictions, just high and low estimates. Call it what it is, guesswork. Luck. Tarot card reading.

To me it seems science can be anything. Rot started with 'social sciences' Maybe its just a 'soft' science.

Economics is to science what astrology is to cosmology. It's as much use as looking at things that have happened, ignoring any evidence and then getting your hamster to ride a little bicycle around a ouiji board.

Science is about things that are reliable, repeatable, utterly predicatable. Economics combines the outlying areas of second rate mathematics with all the loopy-doopy dog ends of history, sociology, group psychology and crystal therapy. You can't even get two economists to agree what happened, let alone make any valid prediction about events to come.

With so much of economics being sponsored, supported and directed by vested interests, it's what "science" (or natural philosophy as it was then known) was in the days when the church was in charge and everyone believed the sun went around the earth.

Forget "social sciences" and all the other spheres which involve people and indeterminate events. The tag science is just added on by poeple selling second rate university courses who couldn't ge away with a degree called "aren't people difficult?".

Climate and planetary scientists do a lot of their work based on the fundamental principles of observation, measurement, hypothesis, prediction, testing. At least the planet acts rationally and free of political bias. This is in contrast to people, markets and money. I'm happy to accept them into the corner of the room, but until someone produces a 100% reliable earthquake predictor the work should be taken only as a guide, not a statement of certainty. That's no reason to deny climate change though, even if your entire investment protfolio is in Exxon shares. The cumulative evidene is too compelling.

Back to Nobels for physics, chemistry, medicine please. The rest is just crown pleasing, self-serving hokum.

Rant over.

Edited by Stainless Sam

Share this post


Link to post
Share on other sites

Economics combines the outlying areas of second rate mathematics

Economics doesn't quiet manage that.

Macro-economics has been shown to be about as much use of sheep entrails. Its a complete waste of time.

Micro-economics is best addresses by statistics.

But economists cannot do the maths.

Political-economics, to give it its full name, is just politics with numbers. Mainly trying to come up with wishful outcomes.

Share this post


Link to post
Share on other sites

Economics doesn't quiet manage that.

Macro-economics has been shown to be about as much use of sheep entrails. Its a complete waste of time.

Micro-economics is best addresses by statistics.

But economists cannot do the maths.

Political-economics, to give it its full name, is just politics with numbers. Mainly trying to come up with wishful outcomes.

I think there are 2 core issues with the economics to make it more soft than hard science:

- the political science - like keeping IRs low or pensions high to win elections

- changes of the economy - the new progress (eg electronic trading and globalisation) and also the economics research itself (universe did not change when we found out that E = mc^2)

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/finance/comment/10390981/Time-to-stop-this-pretence-economics-is-not-science.html

Perhaps we could get those guerillas over here to work there magic on the BoE?

As usual article doesn't start well, the nobels made their fortune developing the oil fields around the caspian sea, dynamite was a sideline.

What many people don't realise is that the Nobel prize has a cash value to the person, currently a million euros

To the average chemist or physicist this is life changing, when my colleague won a few years ago he upgraded his car from a beaten up 20 year old Datsun to a brand new BMW!

I suspect that the award is just pocket money to the average economics winner.

Share this post


Link to post
Share on other sites

Economics does not fare well as a science because it is ultimately trying to assess and predict the collective decisions of millions of people. And often the results are different - humans are unpredictable. I see it more as a branch of psychology than a science.

For example if I helicopter some money into your bank account, do you save it, pay off debts, spend it on basics or spend it on shiny things? That decision is up to an individual, but how will the masses act overall? It depends, really. That is why the effects of QE or other similar techniques are so hit and miss

Share this post


Link to post
Share on other sites

Economics doesn't quiet manage that.

Macro-economics has been shown to be about as much use of sheep entrails. Its a complete waste of time.

Micro-economics is best addresses by statistics.

But economists cannot do the maths.

Political-economics, to give it its full name, is just politics with numbers. Mainly trying to come up with wishful outcomes.

It's about time the politics depts took control of the barsteward child that got away.

Share this post


Link to post
Share on other sites

If Halligan followed his own silly argument to its logical conclusion then he'd realise that science isn't a science either.

They don't even know how we got here ffs.

But it's the Telegraph - so nothing is really what it seems.........

Share this post


Link to post
Share on other sites

Economics is to science what astrology is to cosmology. It's as much use as looking at things that have happened, ignoring any evidence and then getting your hamster to ride a little bicycle around a ouiji board.

Science is about things that are reliable, repeatable, utterly predicatable. Economics combines the outlying areas of second rate mathematics with all the loopy-doopy dog ends of history, sociology, group psychology and crystal therapy. You can't even get two economists to agree what happened, let alone make any valid prediction about events to come.

With so much of economics being sponsored, supported and directed by vested interests, it's what "science" (or natural philosophy as it was then known) was in the days when the church was in charge and everyone believed the sun went around the earth.

Forget "social sciences" and all the other spheres which involve people and indeterminate events. The tag science is just added on by poeple selling second rate university courses who couldn't ge away with a degree called "aren't people difficult?".

Climate and planetary scientists do a lot of their work based on the fundamental principles of observation, measurement, hypothesis, prediction, testing. At least the planet acts rationally and free of political bias. This is in contrast to people, markets and money. I'm happy to accept them into the corner of the room, but until someone produces a 100% reliable earthquake predictor the work should be taken only as a guide, not a statement of certainty. That's no reason to deny climate change though, even if your entire investment protfolio is in Exxon shares. The cumulative evidene is too compelling.

Back to Nobels for physics, chemistry, medicine please. The rest is just crown pleasing, self-serving hokum.

Rant over.

Pretty epic fail if you ask me.

Science is more about the approach you apply to studying a particular problem, rather than the nature of the problem itself.

Economics is in some ways like the weather and is chaotic. A butterfly flaps its wings in Spain and that ends up as a hurricane sort of stuff. Even if the weather is ultimately chaotic and we can never know everything about it, we can know enough to make some useful predictions if we study it on a scientific basis, hence the general accuracy of the weather forecast.

Part of the problem in economics is that the rules of the system are constantly changing and there is still a chaotic element at the heart, which makes making useful predictions that much more difficult than weather, where the rules of the system are pretty much fixed, or varying on a slow timescale.

Share this post


Link to post
Share on other sites

Pretty epic fail if you ask me.

Science is more about the approach you apply to studying a particular problem, rather than the nature of the problem itself.

Economics is in some ways like the weather and is chaotic. A butterfly flaps its wings in Spain and that ends up as a hurricane sort of stuff. Even if the weather is ultimately chaotic and we can never know everything about it, we can know enough to make some useful predictions if we study it on a scientific basis, hence the general accuracy of the weather forecast.

Part of the problem in economics is that the rules of the system are constantly changing and there is still a chaotic element at the heart, which makes making useful predictions that much more difficult than weather, where the rules of the system are pretty much fixed, or varying on a slow timescale.

Absolutely, too bad economists know nothing about dynamic systems! Perhaps if they paid more attention to the soft or 'social' sciences rather than physics they might make some progress? Multi-agent simulations appear to be a fruitful area of enquiry in biology, psychology and network theory.

Share this post


Link to post
Share on other sites

Why isnt it a science?

I always thought science could tell us something *will* happen. If I subject water to temperatures of below zero, it *will* turn to a solid.

Yet global warming alarmists are called 'climate scientists' and cant give an accurate figure on their predictions, just high and low estimates. Call it what it is, guesswork. Luck. Tarot card reading.

Quantum physics is nothing but probabilities.

And there are error bars on everything.. even the melting point of ice..

Share this post


Link to post
Share on other sites

Quantum physics is nothing but probabilities.

And there are error bars on everything.. even the melting point of ice..

When i taught 1st year physics students about the nature of measurement, the way i told them to think about it is that the universe has an exact answer to the thing that you are trying to measure, and that everyone who tries to measure it is measuring the same thing. But that the exact value is ultimately unknowable, all we can measure is an approximate value. Therefore any value you give to a measurable parameter has no meaning without an uncertainty attached to it. Quantum physics doesnt change this, just changes the way you assess the uncertainty

if you want a definition of a scientific premise, then (as defined by Karl Popper) it has to to "Falsifiable" i,e it must be possible to disprove it rigorously. hence the existence of any god (for instance) is not a scientific premise as it cannot be proved false.

how any of this applies to economics i have no idea....

Share this post


Link to post
Share on other sites

Economics as a Science would:

- Seek first to understand the behaviour of indivuduals.

- Formulate hypotheses to test against reality

- Find ways to systematically measure outcomes

- Be cautious on giving policy prescriptions.

Economics as a political program would:

- Assume the desired behaviour of individuals

- Attempt to change reality to match theory

- Measure outcomes crudely (*ahem*GDP)

- Always be ready with a policy..

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   206 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.