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Comment by vbuwivbiu | Hacker News Reader

Economics is worse than religion: it's astrology.

It has the trappings of mathematics (ODEs and whatnot) as astrology uses numbers, like astrology and auguring (in their day) economics is a fantasy serving to flatter the powerful.

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A lot of economics is just concepts built on pure math (interest rates, etc). There's nothing astrological about this

Statistical models also are interesting but there are limitations, both at micro and macro levels

But I think people take its prediction power too seriously and ignore linked events that seem independent at first (like low graded loans failing affecting payment of other loans)

See Milton Friedman's "The Methodology of Positive Economics" (https://en.wikipedia.org/wiki/Essays_in_Positive_Economics):

"Truly important and significant hypotheses will be found to have "assumptions" that are wildly inaccurate descriptive representations of reality, and, in general, the more significant the theory, the more unrealistic the assumptions (in this sense) (p. 14)."

> A lot of economics is just concepts built on pure math

A lot of numerology is also pure math, addition for example.

If you can't see the difference between an interest rate and "finding your lucky number" this discussion can't be furthered

Interest rate is "pure math", and used within a framework, parts of it rather arbitrary. "finding your lucky number" is framework and adding up numbers in a name or stuff like that is "pure addition", so that framework uses pure math. That's my point, you're just not getting it.

> ... it's astrology.

And it has alchemists, too. Like the alchemists of old were searching for a formula to make gold (assuming they legitimately tried and were not just scamming their employers), their modern-day peers try to find a formula for producing unicorns.

Economics has many successes, but the problem is it's trying to approach psychology with math. They know that people are not actually rational, but there is some value in treating them as such.

Rational choice theory is usually the right model. There are others.

The biggest problem I run into with this is that I believe the bounds of rationality for different individuals had far more variability than is accounted for. I suppose it's still useful to look at for a perspective on some things though

I know nothing of modern economics, but couldn't you just model the rationality of individual as a random variable like everything else?

Economic models usually look at average behaviour for large groups. There are cases where the model breaks, but jumping into "oh, it was all bs then" is just populism.

I hope that 'right', in this context, means that it leads to observationally verifiable predictions of significant real-world events, and not, say, 'makes the math tractable', or 'produces results that conform to the existing tenets of economic theory'.

I would be less skeptical if there were not apparently at least two schools of economists, producing diametrically opposed analyses and recommendations for any situation.

> would be less skeptical if there were not apparently at least two schools of economists, producing diametrically opposed analyses and recommendations for any situation.

What you perceive is large part politics, not academic economics.

There was a serious attempt to push an equivalent of rational choice in political science a while ago. Public choice theory holds that bureaucrats and politicians are rational actors maximising their own power. It's no longer very prominent because it turns out to be a poor fit for actual motivations - which seem to be a complex mix of office politics, power seeking, public service motivation, and following the wishes of their superiors. The model was simply too reductive to be useful.

I'm not an economist, but it would surprise me if a whole society's motivations were not at least as complex as those of a government department.

Approaching with math and large amounts of data are actually really great because you can start to account for variability and the flaws of traditional theoretical economics. Hard part now is determining who is twisting analysis for ideological/power reasons vs. staying true to the data/reality.

The problem is if you look at say home ownership as a balance between the costs of rent vs. loans that works at a very high level. But, second order effects such as decreased earnings from immobility vs pride in home ownership etc get really complicated if you want high fidelity models.

To use an analogy, classical physics is great for building walls, but it does not help you build 5nm transistors.

The bigger problem seems to be that most don't seem to realize they're a branch of psychology. How often have you heard economic talking heads talk about logical fallacies and biases, for example. It's not that what they're doing has no value, it's that they're mostly besides the point.

"Economics has many successes"

Out of interest (no pun intended), what are they?

It's arguable, but the massive decline in global poverty over the last 30 years is arguably the largest. Details are complicated, but things like comparative advantage > free trade seem to have been working.

Not true. Too cynical. That the economy is amenable to quantification is unquestionably true. That it has so far completely resisted our advances is false.

Edit: Having said that I see where you're coming from.

If economics is the study of macro-psychology, then it would have the same problems as regular psychology: the inability to do truly controlled experiments, only with an even smaller set of entities to build your N out of.

I think the closest we can get is to compare the predictions from their theories to reality X years later. It anyone has done that, I'd be very curious to see it.

What's macro-psychology? Do you mean group-psychology?

Economics is the study of a particular value system within society, that value system being the monetary/capital one. Human psychology comes into play (both at the individual and group level) because human evaluation and action is involved.

Group psychology vs egregore psychology. The difference is whether you are paying attention to individual desires in aggregate, or whether you are attributing desires to the collective entity that no single individual has.

I think Futurama got it right with their "voodoo economists"

Which was originally a quip Bush Sr used to describe Reaganomics.

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