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Comment by bsedlm | Hacker News Reader

IMO, economics as a science is all about making up theories to 'scientifically' (but actually, just academically) justify whatever the ruling powers want to do.

In a larger sense, academia and a big chunk of contemporary western "culture" is all about coming up with stories, narratives, explanations, mindsets (frameworks) to ignore the exploitation of humans as a resource for the sake of ill-defined (by design) notions of "the group" or "us all" when in fact the end result is a big hierarchical pyramid with little room at the top which requires lots and lots of desperate people at the bottom (by this point, the bottom is entire countries).

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The problem is that economics as a field spans from sociology and mass-psychology (almost impossible reason about, fully quantify or prove anything in a scientific manner) to mathematics (easy to reason about, model and publish results - but at the risk of not actually modeling the real world). The incentives of the academic world nudges researchers toward the math side of the field, but the risk in that is that the field becomes disconnected from reality.

> the risk in that is that the field becomes disconnected from reality

it's not a risk, it's a measurable fact.

What's the measure?

The fact that it doesn't make predictions any more reliably than astrology.

>The fact that it doesn't make predictions any more reliably than astrology.

yup.

Physics: apply force F to projectile of mass M and know in advance where and when it'll land modulo a tiny error margin.

Economics: raise the interest rates by X%, wait unknown amount of time Y, observe state of the system after time Y, formulate complex theory as to why action led to "cause", go write a paper about it. Get wined and dined by policy makers who see great benefit in your "explanation".

The phenomenon is not new BTW, oracle, druids and shamans have occupied that ecological niche for as long as there has been tribes and leaders needing to justify their actions to the masses.

They just changed their names in the 20th century to sound more respectable.

Were it reduced to "predictions". It isn't. And people take for granted a lot of popular concepts borne of the study as though it was always known. E.g. the relationship between interest rates & exchange rates, supply and demand, etc.

Any "science" that can't reliably make reliably make predictions isn't a science. That's the litmus test.

You've just eliminated all social sciences, by your metric of "reliably".

edit: your take-away from this should be that you're mis-defining science.

edit2: you all forgot that medical and nutritional science has a reproducibility crisis, it's no less "science" for it. Add to the fact, the notion that nothing is reproducible in Economics is false. See for example: https://www.caltech.edu/about/news/famous-economics-experime... , https://www.science.org/doi/10.1126/science.aaf0918

Absolutely.

> edit: your take-away from this should be that you're mis-defining science.

No thanks.

> You've just eliminated all social sciences

Because they're indeed not sciences.

They call themselves that to attract funding.

Predictive power and reproducibility are defining characteristics of sciences.

Social "sciences" have neither and therefore aren't sciences.

reproducibility has improved over time as well - https://pubs.aeaweb.org/doi/pdfplus/10.1257/jel.20171350

What kind of precision of prediction is required? Economics predict some things. For example if you print exceedingly a lot moneys, inflation will happen.

At the same time, physicists have problem telling precise location and momentum of the atom (at the same time; precisely).

(footnote: I love physics more than economics, but world is not perfect and sciences are not perfect. Except for math maybe https://xkcd.com/435 . Perfection and usefulness are not the same)

Volcanologists cannot exactly predict when a volcano will erupt. Seismologists cannot exactly predict when an earthquake will happen. Both can only offer uncertain probabilities. But these are definitely both sciences.

They don't have to predict everything, especially things that aren't predictable.

Can you point me to any good quantitative research on astrology? Steelman style treatment, preferably. I haven’t actually looked into astrology with much seriousness. I worry that I might be like one of those people who dismiss economics because of envy or some other weird psychological mechanism. It sounds like you might have some information to share?

That's about as accurate as saying Medicine doesn't make any more reliable predictions than astrology

That's about as accurate as saying "nuh-uh."

Economists cannot predict exactly when market crashes will occur. Is volcanology not a real science because volcanologists cannot predict the moment a volcano will erupt?

In both cases scientific study can help us determine when the risk is higher or lower, and can tell us definitively when one does occur. But no field that studies stochastic processes like markets or volcanic activity can make 100% certainty predictions years in advance.

These fields are all dealing with probabilities, asking for a yes or no answer is missing the point.

> sociology and mass-psychology (almost impossible reason about, fully quantify or prove anything in a scientific manner)

On the contrary, sociology is way more scientific than economics in building probabilistic models of social behaviors. Such models are quantitative and testable.

Economics is opinion based by design.

This is complete nonsense, economics is by far the strongest social science field in terms of empirical methodology. Pretty much all the modern causal inference methods were developed in econometrics. Try taking a look at the big econ journals (like Journal of Political Economy, American Economic Review, or Journal of Finance) and I assure you you won't find anything resembling arbitrary "opinions".

There is a simple method to disprove your wild claims that comes from system theory.

Regardless of the field, be it economics, cookery or mechanical engineering, you can ask a pool of experts:

- How can I solve problem X? What will happen if I do nothing?

- How confident are you that the solution will be effective or the prediction will be accurate?

The problem X is the input and then you compare predictions and real outputs.

There is abundant literature on the effectiveness of economical models and the ability to make prediction and the outcomes are clear:

- Economists systematically overestimate their ability to make predictions

- There is not even a single economical theory. Economists have different schools of thought that are incompatible with each other (!)

There are countless examples of economists failing to predict the future or having wildly different opinions.

> There is not even a single economical theory

This applies to all social science.

> There are countless examples of economists failing to predict the future or having wildly different opinions.

This applies to all social science.

That's a sweeping generalization, but ignoring that and assuming it's true: so what?

Your argument on sociology hinges on that not being true.

Right, can science accurately model the 3 body problem? Or turbulent flows in fluids?

I guess science is a failure then, better give it up.

Nice example.

Economics almost by definition can not make good predictions wanted by the public, because as soon you figure out precise model “a” of the economy, the economy takes the model “a” into account and mutates to model “b”.

You are making a strawman.

Ask meteorologists about their models and they will honestly tell you the limitations of such models and the success rate at predicting the weather. They have little incentive to lie.

It will be difficult to find meteorologists with clear "anti snow" or "pro rain" biases.

Same goes for getting a blood check: they are not 100% reliable, yet it's difficult to find a lab with an ideological bias skewing the results.

Then, ask economists and you'll quickly find out that their predictions and advice on economic policies aligns with the school of though they belong to.

Politicians routinely ask for advice from this or that economist depending on what they want to hear.

Politicians commonly ask advice from this or that scientist depending on what they want to hear rather than looking for peer reviewed models. I would say that's a problem of a different nature.

Some would beg to differ https://larspsyll.wordpress.com/2021/04/06/econometrics-a-cr...

Economics may be the most elaborate in manipulating mediocre data to support a hypothesis, but it is important to remember how incredibly easy it is to be wrong or mislead others when using data and complex statistical methods.

To me, this kind of thought is mostly equivalent to creationists who say Evolution "is just a theory". When scientific findings contradict our strongly held beliefs, we often choose our beliefs.

That said, it's important to separate Microeconomics and Macroeconomics.

Microeconomics is a solid Hard Science which has helped us understand many important things. Macroeconomics, OTOH, is a very difficult field, in part because the object under study is aware of the findings, and adjusts to it.

Microeconomics is scientific… in theory!

do scientific findings contradict the notion that we are using economic theory to "ignore the exploitation of humans as a resource for the sake of ill-defined (by design) notions of 'the group' or 'us all?'"

"God was very harsh with economists, as in Economics, the atom thinks, speaks and reacts" - Delfim Netto, Brazilian economist.

I hard disagree. Economics (of any flavor) is as soft as any other social science. The field of economics can be a useful lens to help one understand the world and human behavior, but it relies too much on human behavior to be consistently testable in the same way as 'Hard Science'.

> it relies too much on human behavior to be consistently testable

Are psychology or sociology hard science?

Obviously not.

I think the term "hard science" is squishy enough to where you both can argue in good faith, but have a different definition in-mind.

I agree that Econ doesn't quite have the hardness of say Physics, but insofar as you can characterize physics as the development of models that can meaningfully explain reality within reasonable error bounds and feasible energy usage, then Microeconomics sometimes does do this as well.

Microeconomics is math. But science requires something more than math. A theory motivating why a certain mathematical structure should manifest in reality and describe our observations. In the case of economics such a theory would be something like "people are rational actor optimizing some quantity". This is however *highly* controversial and many of the predictions such a theory makes contradicts observation.

I'm not an Economist, but my impression is that the predictions of microeconomics have vast practical applications and the cases where they fail are few, but of course they get a lot of attention, just like happens in Physics or any science.

To be less jargon-y, microeconomics is sometimes called "price theory", and in its basic form models prices as depending on supply and demand.

Microeconomics study the interaction of marginal costs with the demand curve, too bad that in real life marginal cost is undefined (and the demand curve doesn't exist in a vacuum).

"People are rational actors at optimizing quantity X, unless they are made aware of what quantity X is".

Economics seems to break under Goodhart's Law.

At the risk of some meta-irony, important to point out that Goodhart was an economist.

People are rational actors at optimizing their own well-being, as they see it. That holds in all cases but it isn't very helpful to the politicians.

What breaks is trying to get people to optimize for some other factor by manipulating economic signals (e.g. with inflation). Once they know about the manipulation they'll compensate for it. Not 100%, not always even in the right direction, but enough to make the eventual outcome chaotic.

> People are rational actors at optimizing their own well-being

What experiment can we make to empirically verify this claim? If no experiment is needed then the statement is a tautology.

I'm fine with considering it a tautology, as that implies you're using the correct definition for "rational actor" and the correct perspective (i.e., theirs) for evaluating the expected effect on their well-being.

The problem is the recurring claim that people are not rational actors, either because of imperfect information (sometimes things don't turn out as expected) or because what people choose to do isn't always what someone else thinks of as their own best interest. That isn't what is meant when we say that people are rational actors. Anything can be a rational action within some system of preferences; the point of the "rational actor" model is that if you assume people are potentially irrational actors, deliberately making choices which they expect a priori to satisfy their preferences worse than other options they are aware of, then the system is underconstrained and you can't say anything about people's preferences based on observations about their choices. Assuming rationality doesn't constrain people's behavior at all, but it is a more useful way of interpreting it.

That sounds like an unnecessarily complicated way of going about it. If someone does something really strange, we have to interpret it as a rational action in a strange value system? Instead of stating the obvious: sometimes people do strange things. Would you also consider animal behavior rational by definition? Why not?

I think this way of framing things, while not imposing any constraints, as you point out, is just quite confusing. We know people are not perfect logicians, why pretend that they are? (except of course in the situations where this is a good approximation).

> If someone does something really strange, we have to interpret it as a rational action in a strange value system?

Pretty much, yes. That's the only way you get any useful information.

Look, everyone knows that people sometimes make choices they later regret. That does not refute the rational actor model, because the rational actor model is about what they knew and what their hidden preferences were in the moment, at the time they made the choice. That includes preferences they may not even understand themselves. To refute the rational actor model you would need to show that the person knew there was a better choice, one whose a priori expected outcome was superior in all respects from their own point of view, and deliberately decided not to take it. Since you can't know how they valued all the possible outcomes from their point of view—they don't even know that—that means it can't be refuted at all. It's a framework for understanding people's revealed preferences, not a means of empirically predicting their behavior. At best you can use it to say that if people prefer A over B then they will choose A and not B, but it doesn't tell you whether a person will actually prefer A over B at any given point in the future, even if you can infer from their actions that they did in the past. Preferences change; circumstances change. No two choices are ever made in exactly the same context.

> We know people are not perfect logicians, why pretend that they are?

It's not a matter of perfect logic. It's saying that people (are assumed to) pick the course of action that seems to lead to be best outcome from their own point of view. That can, of course, include others' well-being, if they value such things. There is no requirement that their expectations be perfectly logical, or grounded in perfect knowledge.

There is a separate principle, not part of the rational actor model, which basically says that people either learn to hold expectations which closely align with reality over time or tend to lose wealth, and thus influence in the economy, over time. This implies that most of the economically significant actions are taken by those who make decisions they are not likely to later regret. Of course this breaks down a bit when poor decisions get subsidized, propping up the economic influence of poor decision-makers.

> Pretty much, yes. That's the only way you get any useful information.

Nah I don't agree. Sometimes people act irrationally. A otherwise friendly person might seem unfriendly because they've had too little to eat. Or because they had a bad day at work. Typically they would agree that their temporary unfriendlyness is not in accordance with their eithical principles, nor generally in theirs or anyone else's best interest. They (we) are just limited as beings. Unable to do what they know to be best.

Another way to look at it could be to say that people are not a single actor. What is the self? What we perceive as a unified I could very well be a much more shattered / distributed fenomena. Relying on the "rational actor model" limits the perspectives we can take on what a conscious being really is.

And I do think logic is a *requirement* for rationality (agree knowledge is not though). Maybe perfect logic is not necessary, behavior of sufficiently rational actors is perhaps well approximated by the rational actor model.

But maybe not! Question is - will increasingly rational actors eventually converge to the same behavior? If not - then rational actor theory cannot even approximate human behavior, it intrinsically has to be a theory about "human logic".

> Microeconomics is a solid Hard Science

And what's you opinion on astrology?

FYI microeconomics is the most controversial part of economics. Doing advanced math on abismally poor world models doesn't make a hard science, especially when none od your results are falsifiable…

Have you read Kim Stanley Robinson? This could be a paraphrase of "Anyway that's a large part of what economics is - people arbitrarily, or as a matter of taste, assigning numerical values to non-numerical things. And then pretending that they haven't just made the numbers up, which they have. Economics is like astrology in that sense, except that economics serves to justify the current power structure, and so it has a lot of fervent believers among the powerful." from Red Mars.

This is absurd. Economists devote their lives to academics, just to serve their former colleagues who are thousands of times richer than them? If you actually paid attention to real policy and the sort of policies economists actually want, you'd notice a huge disconnect.

I think there is a potential issue with funding/sponsorship bias leaking into the consensus of the field, as there is with any field. It's just that economics has ramifications for very core government policy in a way that most other fields don't.

I agree that economists as individuals are working competently and in earnest, it's just that certain economists will find it harder to get funding than others and that could manifest as bias with potentially wide reaching implications.

There is definitely a subset of economists who are hacks who advocate positions because they want to help some group and not because they think they are true, just as there were doctors who said smoking was fine.

This is absurd. Naturopaths devote their lives to health and medicine, just to serve their former colleagues who are hundreds of times richer than them? If you actually paid attention to real policy and the sort of practices naturopaths actually want, you'd notice a huge disconnect.

...

A lot of people practice things that they feel genuine and sincere about and they can even build entire institutions around those practices... doesn't mean anything if what they're doing doesn't have a measurably positive impact and there doesn't need to be any malice involved whatsoever. If anything, the people I know who believe in homeopathy are among the nicest and most honest people who deeply care about health, and yet... they are still full of crap.

OP is accusing economists of being pawns of the ruling class, which indicates a severe lack of understanding of the field. If your argument against naturopathy is a conspiracy theory about how naturopaths serving the wishes of the elite rather than scientific studies that debunk it, you also deserve to be ridiculed.

You're suggesting that there is some coordinated and intentional scheme by the ruling class to use economists as a way to serve them, my whole point is that there need not be any such conspiracy or intentional malice for this to occur by any party.

It could simply be an emergent phenomenon where economists whose opinions align with the ruling class get more exposure and more prestigious appointments than those whose opinions disagree with them, or even worse disparage them.

I am reminded of a TV news reporter/presenter who took offense to the idea presented to them that they are spreading political propaganda in service of the elites and flippantly asked something along the lines "Do you think I am self-censoring myself in service to the elite class, like I'm just a pawn taking a paycheck to say whatever the elite want me to say?" and the response to that question was "You most likely believe everything you say and are honest about your position, but if believed something different you wouldn't be sitting where you are."

>You're suggesting that there is some coordinated and intentional scheme by the ruling class to use economists as a way to serve them

I wasn't suggesting that. OP did. Nothing I said suggests that economics is an incorruptible field. The problem is that a disproportionate demand for economists comes from people with an agenda. We all know that lobbying exists. When politicians get most of their knowledge about economics from these lobbyists rather than from less biased sources, of course it will seem like the field is more broken than it actually is.

Well I'm not the other guy, and I don't think there's any sort of "seekrit society with the elites". But having done undergrad study of finance, it seems like there's a sort of "ideological capture" in the field of economics. I have never had anyone explain to me why interest rate intervention doesn't fundamentally undermine the quality of work we're doing (giving businesses loans they shouldn't be able to afford means we're wasting effort). All the economists just agree it's totally okay based on less than 100 years of data, which, IMO isn't long enough to really observe the policy effects.

Suppose you open a spreadsheet right now, discount 100 years of cash flows, and measure each cash flow as a % contribution to the sum (aka npv). You will find that at medium to higher rates years 0-20 make up the greatest percentage of the npv by far. But as you lower them, that relationship flips and cash flows for years 20 to 100 become the lion's share of the valuation. Pretty sure this is how we wound up with WeWork and all the similar fiascos, meanwhile huge swaths of the capable working-age population has dropped out of society for lack of well-compensated opportunity. Hell, there's a lot of issues right now that seem pretty easily explained with a simple DCF interpretation.

All I ever seem to get is "lowering interest rates gets the economy rolling again by allowing businesses to continue hiring, and even if those jobs are just digging & filling in holes, those people have to buy food and housing and stuff so it gets the economy rolling again!" But that doesn't explain what happens if you "get it rolling again" too many times and the ratio of hole-diggers to food-makers starts to approach 1/2 (or wherever a "tipping point" may be). Hey great! Low unemployment! Except what's actually getting done is worthless.

Is there such a thing as the 'natural interest rate' in economics? A way to determine what the yield curve would be if we hadn't been intervening for the last half a century?

I don't understand what your DCF example is supposed to illustrate. A higher interest rate also enables wealthier people to stay wealthy without doing anything. Meanwhile, Wework and similarly useless companies circulate wealthy investor's money into regular people's pockets by renting out office spaces at a loss.

For the most part, I don't think low interest rates are a bad thing (though I don't think that they should have ended quantitative tightening prematurely in 2019). I share your sentiment that too much money is circulating around, but I don't blame the Fed. They have no way to stop Wework from receiving cheap cash without hurting useful small businesses. IMO, if Congress weren't so bad at balancing a budget, the government wouldn't have to issue so much debt, and in turn the Fed wouldn't have to buy so much of it back to achieve a similar effect with QE.

I don't think the possible irrationality of the situation refutes OP's point. Historically there are plenty of people happy to serve more powerful people for a small slice of privilege, especially when that privilege is backed by ideology or religion. Why were sharecroppers fighting the Confederacy's war? Why do employees feel loyalty toward their company for the free snacks? People's motivations are not economically rational.

I will never understand why ideas like this - both completely detached from reality and actively harmful to the people who espouse them - have become so popular on Reddit.

There are a couple of orthogonal ideas in there, so I don't know what you're referring to. That economists isn't a science? That most economists are propagandists? That human societies tend to form a pyramid?

The main idea that I took offence to was the "economic incel" ideology - ie that the our entire society is nothing more than a tool for siphoning resources from the "underclass" into the hands of a few dozen multi-billionaires, and therefore if one engages in any productive activity beyond the absolute minimum necessary to survive, they're a sucker.

It's popular on various front-page(!!!) subreddits like r/antiwork and r/latestagecapitalism.

I say "incel" there very deliberately. It's a set of toxic beliefs that prevents the formation of normal, healthy economic relationships, and this reinforces the toxic beliefs in a positive feedback loop.

I've seen a friend get sucked into this and it was (still is) absolutely devastating.

The worst part is that it’s entirely narrative, so not really disprovable in the same way that “it is raining outside right now” is.

And it is like you said self fulfilling, where the world makes more sense the less economic success one has, and the narrative provides no moral option to changing one’s economic status within the system.

>the narrative provides no moral option to changing one’s economic status within the system.

This is where my friend is right now. It really, really sucks.

Could you elaborate? I'm not sure how calling an idea 'detached from reality and actively harmful' and then vaguely referencing a different social media platform contributes anything.

He did and the comment was removed. It didn't seem terrible, I don't know why it was removed. I responded to it and then it was gone.

this is hackernews

> IMO, economics as a science is all about making up theories to 'scientifically' (but actually, just academically) justify whatever the ruling powers want to do.

I see this with macroeconomics, but economics is still a fairly broad field. Microeconomics has the spherical cow problem but econometrics has many useful applications, as does game theory.

A piece of evidence to your point is who quant firms hire: a lot more physics and math PhDs than economists. You would think someone who studies the science of the economy would be good at making money, but the real economy doesn't seem to care as much about those theories.

When I see comments like this I just want to ask: could you do us a favour and name and explain a single economic theory?

Let's start with the basics. In economics, what is "utility"?

I'm not the person you're responding to, but I hold the opinion that economics isn't a science, that it's akin to numerology, and that it's social role is that of modern-day court astrologers.

> In economics, what is "utility"?

First result (using https://andisearch.com/ ):

https://www.investopedia.com/terms/u/utility.asp

> Utility is a term in economics that refers to the total satisfaction received from consuming a good or service. Economic theories based on rational choice usually assume that consumers will strive to maximize their utility. The economic utility of a good or service is important to understand, because it directly influences the demand, and therefore price, of that good or service. In practice, a consumer's utility is impossible to measure and quantify. However, some economists believe that they can indirectly estimate what is the utility for an economic good or service by employing various models.

Circular definition, "impossible to measure", "indirectly estimate", "various models"...

Sounds like mumbo-jumbo with math to me.

"Utility" isn't a scalar value, or a vector, or even a matrix. It's got to be a higher-order tensor or some even more exotic mathematical object, eh?

> I remember my friend Johnny von Neumann used to say, "With four parameters I can fit an elephant, and with five I can make him wiggle his trunk."

~Fermi

So to sum up, you don't know what utility is, you've looked it up on investopedia, and on the basis of a web page, and your own entirely mistaken imagination of what the maths might be, you're gonna pontificate? I think you're proving my point!

> you don't know what utility is

I don't think anyone does.

> you've looked it up on investopedia, and on the basis of a web page

Is that definition wrong? Can you provide a better definition or link?

> your own entirely mistaken imagination of what the maths might be

But I do know what math is, eh? And I know how to use it to do things like design electronic circuits that work "like it says on the tin". Do economists have anything like Ohm's law? Can you describe the math? Does it makes predictions? How can it make predictions when there are no empirical ways to measure e.g. the "utility"?

Sure. Utility is a way of representing preferences. A utility function goes from the choice set X to the real number line. A preference relation, in turn, is a binary relation on X satisfying completeness and transitivity. Utility function u represents preference relation >> if and only if u(x) > u(y) iff x >> y.

Yes, utility makes predictions, because preference relations make predictions. See the Weak Axiom of Revealed Preference and its cousins. If I see you choosing oranges over apples, and then the price of apples falls and you still choose oranges, we have learned that you strictly preferred oranges at the old price. More generally, some patterns of choices are rationalizable by a preference ordering. Others aren't. So a claim about someone's preference ordering has empirical content. (It sounds as if you imagine measuring utility as something that might need a brain scanner. We haven't thought that way since about World War II.)

This is all Econ 101 (at a bit higher level than a first year undergrad). I don't expect you to know it. I do expect you to know it if you intend to pontificate about it. Similarly, I know nothing about Ohm's Law, and for this reason, I avoid making broad pronouncements about the invalidity of all of physics. I find this basic commitment to intellectual humility helpful.

First, thanks for putting your math where your mouth is, but I'm sorry to admit that I just hear "spherical cow in a vacuum" in what you describe. I mean it, I really do appreciate you trying, but what you're describing sounds ridiculous to me.

Sorry for relying on investopedia again but, uh:

> Weak Axiom of Revealed Preference (WARP): This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom.

https://www.investopedia.com/terms/r/revealed-preference.asp

The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it.

> It sounds as if you imagine measuring utility as something that might need a brain scanner. We haven't thought that way since about World War II.

That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology.

> I do expect you to know it if you intend to pontificate about it.

First, I'm not pontificating, I'm decrying. Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology. Just as I don't need to study those in depth to know they're BS, I don't need to know much about economics to see that it's barren and, frankly, ridiculous.

> I know nothing about Ohm's Law

You might want to learn. Not only would learning electrical engineering give you a great working example of how to use math to reason about real world phenomenon, and unlike economics you can actually use it reliably to build useful devices.

> I find this basic commitment to intellectual humility helpful.

It would have been most welcome and helpful a couple of comments ago.

- - - -

See, the thing about Ohm's law is you don't have to take my word for it, or anyone's, not even Ohm's. You can build the circuit, apply the meter, and measure it for yourself. Humility or arrogance doesn't enter into it.

The problem isn't that economists want to study the economy and are doing it badly, the problem is that they want to be treated as if they are physicists, and we want to treat them that way because of politics and psychology. And even that's isn't a problem until we make mistakes and our blind following of the not-physicists' "science" prevents us from stopping or fixing the errors. Next thing you know, the Aral Sea is gone!

https://en.wikipedia.org/wiki/Aral_Sea

> The word "axiom" is inappropriate here. This isn't science, it's a "just so" story. It's cereal box psychology. It's an attempt to dress up in big kids' clothes and I've got no respect for it.

I don't see any substantive criticism here. Can you explain what's wrong with WARP? I see it as a way of going from theories (people's preferences are such-and-such) to predictions (given WARP and these preferences, we expect these choice patterns, and not those).

>That's a shame, disdaining the source of real data. Of course brain scanners weren't that good back then, eh? But you don't need them. Pupil dilation, changes in pulse and respiration, capillary response, there are all sorts of signals that let you see "inside" the brain w/o fancy technology.

If you think that, then you can build a theory of utility involving that. There is an approach called neuroeconomics which tries to do so. My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices.

> Second, I don't need to know details about the nature of the BS, I can tell from the smell alone. Economics is in the same epistemological boat as Numerology and Astrology.

Of course, if so, then there's nothing further to discuss. Meanwhile:

* Autor et al. claim "import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment." What's wrong with their method? Why is it astrology?

* Banerjee and Duflo analyse microcredit using a randomized controlled trial. They find "no significant changes in health, education, or women's empowerment" and almost no long run effects. It seems important to understand whether popular anti-poverty policies work. Why is this barren?

* James Heckman has spent his life trying to understand how to help disadvantaged children, building mathematical theories of human capital and testing them on data. Why is this numerology?

* You blame economists for the loss of the Aral Sea. I would think it's more to do with Soviet planning. I hold no brief for Marxist economics, which was far from the mainstream already by the 1950s, but in any case, which economists were to blame?

Thank you for replying in such a constructive way, and I apologize for being uncouth in my previous comments. You've made your original point: I've admitted that, as a critic of economic science, I'm speaking from gross ignorance.

I want to be clear, I don't object to the study of economics, it's obviously an important and valuable field of study. What I object to is the (IMO) unearned social/political status of the field. I don't believe that economics is science (yet!) and so it seems to me that it functions (en mass) as a kind of psychological blind or bluff to let us feel like we have more agency than we in fact do. If I were to try to put it in a pithy "clickbait" phrase, "Alan Greenspan is a priest not an engineer." Hmm?

I don't think I'm going to convince you that economics is pre-scientific, and you're not going to convince me that it's a proper science. But let me try to be a little bit constructive. To me a legit scientific economics would have to be essentially:

    Ecology + Psychology

Ecology is scientific (because it studies physical systems and our physics is solid. It deals in vastly complex networks but traction is gained through statistical methods, and our understanding of statistics is pretty strong too.)

Psychology, on the other hand, is a huge mess, far worse than economics. I'm not going to get into it here but the only rigorous engineer-able psychology I know of is dismissed as pseudoscience by academics, so there we are.

We're halfway there, viewed optimistically.

- - - -

> Can you explain what's wrong with WARP?

I can pick apart the definition and maybe that will illustrate where I'm coming from.

> This axiom states that given incomes and prices, if one product or service is purchased instead of another, then, as consumers, we will always make the same choice. The weak axiom also states that if we buy one particular product, then we will never buy a different product or brand unless it is cheaper, offers increased convenience, or is of better quality (i.e. unless it provides more benefits). As consumers, we will buy what we prefer and our choices will be consistent, so suggests the weak axiom.

To me, this is obviously a statement about psychology, but it's trying to treat the human being as a kind of "black box" by applying an abstraction ("as consumers") that's almost cartoonish, and then reasoning over this abstraction in ways that don't particularly match up to what you see in the real world, where people buy things for all kinds of reasons, most of them largely unconscious. There's the phenomenon where the price of something goes up and people want it more. Or the package changes and the sales go up (or down) even though the other qualities (price, convenience, quality) are the same.

Then there's the methodological difficulties. How do you actually measure these things to test the theories? How are these predictions stated?

To me, WARP says "people have habits" without adding anything of substance. It's taking a commonsense, prosaic truism and dressing it up in a lab coat.

> My point is not to disdain these sources of information, it's that they aren't strictly necessary: preferences exist to predict choices and a given claim about someone's preferences can be falsified by observing their choices.

If you have access to lots of purchasing data then, yes, I'm sure you can find regularities. If you're talking about predicting individual behaviour than again, how are you measuring this stuff? Are people following subjects around and recording them?

I want to be clear, I am pro-science. I'm not trying to undermine the authority of science, I'm trying to protect it. If we restrict the word to mean those fields of study that can make reliable predictions, or in other words that lead to reliable engineering disciplines, then it becomes pretty much unassailable. Only a fool doubts a physicist (in re: physics) eh? Chemistry is already a little squiffy though: e.g. nicotine "research".

If we continue to insist that psychology, sociology, economics, and the other "soft" sciences should carry the same authority when it's obvious to a lot of people that they are nothing like physics, then it seems to me we risk throwing the baby out with the bathwater.

I'm not going to go through those examples you gave, and I apologize for that. The first one sounds like it might be a statistical correlation backed by a lot of data, so perhaps it's okay? The second two sound like numerical naval gazing. Why study poverty? Just give people food and money. The reason poverty exists is that we lack love.

> You blame economists for the loss of the Aral Sea.

In re: the Aral sea. I do not blame the economists, or even the Soviets per se, I blame human nature. We are dumb, ignorant, and prone to hallucinations. That's why science is so important. These folks thought they had a correct economic theory but they were wrong and they didn't have the ability to notice and react. We (modern, Western) folks tend to talk and act like we have a correct economic theory but then things like the 2008 meltdown come along and Alan Greenspan is like, "Whoops."

To the extent that economics helps us see and understand reality, it's terrific! To the extent that it helps us fool ourselves, it's as dangerous as relying on astrologers.

I think we are probably more or less coming closer, and in danger of overloading HN's servers, so I will stop here :-)

I studied economics. Everything except basic micro is nonsense. Intermediate micro is just calculus with silly variables. All the macro we studied was based on like fifty years of data, that of course showed the amazing power of economic theory, that everything compounds forever! Wow, what incredible achievements us humans have made. Pat on the back for us!

Can you define utility? It's an unsolved problem in economics.

What? It isn’t even a problem in economics.

I think if you divided economists up into two groups, with A including all the economists with popular media platforms or who work in government policy, and with B including the rest, those stuck in academia writing papers that only other economists ever read, then you would find that group A fits your quip very nicely, and group B does not.

Group B would probably be split in one bigger group that fits and another smaller one that doesn't.

Is it somehow righteous for academics to study self-referential things that their offspring then go to study in perpetuity? For example, money holes like string theory haven't produced any major breakthroughs, and in fact, that is by design. Chipping away at the near infinite scope of the infinite problem is good for writing papers to get PhDs. It is not good for science, or human progress.

Yeah, I think it's mostly that, but also as I just commented in another thread:

> economics is a psuedoscience like all social sciences and astrology. They've predicted absolutely nothing of value. It's just people studying these things prior to them becoming scientific, like people did with alchemy and whatnot before chemistry.

I mean...sort of? You're right about everything...but the way you portray it is..not so black and white. Life is quite nuanced.

Life is certainly nuanced, but complexity is more often leveraged to justify corruption than it is the cause of failure.

The problem with economics is that every problem becomes a wicked problem. You just can't test your theories in a controlled manner. And everything has confounding factors.

> The problem with economics is that every problem becomes a wicked problem. You just can't test your theories in a controlled manner. And everything has confounding factors.

Or, to put it simply: economics is not a scientific discipline for any generally accepted definition of the term.

Esther Duflo won the Nobel prize for implementations of randomized controlled trials in a very non-wicked way. Experimental economics is a mature and active field.

"Wicked" doesn't mean bad, it means there are inherent difficulties in testing and implementation.

The Nobel Memorial Prize for Economics is what it is. Both Hayek and Friedman both won it, even though they have very different ideas about how the economy should be run. As did Paul Krugman. Yet I've seen no one mention his Nobel prize when it comes time to criticize him.

Even looking at what her study that won her the Nobel showed:

"Banerjee, Duflo and their co-authors concluded that students appeared to learn nothing from additional days at school. Neither did spending on textbooks seem to boost learning, even though the schools in Kenya lacked many essential inputs. Moreover, in the Indian context Banerjee and Duflo intended to study, many children appeared to learn little: in results from field tests in the city of Vadodara fewer than one in five third-grade students could correctly answer first-grade curriculum math test questions."

You can only get those results by implementing the solution. You can only know it doesn't work by trying it and seeing it doesn't work. That's part of what makes the problem wicked.

And unlike one of the people who responded who wanted to use my statement as support for saying economics is not a "real science". What it really means, is that this shit is hard because it is incredibly hard to conduct experiments in ways that don't irreparably harm some group.

Yeah, exactly, so it's not science at all and is of no value other than for what the OP said.

This criticism is usually applied to MMT. MMT says that in times of inflation you should raise taxes. Nobody is doing that.

That's not what MMT says. It says that excessive spending in the economy can create inflation. A possible way to compensate (not the only one) is to raise taxes.

But it doesn't say that the only cause of inflation is excessive spending. That idea is a monetarist fantasy, who are able to keep saying that even in the middle of a pandemic, with a logistic collapse, an energy crisis and a major war. Still, they think that everything will be OK raising interest rates and taxes.

Totally crazy. I'm curious to see what they will say if we see something a lot worse, deflation, in the next years.

"This criticism is usually applied to MMT. MMT says that in times of inflation you should raise taxes. Nobody is doing that."

Except that it doesn't say that.

The basics of MMT analysis is that put forward by Warren Mosler in Argentina recently. [0]

- Floating exchange rate

- 0% interest rates and no further issuance of public debt

- a guaranteed job for all at a fixed living wage

Taxes are very much secondary in MMT analysis. The stabilisation comes from government refraining from giving people free money for doing nothing, which is what paying interest on debt and reserves represents.

"As Mosler tirelessly repeated in his expositions, the price level of an economy, and therefore its level of inflation, can only be explained by the price that the State is willing to pay for the goods and services it needs to supply itself. This especially concerns the price of labour reflected in wages, since the origin of all goods and services is socially embodied human labour. "

[0]: https://gimms.org.uk/2022/05/16/journey-to-the-heart-of-arge...

That's Mosler's MMT, there are other MMT proposals which are closer to the path taken by the administration. Kelton's for example.

It's the same thing with a different marketing emphasis. Although increasingly they appear to be heading down the same policy dead ends as Post Keynesianism, simply to try to appeal to the Democratic Party.

You won't find any MMT proposal that proposes changing taxes to control inflation, because that doesn't work any more than changing interest rates does. You don't want humans involved in the stabilisation system - it has to be done by the automatic stabilisers, and on the spend side.

Taxes are set based upon fiscal policy goals which are, or should be, indifferent to the business cycle.

The analysis within MMT comes from an understanding that we control inflation via a buffer stock of human labour, and that government sets the price of currency when it spends.

This is because the money and prestige is in academically justify the ruling powers and economists are simply rational agents engaged in maximizing their personal utility.

There's more money in demonstrating that raising the minimum wage destroys jobs than there is in demonstrating that it destroys profits.

There is a kernel of truth in there, I'll give you that. It is hard to extract social sciences from the zeitgeist.

But let's call a spade a spade: this is just another iteration of Marxist epistemological ideas. For Marx, the division between the proletariat and the bourgeoisie was much deeper than exploitation. Bourgeois had their own unsound systems of intertwined knowledge built to benefit their position in society.

Not to be flippant, but that's how forced re-education was morally justified by socialist regimes of the 20th century.

I don't understand why this comment is almost downvoted to oblivion.

This type of thinking is exactly what led to mass starvation in the Soviet economy.

It turns out, markets are really good at figuring a LOT of that out. Planned economies are probably computationally infeasible even with vastly simplifying assumptions.

> This type of thinking is exactly what led to mass starvation in the Soviet economy.

In this case, the problem was indeed that Soviet "scientists" - as bsedlm postulates - "were making up theories to 'scientifically' (but actually, just academically) justify whatever the ruling powers want to do" - in this case lysenkoism:

> https://en.wikipedia.org/wiki/Lysenkoism

Tangent here: how do arbitrary, mass decisions differ when they are done independently versus when they are done in the open? Looking at this from the perspective of 'mob rule' which frequently makes very bad decisions.

Because markets are actually making a LOT of different decisions with incredible granularity and specificity across time and many other metrics. This is essentially computationally infeasible to do in a centralized way even if you make many simplifying assumptions.

It can go wrong of course! But there essentially is no alternative that is even close to working.

But those decisions are done in a fairly isolated fashion, i.e. you don't know what your neighbor is doing.

There was mass starvation in Russia under the Czars too.

Markets existed long before “Economics”.

The Soviets had economists too. They just had different dodgey theories.

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