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Comment by 1gor | Hacker News Reader

Economics is not a science at all, in its current mainstream form.

It is based on a set of hopelessly outdated assumptions about the world, and its current toolset is easier to throw away than to modernize. Especially since the economic academic establishment is focused more on self-defence and self-support than on the pursuit of knowledge.

Here is the list of things that are central to modern mainstream economics but are proven wrong.

- the concept of equilibrium

- efficient market hypothesis

- modern portfolio theory

None of core economic concepts is supported by experimental evidence, so it is as much a science, as the "scientific Marxism" was.

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Whether or not these concepts are really proven wrong, I would claim they're not that centeal to economics. The most central idea of economics is that there aren't enough goods for everybody to have what they want. Therefore, you have to distribute the goods somehow.

Some (more or less) fair ways to do that would be to give the goods to those that pay more, or work harder, or wait longer. There are other ways - stealing, cheating, haveing influential friends.

In any case, the scarcity simply won't go away by declaring economics unscientific.

Yes, scarcity, opportunity costs, and tradeoffs are the real core economic principles.

It is a science if you consider the word's Middle English, Anglo-French, and Latin roots. Economics is a body of knowledge, and thus it is a science. It, however, is not a natural science. With that said, it doesn't mean that it is any less valid than something like chemistry or physics. While I am breaking my own rule about not discussing this topic, the only people that really seem to care about such distinctions are "natural scientists" whose egos have apparently grown too large to stick with the subject they know. I'm sorry that the Swedish Bank has deprived the world of the purity of the original Nobels by issuing an award that is not a Nobel. I hope the physicists are able to detect the sarcasm of the last sentence; if not, this sentence should make it clear.

EDIT: My position is more on the economics side. I'm working on a grad degree in financial engineering.

There is no need to speak in general terms, there are very specific things that make economics a bogus science.

The biggest issue is that modern mainstream economics is modelling the world as Gaussian. There is no room for 'fat tails' in econometrics, for example, every time you see 'regression' mentioned somewhere -- this should raise alarm. The world is not-linear.

Same applies to other concepts mentioned above. This one issue of crude inefficient approximation (stochastic world rather than the world as a complex nonlinear system) is enough to undermine most of modern economics. This is because a lot of this so called 'science' consists of many very elaborate and intellectually beautiful rigorous constructs, which are unfortunately built on an obsolete base.

Linear models had their place, maybe, 20 year ago, because there was nothing better. But now we have a very solid body of knowledge on which to build further scientific advances, most of it achieved through experiments (with computers), and not though some cute 'mental experiments'.

So, let's not be too sensitive, there is science that is supported by experiments, and there is a kind of abstract sophism which is modern economics. The sooner the public sees that this emperor has no clothes, the better.

I hear this argument constantly. No, it's not the best model of the world, but models rarely describe the real world 100%. Instead of trotting out the same old claim that the world is non-Gaussian over and over again, how about you provide some original thought to the subject or at least accept that some of the models in current use are the best we can do with at this time?

It's a tough call to come up with 'original thought' in a thread comment. But I can give some pointers about non-linear methods that work.

Time delay embedding is a common method to estimate hidden structure in the system. You can make short-term predictions about future state of the system if you look at its previous states and find ones that are similar to current one. You can analyse transitional probabilities between these states. You can also study scale-invariant properties of the system such as fractal dimension or log-time scaling. There is a separate discipline called 'chaos control' that looks at certain unstable moments when the system can be manipulated by a small external signal (very relevant for dealing with heart attacks, should be interesting for central banks as well).

So, most categorically, current mainstream economic models are by far not the best we can do with at the time. They are grossly inaccurate representation of reality. There is of course emerging field of 'complexity economics' but it is not even close to being accepted in the mainstream.

I think you're contradicting yourself when you argue that economics is not a science and yet also argue that central tenets of modern econ have been "proven wrong." By what means are you claiming they have been "proven" wrong if not scientifically?

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