Economics – when the model becomes the message
11 January, 2013 at 13:54 | Posted in Economics, Theory of Science & Methodology | 3 CommentsToday there is a post up on Real-World Economics Review Blog – one of my favourite blogs – by Peter Radford on the sorry state of modern economics:
Economists nowadays love to talk about their models. They produce models to explain and elucidate. They devise more complex models to mimic the entire economy. They cobble together small models to illustrate a particular problem. Not to model is not to be an economist.
I call these models caricatures. That’s what they are. Caricatures.
Think of those old political cartoons. The subject of the cartoonist’s scorn was always a politician whose features were exaggerated to make a point. If the nose was large in real life, it became huge in the cartoon. If the ears were a little on the above average side, then they became elephantine. A squeaky voice was portrayed as a squeal. And so on. The point being that the viewer of the cartoon was assumed to be aware of the foible or feature being drawn out, and the exaggeration was a device to convey new information or to highlight something about the subject.
Models are the same thing.
They are gross simplifications with certain features of the real world suppressed or eliminated entirely in order to draw attention to others. If the model is supposed to throw light on one thing, then other stuff is thought of as extraneous and eliminated …
The reason a caricature works is that we already know about the nose, the ears, or the voice. There is nothing new being conveyed. Recognition is simplified so that another message can be attached to it and passed along more readily.
In contrast, the reason economists use models is to look for things that are not already known. They are looking for insights not easily revealed by the complex web of reality, but which may come into sharper focus when that complexity os removed.
The success or failure of the technique resides largely in the choice[s] about which aspect of reality to suppress. And therein lies the source of the mess. Economists have made some pretty damn awful choices. So much so that any insights gained are unlikely to have much, if any, relevance to the real world. The cartoon remains just that, a cartoon …
Apparently economists like caricatures because they cannot draw good portraits. Economics is mostly a cartoon. We need it to be more.
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Suppressing certain things and abstracting away from others is a deliberate act I feel.
And that’s because economics isn’t about discovering how the world works. It’s largely about pushing your a-priori beliefs and coming up with ‘evidence’ that supports them.
Economics likes to think that it evolved from Political Economy by dropping the Political bit.
I’d suggest it is the other way around
Comment by NeilW— 11 January, 2013 #
Theres that damn cross again. Every theory has this god damn cross. No matter who you turn to it shows up as the basis of the entirety. First do away with the cross, it is obviously a falsehood a construct not from reality, it is the fantasy that creates all the other fantasies. Then do away with the notion that equilibrium is in the center, it is not, it could be, but purely by chance in some specific case.
I started to make a more correct illustration to put in place of the cross. But then I realised, it would still be the description of a machine, what good would it do if I made economists good at managing the machine? I don’t want to live in a machine.
Comment by Martin— 13 January, 2013 #
It’s interesting how cartoons or caricatures are made scientific truth by using some mathematics and so called scientific reasoning. They are only models and thereby. in their best, describes typical examples.
To look deeper into this kind of models may lead to greater knowledge. It leads to greater knowledge of the model of current interest. This knowledge is however not guaranteed to be greater knowledge of the reality which the model is attributed to depict.
I have also contributed to this quilt and scientific work should in its, to use a ill-used word, nature be without pre-understanding and assumptions. Some things are still taken for the truth and can therefore not be questioned. It’s not easy to “keep some darlings” and “kill some darlings” as long as you have to relate to all the knowledge known until today – a knowledge where some things are prescribed doctrines.
Comment by L8— 17 January, 2013 #