What is truth in economics?

16 Feb, 2020 at 14:34 | Posted in Economics | 2 Comments

28mptoothfairy_jpg_1771152eIn my view, scientific theories are not to be considered ‘true’ or ‘false.’ In constructing such a theory, we are not trying to get at the truth, or even to approximate to it: rather, we are trying to organize our thoughts and observations in a useful manner.

Robert Aumann

What a handy view of science …

How reassuring for all of you who have always thought that believing in the tooth fairy make you understand what happens to kids’ teeth. Now a ‘Nobel prize’ winning economist tells you that if there are such things as tooth fairies or not doesn’t really matter. Scientific theories are not about what is true or false, but whether ‘they enable us to organize and understand our observations’!

What Aumann and other defenders of scientific storytelling ‘forgets’ is that potential explanatory power achieved in thought experimental models is not enough for attaining real explanations. Model explanations are at best conjectures, and whether they do or do not explain things in the real world is something we have to test. To just believe that you understand or explain things better with thought experiments is not enough. Without a warranted export certificate to the real world, model explanations are pretty worthless. Proving things in models is not enough.

Truth ought to be as important a concept in economics as it is in real science.


  1. It is interesting that many economists don’t read Milton Friedman’s 1953 essay “The Methodology of Positive Economics” anymore on the grounds that either [1] the apparent instrumentalism it advocates is out of date, or [2] methodological thought is a philosophical side-show. And yet it is still the ‘go to’ view of economic science of some luminaries such as Aumann.

  2. Is the equation for gravity true? If so why doesn’t it apply to stars orbiting galaxies? If Dark Matter is true, why can’t we observe it? Real science is normative, too. As Feynman pointed out in Cargo Cult Science, researchers after Millikan found ways to repeat his mistakes, throwing out better results because they wanted to tell the same story of charge that he had told. The notion that science goes beyond story-telling is itself a story.

Sorry, the comment form is closed at this time.

Blog at WordPress.com.
Entries and comments feeds.