The economist’s oath

4 Oct, 2022 at 12:10 | Posted in Economics | 1 Comment

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— I will remember that I didn’t make the world, and it doesn’t satisfy my equations.

Ten Principles of Economics | nostra economia— Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.

— I will never sacrifice reality for elegance without explaining why I have done so.

— Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.

— I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.

Emanuel Derman & Paul Wilmott

As social researchers, we should never equate science with mathematics and statistical calculation. All science entails human judgment, and using mathematical and statistical models doesn’t relieve us of that necessity. They are no substitutes for doing real science.

Mathematics is one valuable tool among other valuable tools for understanding and explaining in economics.

What is, however, totally wrong, are the utterly simplistic beliefs that

• “math is the only valid tool”

• “math is always and everywhere self-evidently applicable”

• “math is all that really counts”

• “if it’s not in math, it’s not really economics”

In mathematics, the deductive-axiomatic method has worked just fine. But science is not mathematics. Conflating those two domains of knowledge has been one of the most fundamental mistakes made in modern economics. Applying it to real-world open systems immediately proves it to usually be excessively narrow and hopelessly irrelevant.

1 Comment

  1. Amen!


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