The insufficiency of validity

14 Mar, 2023 at 11:14 | Posted in Theory of Science & Methodology | 2 Comments

Mainstream economics is at its core in the story-telling business whereby economic theorists create make-believe analogue models of the target system – usually conceived as the real economic system. This modelling activity is considered useful and essential. Since fully-fledged experiments on a societal scale as a rule are prohibitively expensive, ethically indefensible or unmanageable, economic theorists have to substitute experimenting with something else. To understand and explain relations between different entities in the real economy the predominant strategy is to build models and make things happen in these “analogue-economy models” rather than engineering things happening in real economies.

Formalistic deductive “Glasperlenspiel” can be very impressive and seductive. But in the realm of science, it ought to be considered of little or no value to simply make claims about the model and lose sight of reality. As Julian Reiss writes:

Error in Economics: Towards a More Evidence-Based Methodology (Routledge  INEM Advances in Economic Methodology): Reiss, Julian:  9780415579728: BooksThere is a difference between having evidence for some hypothesis and having evidence for the hypothesis relevant for a given purpose. The difference is important because scientific methods tend to be good at addressing hypotheses of a certain kind and not others: scientific methods come with particular applications built into them … The advantage of mathematical modelling is that its method of deriving a result is that of mathemtical proof: the conclusion is guaranteed to hold given the assumptions. However, the evidence generated in this way is valid only in abstract model worlds while we would like to evaluate hypotheses about what happens in economies in the real world … The upshot is that valid evidence does not seem to be enough. What we also need is to evaluate the relevance of the evidence in the context of a given purpose.

Proving things about thought-up worlds is not enough. To have valid evidence is not enough. A deductive argument is valid if it makes it impossible for the premises to be true and the conclusion to be false. Fine, but what we need in science is sound arguments — arguments that are both valid and whose premises are all actually true.

Theories and models being ‘coherent’ or ‘consistent’ with data do not make the theories and models success stories. We want models to somehow represent their real-world targets. This representation can not be complete in most cases because of the complexity of the target systems. That kind of incompleteness is unavoidable. But it’s a  totally different thing when models misrepresent real-world targets. Aiming only for validity, without soundness, is setting the economics aspirations level too low for developing a realist and relevant science.


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  1. ‘coherent’ or ‘consistent’ in maths as a model reducing reality to numerical symbology would seem to violate everything known about human psychology e.g. rational by model standard and the next a psychotic episode which can go from micro to macro in an eye blink these days due to digital platforms. Not that analog War of the Worlds sent more than a few around the twist.


    Which then begs the question about behavioral economics being a post model marketing/fine tuning dept.


    The late 1800s has a lot to answer for and those that thought economics was a dept store catalog and buy the one that resonates with them the most – funny how that works … and not something new IMO …

  2. “The advantage of mathematical modelling is that its method of deriving a result is that of mathemtical [sic] proof: the conclusion is guaranteed to hold given the assumptions.”
    “Since Gödel showed that any complex axiomatic system is undecidable and incomplete, any such deductive-axiomatic economics will always consist of some undecidable statements. When not even being able to fulfil the dream of a complete and consistent axiomatic foundation for mathematics, it’s totally incomprehensible that some people still think that could be achieved for economics.” – Lars Syll, Gödel and the limits of mathematics, 10 May, 2022 at 16:50 | Posted in Theory of Science & Methodology
    If mathematical proofs can be given inputs that yield undecidable results, can they be said to guarantee anything really?

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