Physics envy — a sure way to make economics useless
18 Mar, 2023 at 12:05 | Posted in Economics | 2 Comments
In the 1930s, Lionel Robbins laid down the basic commandments of the discipline when he said that the premises on which economics was founded followed from ‘deduction from simple assumptions reflecting very elementary facts of general experience’, and as such were ‘as universal as the laws of mathematics or mechanics, and as little capable of “suspension”.
Ah yes, general experience. What did Albert Einstein allegedly say about common sense? A funny thing happened on its way to becoming a science: economics seldom tested its premises empirically. Only in recent years has there been serious investigation of its core assumptions and, all too often, they’ve been found wanting.
Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity …
Given this willful blindness, the current reaction against economists is understandable. In response, a ‘data revolution’ has prompted many economists to do more grunt work with their data, while engaging in public debates about the practicality of their work. Less science, more social. That is a recipe for an economics that might yet redeem the experts.
Physics envy still lingers on among many mainstream economists. It is also one of the prime reasons behind the pseudo-scientific character of modern mainstream economics. The use of mathematics in mainstream economics — in contradistinction to physics — has not given us much in terms of accurate explanations and successful predictions of real-world phenomena.
Turning economics into a ‘pseudo-natural science’ is — as Keynes made very clear in a letter to Roy Harrod in 1938 — something that must be firmly ‘repelled.’
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LARS P. SYLL 
Dear rsm I think you are missing the target with your bridge builders for a number of reasons. They are engineers, not physicists so operate with margins of error to compensate for the unknowns that seem to crop up in engineering situations like exceptional weather conditions and the possibility of ageing or poor workmanship or material failures combining to produce unexpected results. Which is exactly what you would expect economists to do – to look at their predictions and factor in the stuff that often catches them out or they don’t know about.
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And your physicist analogy points to the same thing. We have “laws” of physics that actually work in real world situations and we know there are problem areas because the “laws” don’t make sense of everything out there. So physicists are working on refining or completely rewriting their “laws” so that they do cover the problem areas.
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Some economists on the other hand seem to say that their model did not predict what actually happened because of something we could not possibly know about, rather than trying to work out what was wrong with the model so that the next set of predictions will be closer to reality.
Comment by Huw Williams— 20 Mar, 2023 #
How precise and predictable is physics, when bridge builders double specs? If economists honestly propagated error terms as physicists do, shouldn’t poverty levels be twice what economic calculations yield?
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《Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity …Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity …》
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Why ignore dark matter? Why do stars in some galaxies defy physical gravity, while other galaxies don’t?
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Also why ignore the central problem in physics, that laws on different scales are incompatible?
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Why still pretend that physics has things figured out, when physicists themselves are exploring retrocausality? See a recent slashdot.com article “A Growing Number of Scientists Are Convinced the Future Influences the Past”:
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《”We have instincts about all sorts of things, and some are stronger than others,” said Wharton [professor of Physics at San Jose State], who recently co-authored an article about retrocausality with Huw Price, a distinguished professor emeritus at the University of Bonn and an emeritus fellow of Trinity College, Cambridge. “I’ve found our instincts of time and causation are our deepest, strongest instincts that physicists and philosophers — and humans — are loath to give up,” he added. Scientists, including Price, have speculated about the possibility that the future might influence the past for decades, but the renewed curiosity about retrocausality is driven by more recent findings about quantum mechanics. […] While there are a range of views about the mechanics and consequences of retrocausal theories, a growing community of researchers think this concept has the potential to answer fundamental questions about the universe.》
Comment by rsm— 18 Mar, 2023 #