The science of economics?

My dad is disappointed in me. He tries to restrain it, but every so often he lets it come out. He thinks I shouldn’t have chosen to do Economics at University. “It’s not a real science,” he says. He is a chemist, you see. Sometimes I find it difficult to disagree with him, although I don’t think that it makes economics worthless at all. I hated chemistry at school anyway. Besides, my mum warned me not to do a science at university because according to her it’s almost impossible to get a job. What do I do with parents like this?

Anyway, that throny issue as to whether or not economics is a science is something that Greg Mankiw has got his teeth into on his blog.

In my opinion there are a few barriers to economics being a science (so far). One of the things my dad says is that because the behaviour of humans is “random” (his word), you cannot possibly make any serious predictions. Perhaps so. It does get tiring after a while to see economic models assuming “rationality”. Every human becomes the robotic Homo economicus (there was a post about this yesterday at The Fluffy Economist).

Nevertheless, many economic theories do appear to hold true in real life. I should have asked my dad, “When the price of a good goes up, is it really a ‘random’ occurance if the demand for that good goes down?” Yet even such simple concepts which even non-economists would recognise almost as facts of life are not without their problems.

I was discussing economics with a friend on my way back home from our exam yesterday, and I mentioned that my biggest personal gripe with the economics I have learned at university and that I read in the textbooks is all of the maths involved. The movement towards a more maths-based approach was an attempt by the discipline of economics as a whole to gain more credibility; to look more like a real science and not one of those wooly humanities subjects.

But I think I would take a lot of economics much more seriously if it stopped trying to sum up human behaviour in an abstract equation. It is a square peg in a round hole, in my view. By coming out with such an approach that gives you such precision makes it look like economics is promising the moon on a stick when it evidently cannot bring you it. Maybe this is just my personal aversion to maths coming out though. 😀

Another huge barrier to economics being seen as a science is that it is so closely related to politics. To make a comment about economics is to make a comment about politics. And as we all know, making a comment about politics makes you ten instant friends and a hundred instant enemies. Even if many economists can agree on something (which isn’t often, but hey), many non-economists almost certainly will not. Immigration is a good example (and I’ll probably have a post on that tomorrow — I bet you can’t wait!).

As one anonymous commenter on Mankiw’s blog said, “One hardly hears of Republican chemical theories and Leftwing chemistry.” Is it any coincidence that, for the man on the street at least, one of the most controversial scientific theories today is that of evolution? The scientific community may be pretty well united in its support of the theory of evolution, but because creationism / Intelligent Design and evolution has become such a politicised issue, the theory of evolution has become questionable in the eyes of the general public.

This is a rare, freak event: a biology theory has become politicised, and therefore questioned. Economics is not so lucky: every economic theory is politicised from the word go, and is therefore questioned.

Here is some better news for economics though. Economics is still an extraordinarily young science. While people have been pondering about mathematics, biology, physics and chemistry for thousands of years, modern political economy is said to have begun with Adam Smith just a couple of hundred years ago.

If we go back to when chemistry was that old, we would probably find four elements: earth, fire, water, air. So perhaps we shouldn’t be too critical if economics still seems a bit unsteady on its feet, and we should instead make do with what we’ve got.

5 comments

  1. I studied a small amount of economics as part of my rational/public choice modules.

    Your father has sort of got a point. One of the things my dad says is that because the behaviour of humans is “random” (his word), you cannot possibly make any serious predictions.

    Fluid mechanics (Boyle’s law?). You can’t predict the random movement of each individual molecule. You can predict the flow of the river.

    You can’t predict which US high school will have a gun shooting in a given calender year. You can predict it will happen. It’s all about percentages and odds. That makes it maths, that makes it science.

    I can predict the behaviour of my host families in my job because I have a good grasp of rational behaviour at a basic level. I don’t know which will be a loon, but I know I’ll get one. I don’t know how many will cancel at short notice, but I can predict it’ll be about 5%, and can try to ameliorate the damage it causes and give extra incentives.

    When running my shop, I knew that each May, takings would double each week as the tourists started arriving. Thus head office management could be told to take a running jump whne they told me I would miss target. I never did. People can be predicted in mass numbers.

    Asimov was right.

  2. There was “left wing” science; Lysenkoism in Stalin’s USSR. The trouble was it was bollocks. For a theory to be scientific the experimental results derived from it must be reproducible and the theory must be testable (i.e. disproveable.) I’m not sure this applies to economics. And Stalin wasn’t keen on testability.
    And yes, it is because economics and politics are so enmeshed that they are contentious. Politicians in particular seem to be immune to the negative aspects of their policies and to have little regard for evidence, preferring to forge ahead with their own pet nostrums.
    By the way, Chemistry as a Science is barely more than two hundred years old – Lavoisier, Priestley and Schele’s separate “discoveries” of oxygen being around the late 18th century.
    And I’m not disappointed in you. I just don’t think that we know anything like enough about all the variables that affect human behaviour to quantify it: and I shy away from the thought that we ever could – because that would make us less than human.

  3. Asimov may have been right but he also recognised that the sweep of history could be upset by maverick behaviour (the Mule.)

  4. Hi Dr Vee,

    Just arriving at this post over two years on thanks to an errant navigator who cruised my way.

    You make some good points that I would like to develop. Economics is hugely political and therefore subject to a great deal of manipulation. Who lands the top econ jobs, as well as how the new talent is selected, is hugely political. As an undergrad I was trated as a pariah for wanting to combine economics with sociology and politics.

    Secondly, economics is a young discipline. It originally began as a moral science and treated as such: sets of conclusions and judgements that can be drawn from looking at the world. It acknowledeged the looseness of what could be seen around it. With the dawn of mathematics and statistical modelling it became quite tied up in itself, didn’t appreciate the gloriously fuzzy and nonsensical nature of what goes on.

    Many academics have a great sensitivity as to how their findings are interpreted but when it makes it down to the political/public sphere, the need for an answer compromises this sensitivity.

    That said, the way economics is carried out leads, I believe, to great damage because of the conclusions it draws. Its reliance on abstraction misses so much of what actually feeds into the economy (human mores, so-called emerging factors of social interaction). Further its reliance on data and statistical modelling means it misses those things that cannot be quantified.

    There are some interesting holistic approaches that incorporate evolutionary theory but these are still very much i the minority.

    Anyway – this went on quite long. Great post.

    FE

  5. Thanks for your comment, Fluffy Economist.

    As you point out, my original post is quite old now but it’s still an interesting debate. I think there will have to be a bit less of a narrow focus on mathematics and some assumptions about human behaviour ought to be a bit more subtle. It might be better for economists to incorporate some findings about human behaviour from other disciplines such as psychology, neurobiology and, as you say, evolutionary theory. For instance, I heard recently that hormones seem to have a lot to do with some economic behaviour. I’d like to see more of that kind of research.