Friday, January 2, 2009

Is Economics Science? (And if not, what then?)

I just added an Interesting (?) Link to an article by quant author and blogger Paul Wilmott titled Economics Makes My Brain Hurt. (Hat tip to Paul Kedrosky for the link.) In it, he writes about one of the central issues I hope to explore in my study of economics:

"And that’s the point I identify as being the problem: The jargonizing of complex ideas based upon irrelevant assumptions into an easily used and abused building block on which to build the edifice of nonsense that is modern economics."

If economics is a real science, why do people have such widely divergent (and fervently-held) beliefs about it? In the hard sciences, there may be controversy at the edges (e.g., string theory) but the basics (e.g., classical mechanics) aren't usually subject to the kind of religious debate I see in economics.

Wilmott says that economics is not in fact science (i.e., built on laws that are very well supported by data and have never failed any empirical test) and therefore shouldn't make the error of behaving like it is.

What say you economists?

Update: Mark Thoma provides a timely answer with his blog post The Austrian and Chicago Schools. The short answer is, "Some economists believe economics is hard science. They're nutjobs."

Update 2: A commenter on Tyler Cowan's Marginal Revolution blog puts an even finer point on it:

"Mistakes in economics is a dull subject. The truly electrifying inquiry would be to name 10... well... 5... OK just 3 incidents when economics made indisputably correct (in a rigorous scientific sense—since economics dare to call itself a science) prediction/forecast on a more or less significant scale."

So, should economics be called "the dismal pseudo-science"?

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