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Nothing makes me think economics is scientific.

But it's taught as if it's a science, handled inside academia as if it's a science, and has more influence on policy than hard science does.

If it's not a science, those three facts are rather curious.

You can view economics (the field) as a coordination device.

Basically, nobody knows anything[1]. But if everyone were to admit that, there would be no basis on which to conduct policy. → Chaos/arbitrariness/incoherence (over time and sectors)

So people make up and promote a narrative (bullshit story) and if enough people believe / are made to believe in it, then you have a basis for relatively stable and coherent policy regime.

This interpretation of economics (as a field) is consistent with the history of economic ideas. No economic ideas are ever discarded or disproven (the very antithesis of science if you will). As the Economist aptly put it: "Macroeconomic arguments tend not to produce winners and losers: only those with more in- fluence and those with less."[2]

That's why economics (the field) is really less about economics (the substance) but about politics and power.


[1] Hyperbolically speaking, of course, and aimed in particular at macro- and monetary economists. There are some nice results but they apply, as far as I could tell, mostly to smaller settings, not the aggregate economy.

[2] The Economist. Free exchange: Magic or logic? page 69, Mar 16 2019.

I do not see why experimentation is impossible if we are in a position where there literally is no alternative other than doing 'experiments' except refusing to address the results and change tactics except under extreme political pressure. Things like 'we believe if taxes are lowered on businesses, it will result in them hiring more workers', after it has been tried for 30 years and has resoundingly shown to be a collassal untruth, actively destroying the middle class and leading to tremendous instability even among those who do remain employed, at least if we could say it was an experiment and we were uncertain of the outcome, we could say 'well that didn't work let's try something different' instead of it being a political battle fueled by people just trying to trick others into thinking that reality is different from what it is.

In a situation that affects so many people, it may seem unwise to do experiments and try things where we can not say with certainty what effects they might have, though we admit they may be substantial. The ethics are very dim on that front. But the alternative has to be considered. We do not have 'generally accepted treatment' to turn to and rely on. We only have other experiments, albeit while not calling them experiments and not treating them as if their outcomes are in doubt, simply forging ahead with blinders on. I can't imagine an argument that would justify that as more ethical than earnestly doing experiments.

It's obvious why: there are too many confounding variables to run experiments on macroeconomically relevant scales.

This is analogous to why econometrics is bullshit: lack of stationarity in the real world.

This is amplified by nonlinearities in the system. So even if things today were broadly comparable to, say, the 1990s (and they're emphatically not), what if there was this little thing somewhere (like an obscure accounting regulation) that led to massive differences in the outcome of the experiment?

Tbc, I think there are better and worse ways to deal with the problem, just because we know so little does not mean everything is equally meaningless.

Behavioural economics has predictive power, so I tend to think of it as scientific

aimed in particular at macro- and monetary economists. There are some nice results but they apply, as far as I could tell, mostly to smaller settings, not the aggregate economy.


Whether something is a science or not depends on the methods which are applied - not how much is known about the subject. You could argue that biology is not a science because we don't understand how lots of basic cell functions work.


The relevant question for those bemoaning policy implementations of economic theories is, "If not guided by economics, then by what?"

Personally, I prefer a discipline which attempts to treat its subject matter scientifically, even if the sum of experimentally proven knowledge is small. Psychology runs into the same difficulties.

But with both (or biology, or high-energy physics), I don't hold it over their practitioners that their subject matter is elusive to experimental inquiry. One does the best one can.

Behavioural psychology has actually given us a lot of the insights that have now been been expanded into behavioural economics, which is the only branch of economics that has some predictive power (and this in my view makes it scientific). So psychology has issues but I feel like a lot more science to it than people expect, if you look into the right circles.

There is definitely some science in economy, psychology, history, etc. The science of social engineering.

The problem is when our incomplete understanding is used to justify inadequate policy, simply because that's the part of the problem we understand. For instance, deregulating industries because markets are generally more efficient, thus disregarding whether that particular market naturally leads to monopoly. It sometimes leads to regulatory capture and whack-a-mole problem solving that are wholely inadequate.

Likewise there is the problem of central banks capturing the academy by lavishly funding their sycophants and cutting off researchers critical of their methods or policies. The conflict of interest is obvious, but nearly the entire field pretends it does not exist.

Unfortunately, people professing to know economics often gives lawmakers rationalizations for whatever they want to do. There’s always someone ready to defend whatever conclusion politicians are already decided upon.

In his Nobel lecture[0], Hayek condemned these rationalizations cloaked in superficial appearance of rigor as scientism.

It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences – an attempt which in our field may lead to outright error. It is an approach which has come to be described as the “scientistic” attitude – an attitude which, as I defined it some thirty years ago, “is decidedly unscientific in the true sense of the word, since it involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.”[1] I want today to begin by explaining how some of the gravest errors of recent economic policy are a direct consequence of this scientistic error.

[0]: https://www.nobelprize.org/prizes/economic-sciences/1974/hay...

[1]: “Scientism and the Study of Society”, Economica, vol. IX, no. 35, August 1942, reprinted in The Counter-Revolution of Science, Glencoe, Ill., 1952, p. 15 of this reprint.

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