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Thread: Is it time to call economics a pseudoscience?

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    Is it time to call economics a pseudoscience?

    "Occam" is the name of the alien race that will enslave us all eventually. And they've got razors for hands. I don't know if that's true but it seems like the simplest answer."

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    Australian economists have an impressive track record, by predicting 9 of the last 5 recessions....

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    Is this suppose to be in a joke thread.
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    There are parts of economics that are very mathematical and predict things in the short term but over the longer term you have to be Hari Seldon to get it right.
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    Quote Originally Posted by parallaxicality View Post
    Is it time to call economics a pseudoscience?
    Are most threads in this "Science and Technology" section of the forum actually about Science and Technology? There is the saying: "People who live in glass houses...".

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    Economics, per se is, in my opinion, less of a science than, say, physics or chemistry or sociology, but intensely political economists probably give the field a worse reputation than it would otherwise deserve, as they can be very prominent, so they can put damaging policies in place, and very good at ignoring data that they dislike, like people dying because of those policies. In other words, they have models but don't revise them when reality disagrees.
    Last edited by swampyankee; 2018-Jan-08 at 10:52 AM.

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    Quote Originally Posted by astrotimer View Post
    Is this suppose to be in a joke thread.
    Quote Originally Posted by tashirosgt View Post
    Are most threads in this "Science and Technology" section of the forum actually about Science and Technology? There is the saying: "People who live in glass houses...".
    Let's stop the meta-discussion
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    Quote Originally Posted by astrotimer View Post
    Is this suppose to be in a joke thread.
    At University we could legitimately buy copies of previous years exam papers (not answers) to assist us with our exam prep.

    Back then (according to the old joke) all the past economics exam papers were exactly the same as it was only the answers that changed each year.

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    Actually, this is a fairly old question I think (I majored in economics, by the way). There is a joke I heard a long time ago, about a chemist, a physicist, and an economist stranded in the desert with only a can of tuna. They are wondering how to open it. The chemist says, if we use our glasses to focus light on it, the inside will boil and the can will burst. The others say, "but then it will scatter all over." The physicist says, if we climb that cactus and drop it on that rock, we can break the lid open. The others say, "but we can never get that precision." Then the economist says, "I have a brilliant solution. First, let's assume a can opener."

    In general, though, I think there is something peculiar about fields like psychology, sociology, and economics. They are essentially studies of human behavior, and since we are human, after all, we are studying things that we sort of understand, but don't really. And we try to make models that explain things, but human behavior is complicated and they are not always very successful. So in that sense, I think one can argue that they are pseudoscience.
    As above, so below

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    I'll just settle for the classic "dismal".

    It's not a "hard" science. It's not the only one like that.
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    Economics has too many variables to predict accurately. Too many, by a few billion, continuously changing inputs.
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    I took back to back classes on the history of narco-terrorism and Texas-American history, which also happened to be in the same classroom. The narco-terrorism class was taught by an economics professor, while other was taught by American history professor. While one professor was packing up and the other was unpacking, I thought I was having a nice conversation with both of them. My part ended in it when one of them said: "Oh, you're one of those, eh?"

    Dead silence and stare down. It was ugly. From that point forward, I made sure I spent the full 10 minutes between classes elsewhere.
    Solfe

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    I read some of a book by George Soros, and he seemed to be talking about predictions of future prices affecting the future of prices on the stock market, which seemed a bit like the uncertainty principle and the butterfly effect......
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    Quote Originally Posted by Mudskipper View Post
    I read some of a book by George Soros, and he seemed to be talking about predictions of future prices affecting the future of prices on the stock market, which seemed a bit like the uncertainty principle and the butterfly effect......
    For sure!
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    I'm more than a little amused that the discussion on this topic has so far been fairly unscientific, without references or evidence.

    This piece from the New York Times by a Harvard economics professor argues that it is.
    It is true that the answers to many “big picture” macroeconomic questions — like the causes of recessions or the determinants of growth — remain elusive. But in this respect, the challenges faced by economists are no different from those encountered in medicine and public health. Health researchers have worked for more than a century to understand the “big picture” questions of how diet and lifestyle affect health and aging, yet they still do not have a full scientific understanding of these connections.

    ...

    This kind of empirical work in economics might be compared to the “micro” advances in medicine (like research on therapies for heart disease) that have contributed enormously to increasing longevity and quality of life, even as the “macro” questions of the determinants of health remain contested.
    And this piece from an economics major at Harvard argues the opposite (though still worthy of study).
    Economics is not a science in the way that physics or chemistry is a science. Yet, this is not something to be lamented. Economics is not, and will never be, at the stage where models can precisely predict the day on which a financial crisis will start before it happens, but this is not due to the lack of legitimacy of the field; instead, it is due to the inherently unpredictable sphere of study in which economics operates. People are not atoms—and this is exactly why economics is immediately relevant.
    It is interesting that both pieces differentiate between macroeconomics and microeconomics, and recognize microeconomics to be much more experimental and empirically based.
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    Would comparing it to meteorology be valid? Obviously it's a hard science, yet it will never be able to tell you exactly what the weather will be on a specific day three weeks out. Anything that has chaotic variables is fundamentally unpredictable far enough into the future.
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    I would say that economics requires reading people's minds, which would increase the uncertainties.

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    Quote Originally Posted by Copernicus View Post
    Economics has too many variables to predict accurately. Too many, by a few billion, continuously changing inputs.
    The issue isn’t so much the accuracy of predictions as what they do when the predictions do not match reality. Tweaking or discarding models doesn’t seem to be on the table so much as excuses about why the model failed.

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    We have seen many economic theories both succeed and fail, Marxism, money control, free markets, regulated markets, central planning, capitalism, there is a tide in the affairs of men, individuals and nations rise and fall. It seems every success is the author of the subsequent failure. Others have pointed out the cyclic or oscillatory nature and surely this comes down to rather disappointing aspects of human nature. We work well under duress and challenge but become lazy and complacent when our efforts bring wealth. Wealth leads to corruption and a ground swell of resentment. A lot of economics is to do with risk taking, humans are rather good at short term risk assessment, like driving a car through a city, but rather poor at seeing long term risks, like whether a city is doomed by changes in lifestyles, or climate, or revolution. Long term economists are Cassandras, doomed to be right but ignored.
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    Quote Originally Posted by profloater View Post
    Others have pointed out the cyclic or oscillatory nature and surely this comes down to rather disappointing aspects of human nature. We work well under duress and challenge but become lazy and complacent when our efforts bring wealth. Wealth leads to corruption and a ground swell of resentment.
    I donít think it requires that, but simply requires that we be profit maximizing actors. The economy clearly does have cycles. What happens is that as the economy grows, there is more demand for labor and wages and resource prices rise, and then this shuts down the economy, and then in the recession wage and input prices fall, prompting a recovery.
    As above, so below

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    Also, in a boom, businesses are investing, and this puts upward pressure on interest rates, which slows the economy.
    As above, so below

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    Quote Originally Posted by profloater View Post
    A lot of economics is to do with risk taking, humans are rather good at short term risk assessment, like driving a car through a city, but rather poor at seeing long term risks, like whether a city is doomed by changes in lifestyles, or climate, or revolution. Long term economists are Cassandras, doomed to be right but ignored.
    I think it is John Maynard Keynes who said, in the long run we are all dead.
    As above, so below

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    Quote Originally Posted by Jens View Post
    I think it is John Maynard Keynes who said, in the long run we are all dead.
    Indeed that raises a question of whether you would choose your economists to be young or old, visionary or historically aware. Academic and poor or rich and cynical ! I listen to academics from left and right, can they both be right? Yes they can because as one economy rises another falls. Science can be applied but not in an easy way because we are dealing with politics, wealth dynamics, emotion, fashion, even religion and natural disasters.

    So is economics a science? I would say not yet. Not while we remain human.
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    Economics, especially in the United States, is ideology, not science. They're all corporate stooges with about zero skin in the actual game. This no more apparent than the ongoing debate about "unilateral free trade". The fact is, they told NAFTA and China WTO wouldn't cost any jobs, and would grow the economy. In fact, the opposite has been observed: 5 million manufacturing jobs lost, massive import substitution dragging on GDP growth, huge, persistent trade deficits that cause asset bubbles that take 10 years to recover from once they burst. In any other science where predictions were got so wrong, there would be a major reconsideration of the underlying theory. But not economics--they just double down.

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    Quote Originally Posted by Warren Platts View Post
    Economics, especially in the United States, is ideology, not science. They're all corporate stooges with about zero skin in the actual game. This no more apparent than the ongoing debate about "unilateral free trade". The fact is, they told NAFTA and China WTO wouldn't cost any jobs, and would grow the economy. In fact, the opposite has been observed: 5 million manufacturing jobs lost, massive import substitution dragging on GDP growth, huge, persistent trade deficits that cause asset bubbles that take 10 years to recover from once they burst. In any other science where predictions were got so wrong, there would be a major reconsideration of the underlying theory. But not economics--they just double down.
    This is getting too political. Let's not go there. And please no counterarguments to the political points of this post.
    Last edited by Swift; 2018-Jan-19 at 07:58 PM. Reason: typo
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    one aspect of economic history which interests me is the invention of virtual money, or paper money which allowed the idea of enterprise to move from having the gold to pay for what you want. It is close in time to people as opposed to kings, being able to borrow against land they own in law. This changes the game, but is science involved? An enterprising person can start to trade without actually holding the money first. Companies, that is ship's companies originally got together to trade on what they hoped to find and the ideas of shares developed with the rules, even the rules of failure. All this seems to me to put the history of economics into the realm of risk taking and being allowed to take risks. So it's a balance of judgements. Every transaction that happens includes basically two sides who both think they are gaining in their own terms. Sometimes both can be right and sometimes one turns out in time to have made poor predictions. sometimes both have. there's a lot of psychology and not much theory. In hindsight we see the patterns, but when we try to predict the future it goes mostly wrong. so I would say economics is not even pseudoscience, but perhaps that's unkind to all those theorists.
    sicut vis videre esto
    When we realize that patterns don't exist in the universe, they are a template that we hold to the universe to make sense of it, it all makes a lot more sense.
    Originally Posted by Ken G

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    Quote Originally Posted by profloater View Post
    one aspect of economic history which interests me is the invention of virtual money, or paper money which allowed the idea of enterprise to move from having the gold to pay for what you want. It is close in time to people as opposed to kings, being able to borrow against land they own in law. This changes the game, but is science involved? An enterprising person can start to trade without actually holding the money first. Companies, that is ship's companies originally got together to trade on what they hoped to find and the ideas of shares developed with the rules, even the rules of failure. All this seems to me to put the history of economics into the realm of risk taking and being allowed to take risks. So it's a balance of judgements. Every transaction that happens includes basically two sides who both think they are gaining in their own terms. Sometimes both can be right and sometimes one turns out in time to have made poor predictions. sometimes both have. there's a lot of psychology and not much theory. In hindsight we see the patterns, but when we try to predict the future it goes mostly wrong. so I would say economics is not even pseudoscience, but perhaps that's unkind to all those theorists.



    On that topic, I have read of studies that concluded credit actually predated specie

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    Just an observation, but in every single game I play, the economy is seriously broken. Sometime the developer will implement some sort of company script or credit system which utterly fails to correct the problem. Usually the problem the credit or script fixes is that coins are "real items", which take inventory space or contributes to weight. Once the paper money is in place, prices skyrocket.

    Many, many years ago I played a game where they actually "fixed the problem" of too many coins. Bank robbery by kobolds. I couldn't' believe it. It was pretty cool, but the end result was all bank accounts were drained to nothing.
    Solfe

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    As has been said many times in other threads, science requires testable, falsifiable theories. As far as I have seen, economics consists of a lot of falsified assumptions and guesses amounting to little more than the statistics of dice rolling. So, not science. At least not yet.
    Depending on whom you ask, everything is relative.

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    Quote Originally Posted by Solfe View Post
    Just an observation, but in every single game I play, the economy is seriously broken. Sometime the developer will implement some sort of company script or credit system which utterly fails to correct the problem. Usually the problem the credit or script fixes is that coins are "real items", which take inventory space or contributes to weight. Once the paper money is in place, prices skyrocket.

    Many, many years ago I played a game where they actually "fixed the problem" of too many coins. Bank robbery by kobolds. I couldn't' believe it. It was pretty cool, but the end result was all bank accounts were drained to nothing.
    A specie-oriented problem. The game should be balancing the work one does to the work another requires. That requires previous information to get that balance. All that means is the game needs more character and story development.

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