Monday, July 19, 2004

Over at The Leiter Reports, Brian Leiter makes some highly questionable claims.

Addressing whether economics is a science, Leiter writes:

[Economics] is better, perhaps, than astrology, but not much more predictively successful than common-sense psychology. It parlays a set of implausible and utterly unrealistic assumptions into tidy, mathematically-expressible theories that have little or no connection to reality...

The New Yorker uses the example of Nobel laureate Robert Lucas's anti-Keynesian theories attacking the ability of the Federal Reserve to affect the economy, theories that exerted a profound affect on public policy for some time. "[A] number of [subsequent] empirical studies" (55) disconfirmed them…. [other examples omitted].

I don't know whether economics is a science; it rather depends on what the definition of a science is, doesn't it? It strikes me as a silly question; economists stake their claim to truth on the empirical verification economic theories must ultimately undergo before being accepted, not on whether economics fits some (inherently arbitrary) definition.

As for parlaying a set of implausible and utterly unrealistic assumptions into mathematically-expressible theories: what in the world does Leiter think physicists and engineers do? I hate to be the one to break it to him, but every electrical device Leiter uses in his daily life makes a myriad of untrue assumptions about the real world - assumptions which hold only in an approximate sense - assumptions that were made because they are easy to deal with mathematically.

Not much more predictively successful than common-sense psychology? This is sheer nonsense. Its true that economists can't quite predict the phenomena they study as well as physicists ; however, to claim that they can do no better than any reasonable person equipped with common sense is rather ridiculous.

How fast will GDP grow next quarter? Different economists may give you different opinions. There will be a sizeable difference between the most optimistic and the most pessimistic estimate. The presence of this difference does not imply that one could do just as well by asking a random person endowed with common sense.

As for Lucas: shouldn't the example cited convince Leiter of the opposite, that economics is a science? A theoretically compelling theory was rejected because it disagreed with empirical data - that, to me, sounds quite similar to the vetting process employed by physicists to test their theories.


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