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Why? They formulate theories and test them against data to understand how the world works. Is that not the definition of science?
by mathieutd 10y ago
Why? They formulate theories and test them against data to understand how the world works. Is that not the definition of science?
- FullMtlAlcoholc 10y ago>
- billions 10y agoScience is subject to interpretation on a spectrum of levels. How accurately can biology predict when a cell will split? Perhaps economic supply and demand is statistically predictable in the same fashion.
- CuriouslyC 10y agoAll economic systems are to some degree adaptive and nonlinear, because people are adaptive and nonlinear. Economists generally create static linear models of these systems. Additionally, economists tend to assume Gaussian errors with diagonal covariance matrices because the math tends to blow up otherwise. Non-gaussian errors are fairly common unless your data set is a bunch of means (thus the ubiquity of "outliers"). Beyond that, economists assume "rational" agents that maximize utility, but this is a fairly poor model of human behavior. Economists aren't uncovering an underlying truth, they're basically building toy models. These toy models might approximate economic systems in a narrow range of controlled circumstances, but things rapidly deteriorate outside that range. The problem is that people assume the models reflect reality, and make bets based on that assumption. It would be nice if economists focused on fully Bayesian models with Gaussian process priors and long tailed (ideally Levy alpha-stable with a low alpha bias) likelihood functions. At least then the uncertainty of their models would be absolutely clear, and black swan type events would be partially factored in.
- gone35 10y ago[...] and test them against data No, in fact they don't. It's hard to believe, I know.
- deleted 10y ago[deleted]