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You can look through any mainstream micro textbook, graduate or undergrad, and in 1,000 pages won’t see a single citation to support any model empirically. Comp

You can look through any mainstream micro textbook, graduate or undergrad, and in 1,000 pages won’t see a single citation to support any model empirically. Compare that to any decent physics textbook, which will link models to the experiments that back them up. Economics for the real world won’t be simple and pure like physics, it’ll be more like geology or biology, with a lot more facts and a lot fewer theories of everything.

inciampati 7y ago
The subfield known as psychology and economics definitely is based on experimental evidence. The experiments may often be laboratory based or contrived, but they are nevertheless a major input to the concepts as developed.
barry-cotter 7y ago
Experimental economics is all about seeing how markets work in practice. Mechanism design is all about taking the theory of economics and using it in the real world, where it works. Economics for the real world exists already. That’s why companies like Microsoft, Amazon and Uber hire so many Ph.D. economists. https://en.wikipedia.org/wiki/Experimental_economics https://en.wikipedia.org/wiki/Experimental_economics Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).
cjblomqvist 7y ago
This is not true. I've been through an economics program and a lot of theories have empirical data to support them. Of course it's much harder to prove there is causation and not only correlation (and all that that entails), but that's part of being a topic which to a large extent deal with social phenomena (people). Can't dig up anything now but a lot of phenomena in papers (though of course far from all /majority) do or reference some sort of quantitative research).
- soVeryTired 7y ago
  Meh. The standard of "support" is pretty low. I spent a lot of time looking through the literature for empirical support for 1/ the Philips curve, and 2/ gravity models of trade. I looked for the first out of personal interest, and for the second because economists often claim that gravity models are well-supported. Where empirical studies were actually available, they usually had large numbers of parameters, they did not test on diverse datasets (e.g. Philips curves across different economies), and they never considered an alternative hypothesis or simple baseline.
  - fujimotos 7y ago
    Indeed. Even within a single economy, plotting a scatter plot for enough data points (e.g. 25 years) makes Philips curves just broken. It was a gong moment for me when I came across a short passage discussing its foundedness. * Freedman, Pisani and Purves Statistics, 4th edition (p153)
zwaps 7y ago
In contrast, econometric literature has seen a huge shift toward identifying causal relations from observational data. More than any other social science, economics has adopted this approach. Experimental fields (Psychology, Medicine) never really had to deal with observational data. Many approaches are not new to statistics, to be sure, but many have been implemented and refined in econometrics. Courses in political science, sociology and management, for example, largely use econometric textbooks and papers nowadays. Why is that the case? Other social sciences have been more data driven before. That is to say, they lacked a coherent theoretical framework that would alert them to causality issues. Economics was early to adopt causal analysis techniques from stats - and look for observational equivalents to experimental science approaches - because the theory framework showed early on that regression based approaches (still being done a lot in sociology and management, for example) are usually not a good idea. It is all a trade-off. Yes, these models are often not accurate, sometimes outright wrong. But, formal theories give you precise assumptions and causal chains, which means they can be quickly discarded as paradigms (General Equilibrium, Game Theoretic Equilibrium Refinements), and crucially, they tell you about empirical issues. This has happened to a MUCH SMALLER degree in social sciences that do not have these formal theories! The notion that economics is behind in terms of empirical approaches compared to other observational social sciences is just not correct. I will give you the point that econ textbooks are often bad in that regard. I mean, the standard micro textbook for grads is really just a treatment of differential manifolds with other names. But those textbooks are not to be read isolation. Intro textbooks I saw, on the other hand, do have real data.
- hycaria 7y ago
  >Experimental fields (Psychology, Medicine) never really had to deal with observational data. https://en.wikipedia.org/wiki/Retrospective_cohort_study https://en.wikipedia.org/wiki/Retrospective_cohort_study
  - zwaps 7y ago
    Yeah I think what I wrote was wrong. It's not that they haven't dealt with observational data, rather they had the advantage of being able to use experiments with good external validity to a larger degree, making both observational and experimental studies easier.
bubblewrap 7y ago
As you say, real world economics don't work like physics. People are not atoms. Therefore your demand that economics textbooks should be like physics textbooks doesn't really make sense. I think Geology and Biology do have a lot of theories, too. Would you say the theory of evolution is bunk and you should just collect data and leave it at that?

inciampati 7y ago

The subfield known as psychology and economics definitely is based on experimental evidence. The experiments may often be laboratory based or contrived, but they are nevertheless a major input to the concepts as developed.

barry-cotter 7y ago

Experimental economics is all about seeing how markets work in practice. Mechanism design is all about taking the theory of economics and using it in the real world, where it works. Economics for the real world exists already. That’s why companies like Microsoft, Amazon and Uber hire so many Ph.D. economists. https://en.wikipedia.org/wiki/Experimental_economics https://en.wikipedia.org/wiki/Experimental_economics Experimental economics is the application of experimental methods[1] to study economic questions. Data collected in experiments are used to estimate effect size, test the validity of economic theories, and illuminate market mechanisms. Economic experiments usually use cash to motivate subjects, in order to mimic real-world incentives. Experiments are used to help understand how and why markets and other exchange systems function as they do. Experimental economics have also expanded to understand institutions and the law (experimental law and economics).

cjblomqvist 7y ago

This is not true. I've been through an economics program and a lot of theories have empirical data to support them. Of course it's much harder to prove there is causation and not only correlation (and all that that entails), but that's part of being a topic which to a large extent deal with social phenomena (people). Can't dig up anything now but a lot of phenomena in papers (though of course far from all /majority) do or reference some sort of quantitative research).

soVeryTired 7y ago
Meh. The standard of "support" is pretty low. I spent a lot of time looking through the literature for empirical support for 1/ the Philips curve, and 2/ gravity models of trade. I looked for the first out of personal interest, and for the second because economists often claim that gravity models are well-supported. Where empirical studies were actually available, they usually had large numbers of parameters, they did not test on diverse datasets (e.g. Philips curves across different economies), and they never considered an alternative hypothesis or simple baseline.
- fujimotos 7y ago
  Indeed. Even within a single economy, plotting a scatter plot for enough data points (e.g. 25 years) makes Philips curves just broken. It was a gong moment for me when I came across a short passage discussing its foundedness. * Freedman, Pisani and Purves Statistics, 4th edition (p153)

zwaps 7y ago

In contrast, econometric literature has seen a huge shift toward identifying causal relations from observational data. More than any other social science, economics has adopted this approach. Experimental fields (Psychology, Medicine) never really had to deal with observational data. Many approaches are not new to statistics, to be sure, but many have been implemented and refined in econometrics. Courses in political science, sociology and management, for example, largely use econometric textbooks and papers nowadays. Why is that the case? Other social sciences have been more data driven before. That is to say, they lacked a coherent theoretical framework that would alert them to causality issues. Economics was early to adopt causal analysis techniques from stats - and look for observational equivalents to experimental science approaches - because the theory framework showed early on that regression based approaches (still being done a lot in sociology and management, for example) are usually not a good idea. It is all a trade-off. Yes, these models are often not accurate, sometimes outright wrong. But, formal theories give you precise assumptions and causal chains, which means they can be quickly discarded as paradigms (General Equilibrium, Game Theoretic Equilibrium Refinements), and crucially, they tell you about empirical issues. This has happened to a MUCH SMALLER degree in social sciences that do not have these formal theories! The notion that economics is behind in terms of empirical approaches compared to other observational social sciences is just not correct. I will give you the point that econ textbooks are often bad in that regard. I mean, the standard micro textbook for grads is really just a treatment of differential manifolds with other names. But those textbooks are not to be read isolation. Intro textbooks I saw, on the other hand, do have real data.

hycaria 7y ago
>Experimental fields (Psychology, Medicine) never really had to deal with observational data. https://en.wikipedia.org/wiki/Retrospective_cohort_study https://en.wikipedia.org/wiki/Retrospective_cohort_study
- zwaps 7y ago
  Yeah I think what I wrote was wrong. It's not that they haven't dealt with observational data, rather they had the advantage of being able to use experiments with good external validity to a larger degree, making both observational and experimental studies easier.

bubblewrap 7y ago

As you say, real world economics don't work like physics. People are not atoms. Therefore your demand that economics textbooks should be like physics textbooks doesn't really make sense. I think Geology and Biology do have a lot of theories, too. Would you say the theory of evolution is bunk and you should just collect data and leave it at that?