5 ms·

Supply and demand is more core than anchoring and it was certainly discovered earlier. It's tested all the time. Add tariff, demand drops. That's also economi

Supply and demand is more core than anchoring and it was certainly discovered earlier. It's tested all the time. Add tariff, demand drops. That's also economics and works well in 2019. This stuff is now so obvious we've forgotten it and can now argue about whether economists can predict recessions.

nradov 7y ago
The usual "supply and demand" rule doesn't even work consistently. See Veblen goods for a counterexample. So it's hard to see economics as a valid science. There are no consistent theories and exceptions to everything.
- klodolph 7y ago
  This is a misunderstanding of what “science” is. Your objection is that the theories of economics are not correct enough for it to be a science. How is this argument not also true of, say, chemistry? Every simple theory in chemistry has a number of exceptions, with a more complicated theory waiting in the wings, up to the limit of our understanding. “Science” is not some kind of shorthand for “ultimate understanding of the world”. It is just a process for validating and understanding the limitations of theories.
  - TheOtherHobbes 7y ago
    The difference is that basic chemistry is fundamentally reliable. Basic economics is hand-waving and just-so stories and "Yes, but..." Absolutely no theory in economics passes even the most basic quantitative testing. Really. That is an observable fact. It's not an opinion. Empirical economics is barely even a thing, and even when it's a thing it's mostly nonsense, based on poor data and questionable methodologies. https://www.livemint.com/Opinion/J7atYOViQO54PiBzSTdAYL/Empirical-economics-growing-pains.html https://www.livemint.com/Opinion/J7atYOViQO54PiBzSTdAYL/Empi...
    - klodolph 7y ago
      What part of basic chemistry is fundamentally reliable? I would be interested in seeing an example; it would help me understand what your notion of “reliable” is. My personal experience is that there is lots of hand-waving in chemistry.
      - orwin 7y ago
        > My personal experience Well this the point. Personnal experience is flawed and unreliable. In my personnal experience, something that weight more should fall faster. This is not the case. Which economic theory enuce clearly the subset of conditions required to be true and fit the refutability criterion? For chemistry: all of them.
        klodolph 7y ago
        > For chemistry: all of them. Humor me… can you give a more specific example? When I took chemistry classes I don’t remember learning a theory that was completely correct, but it has been a while.
      - close04 7y ago
        I think the distinction is between hard and soft sciences. Hard sciences like chemistry, physics, mathematics are very reliable. Barring some very special cases (where an explanation hasn't been found yet) identical conditions will produce identical results. So they're not only reproducible but you can use one to deduce the other. Soft science like economics, psychology, sociology will have none of the 2: conditions vary, results vary, and even if you could ensure you start with absolutely identical conditions it's very implausible that the result won't be heavily influenced later on by random factors.
    - pas 7y ago
      Econ is a bit like medicine. You can not really brute force things. Even phase 3 clinical trials are just a very crude and low entropy source of data. That does not mean there aren't theories, hypotheses, experiments (usually natural experiments, or small scale pop psychology demonstrations like the dollar auction), and so there is data and you can fit models. And in economics the hard part is getting good quality data, knowing what to try to quantize, where to start. Some folks spend decades hunting for signal. And then we get priming, and turns out it was nothing. At the same time there's SBTC (skill-biased technological change) the theory describing what happens as automation progresses. But it takes a lot of work to correctly "apply" that theory, because the effects are complex, and you have to keep in mind what else can also affect your observables. (So confounders has to be managed.) And in the end we get high quality insights, such as the David Autor paper (Why there are still jobs?). And there are the long and even deeper dives like the "Why nations fail?" book, which talks about the problem of public choice economics (politics) and how to model good politics, how to measure, how to quantify, etc. It's naturally less dense than a paper, but the problem and the pondering is a very important part of science. (The hypothesis generation, the abductive reasoning part.)
  - orwin 7y ago
    I don't know about "Science", it's too broad, but a valid scientific theory must valid the "refutability" point, and not respond "this is an exception!" when this point is reached. How many scientific theories does Econ have is a much more interesting question than "is Econ a science?", at leat to me.
mbesto 7y ago
> It's tested all the time. That's not testing. That's just a real life interaction. You can't isolate the variables in supply & demand, so we can only theorize that supply & demand is universally true. If I mix copper and tin in a bowl, I will infinitely get bronze as a result. This can be tested again and again with no variation. I simply cannot reproduce people's behavior in a vacuum. We can only observe it in the real world and draw the conclusion. This goes for my comments about anchoring, etc. as well.

nradov 7y ago

The usual "supply and demand" rule doesn't even work consistently. See Veblen goods for a counterexample. So it's hard to see economics as a valid science. There are no consistent theories and exceptions to everything.

klodolph 7y ago
This is a misunderstanding of what “science” is. Your objection is that the theories of economics are not correct enough for it to be a science. How is this argument not also true of, say, chemistry? Every simple theory in chemistry has a number of exceptions, with a more complicated theory waiting in the wings, up to the limit of our understanding. “Science” is not some kind of shorthand for “ultimate understanding of the world”. It is just a process for validating and understanding the limitations of theories.
- TheOtherHobbes 7y ago
  The difference is that basic chemistry is fundamentally reliable. Basic economics is hand-waving and just-so stories and "Yes, but..." Absolutely no theory in economics passes even the most basic quantitative testing. Really. That is an observable fact. It's not an opinion. Empirical economics is barely even a thing, and even when it's a thing it's mostly nonsense, based on poor data and questionable methodologies. https://www.livemint.com/Opinion/J7atYOViQO54PiBzSTdAYL/Empirical-economics-growing-pains.html https://www.livemint.com/Opinion/J7atYOViQO54PiBzSTdAYL/Empi...
  - klodolph 7y ago
    What part of basic chemistry is fundamentally reliable? I would be interested in seeing an example; it would help me understand what your notion of “reliable” is. My personal experience is that there is lots of hand-waving in chemistry.
    - orwin 7y ago
      > My personal experience Well this the point. Personnal experience is flawed and unreliable. In my personnal experience, something that weight more should fall faster. This is not the case. Which economic theory enuce clearly the subset of conditions required to be true and fit the refutability criterion? For chemistry: all of them.
      - klodolph 7y ago
        > For chemistry: all of them. Humor me… can you give a more specific example? When I took chemistry classes I don’t remember learning a theory that was completely correct, but it has been a while.
    - close04 7y ago
      I think the distinction is between hard and soft sciences. Hard sciences like chemistry, physics, mathematics are very reliable. Barring some very special cases (where an explanation hasn't been found yet) identical conditions will produce identical results. So they're not only reproducible but you can use one to deduce the other. Soft science like economics, psychology, sociology will have none of the 2: conditions vary, results vary, and even if you could ensure you start with absolutely identical conditions it's very implausible that the result won't be heavily influenced later on by random factors.
  - pas 7y ago
    Econ is a bit like medicine. You can not really brute force things. Even phase 3 clinical trials are just a very crude and low entropy source of data. That does not mean there aren't theories, hypotheses, experiments (usually natural experiments, or small scale pop psychology demonstrations like the dollar auction), and so there is data and you can fit models. And in economics the hard part is getting good quality data, knowing what to try to quantize, where to start. Some folks spend decades hunting for signal. And then we get priming, and turns out it was nothing. At the same time there's SBTC (skill-biased technological change) the theory describing what happens as automation progresses. But it takes a lot of work to correctly "apply" that theory, because the effects are complex, and you have to keep in mind what else can also affect your observables. (So confounders has to be managed.) And in the end we get high quality insights, such as the David Autor paper (Why there are still jobs?). And there are the long and even deeper dives like the "Why nations fail?" book, which talks about the problem of public choice economics (politics) and how to model good politics, how to measure, how to quantify, etc. It's naturally less dense than a paper, but the problem and the pondering is a very important part of science. (The hypothesis generation, the abductive reasoning part.)
- orwin 7y ago
  I don't know about "Science", it's too broad, but a valid scientific theory must valid the "refutability" point, and not respond "this is an exception!" when this point is reached. How many scientific theories does Econ have is a much more interesting question than "is Econ a science?", at leat to me.

mbesto 7y ago

> It's tested all the time. That's not testing. That's just a real life interaction. You can't isolate the variables in supply & demand, so we can only theorize that supply & demand is universally true. If I mix copper and tin in a bowl, I will infinitely get bronze as a result. This can be tested again and again with no variation. I simply cannot reproduce people's behavior in a vacuum. We can only observe it in the real world and draw the conclusion. This goes for my comments about anchoring, etc. as well.