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I think what you're missing is that economics has a serious case of physics envy. They like to imagine that their handful of reductionist principles can model a

I think what you're missing is that economics has a serious case of physics envy. They like to imagine that their handful of reductionist principles can model a scenario as well as Newton's laws can model n bodies. The experiments are only needed to fine tune a handful of parameters. What is represented by this pivot towards emperical testing everything is a concession that there are no universal economic laws from which outcomes can be derived, just an ad hoc corpus of facts. I see why they don't want to give up.

elweston2 7y ago
The problem with most economic models is they all work great. In the moment. Right up until it is 10 seconds later and something changed. Then they don't. However, over time they have hidden variables that no one knows how to measure. Say to day you are in a bad mood. You go to a store pick up an item and go 'nah not going to buy that'. Then tomorrow you are in a good mood. You go to the same store and buy that item. Your neighbor does the same thing but does not buy it at all. Economics is very bad at figuring out what that even meant. But to know if handing people cash, or taxing more/less, or changing policies you kind of need to know what it did mean. Experimenting is a good idea which we have been doing for a long time. But the models still do not match. The other issue is many of these things are huge systems (macro economics). You can change one little thing and it has an effect on 3 other things that you did not want. To use the classic micro economic model. The pizza joint. I raise my price because (MR=MC). I sell less pizzas but my profit is up. Profit does not come from nowhere. My customers paid more. So they can buy less of something else. I bought less items from my wholesalers so their profit is down. The gov gets more money because of taxes. One little change touched dozens of other stores/governments/people not even related to me. Getting that model right is tricky with thousands of hidden variables that more like functions.
leereeves 7y ago
Even physics is not so simple as that anymore. The proof that the Higgs boson exists was a statistical test on a sea of noise. And CERN was recently recruiting machine learning experts to help them find other patterns in that noise. Modern physics uses many of the same methods as softer fields like economics. The problem in economics (and other soft sciences) is the low standard of evidence they're willing to accept.

elweston2 7y ago

The problem with most economic models is they all work great. In the moment. Right up until it is 10 seconds later and something changed. Then they don't. However, over time they have hidden variables that no one knows how to measure. Say to day you are in a bad mood. You go to a store pick up an item and go 'nah not going to buy that'. Then tomorrow you are in a good mood. You go to the same store and buy that item. Your neighbor does the same thing but does not buy it at all. Economics is very bad at figuring out what that even meant. But to know if handing people cash, or taxing more/less, or changing policies you kind of need to know what it did mean. Experimenting is a good idea which we have been doing for a long time. But the models still do not match. The other issue is many of these things are huge systems (macro economics). You can change one little thing and it has an effect on 3 other things that you did not want. To use the classic micro economic model. The pizza joint. I raise my price because (MR=MC). I sell less pizzas but my profit is up. Profit does not come from nowhere. My customers paid more. So they can buy less of something else. I bought less items from my wholesalers so their profit is down. The gov gets more money because of taxes. One little change touched dozens of other stores/governments/people not even related to me. Getting that model right is tricky with thousands of hidden variables that more like functions.

leereeves 7y ago

Even physics is not so simple as that anymore. The proof that the Higgs boson exists was a statistical test on a sea of noise. And CERN was recently recruiting machine learning experts to help them find other patterns in that noise. Modern physics uses many of the same methods as softer fields like economics. The problem in economics (and other soft sciences) is the low standard of evidence they're willing to accept.