3 ms·

Economics is absolutely a science. Though the article just discusses auction theory, there are complex equations beyond most of our understanding behind the the

Economics is absolutely a science. Though the article just discusses auction theory, there are complex equations beyond most of our understanding behind the theory, just like you’d find in physics or chemistry.

shoo 6y ago
The presence of complex equations does not determine science-ness. Arguably a science should feature theories with some ability to predict behaviour observed in the world, and those theories should be falsifiable. Some offshoots of theoretical physics that generate large parameter spaces of non-testable mathematical models packed with complex equations are arguably not science (string theories...)
- currymj 6y ago
  auction theory is regularly tested by people running auctions with billions of dollars at stake. of course the assumptions of the theory are never perfectly met in the real world, and things can get quite messy. but for instance, the theory predicts that certain kinds of auctions should fail quite badly, which has happened; and it gives prescriptions for better types of auctions, which have resulted in more revenue.
- prionassembly 6y ago
  That's a contemporary definition of science deeply rooted in a specific philosopher of science (Popper). There was nothing falsifiable about Newton or Darwin. They were predictive (Darwin to a lesser extent) and, more importantly, they fit, like a puzzle. Falsifiability is a good rule of thumb, like Occam's razor, to tell apart obviously pathological research (this possibly includes particle and high-energy physics); but the point of science is the unity of science. If you're a believer in science, you have to believe there's true knowledge to be had (however unobtainable); this true knowledge has to be a single thing, a single puzzle to piece together. However inefficiently and plagued by politics, economics is doing a bit of that. Not long ago we were thinking that it should be replaced in favor of psychology, which is closer to the matter of human behavior. But just look at how psychology is doing.
baja_blast 6y ago
I'd argue that Economics is not a science because it has no models that can predict anything. Economists today are just modern day Oracles/Seers that use their equations/models in a similar manner to how a Seer would throw chicken bones to foretell the future. Because of these Economists seem to break up into factions making it more similar to religious belief IMO. You even see many Economists ignore evidence that contradicts their pet theory. I think it's dangerous to take their ideas too seriously.
- jnwatson 6y ago
  I'm not sure where you're coming from. Economics does indeed produce models that are predictive.
  - JetSpiegel 6y ago
    Tulip prices can only go up. See also 1929, 2008, etc etc.
- traek 6y ago
  The link explains some practical applications of Milgrom's and Wilson's work on auction theory. Mechanism design and auction theory are definitely predictive and useful in the real world.
- johnrgrace 6y ago
  The current prize disproves your point.
- prionassembly 6y ago
  This seems to conflate predictability with determinism. The value of stock options hews very close to what Black-Scholes theory would assume. There's one loose bone: volatility. But reasonable estimates of volatility are close enough for any real applications of derivatives (i.e. hedging, not speculation). The uncovered parity equation of exchange rates has one loose bone: sovereign risk premia. If Cristina Kirschner dies and her successor starts privatizing foreign-owned capital assets, well, there goes the model. And to a smaller extent this is happening all the time. But if you had to take a decision on how local interest rates affect exchange rates, this is an excellent guide. If anything, economics is insufficiently mathematical in the treatment of what it can't determine. It's a reasonable mean field theory but should be more Bayesian about what it takes as assumption (markets will open tomorrow -- fruit and stock alike...). The assumptions are mostly fine but we should, as a general public, have a clearer picture of how fine. Then, how well is epidemiology doing this? 99% confidence intervals from March Covid models should encompass the possibility that there's almost no fomite transmission but the virus remains alive in airborne aerosols for longer distances and time. We might all have gone the Swede route, where true agglomerations were instantly shut down, or at least prevented having the WHO and the Surgeon General telling us not to wear masks.
yakubin 6y ago
If science is about having equations and maths in it, then wait until you hear about astrology.
disown 6y ago
> Economics is absolutely a science. It absolutely is not. It's is a societal study based on artificial rules created by man. It's no more a "science" than a study of monopoly or minecraft. After all, the laws/rules of monpoly or minecraft can be changed since they are man-made and not natural. > there are complex equations beyond most of our understanding behind the theory, just like you’d find in physics or chemistry. Except that in physics or chemistry, the complex equations are testable in nature and hence reproducible and testable. Nothing in economics is objectively testable. The better comparison would be to astrology or christian numeralology. Where people make arbitrary rules and within those rules they use "numbers" to create associations.

shoo 6y ago

The presence of complex equations does not determine science-ness. Arguably a science should feature theories with some ability to predict behaviour observed in the world, and those theories should be falsifiable. Some offshoots of theoretical physics that generate large parameter spaces of non-testable mathematical models packed with complex equations are arguably not science (string theories...)

currymj 6y ago
auction theory is regularly tested by people running auctions with billions of dollars at stake. of course the assumptions of the theory are never perfectly met in the real world, and things can get quite messy. but for instance, the theory predicts that certain kinds of auctions should fail quite badly, which has happened; and it gives prescriptions for better types of auctions, which have resulted in more revenue.
prionassembly 6y ago
That's a contemporary definition of science deeply rooted in a specific philosopher of science (Popper). There was nothing falsifiable about Newton or Darwin. They were predictive (Darwin to a lesser extent) and, more importantly, they fit, like a puzzle. Falsifiability is a good rule of thumb, like Occam's razor, to tell apart obviously pathological research (this possibly includes particle and high-energy physics); but the point of science is the unity of science. If you're a believer in science, you have to believe there's true knowledge to be had (however unobtainable); this true knowledge has to be a single thing, a single puzzle to piece together. However inefficiently and plagued by politics, economics is doing a bit of that. Not long ago we were thinking that it should be replaced in favor of psychology, which is closer to the matter of human behavior. But just look at how psychology is doing.

baja_blast 6y ago

I'd argue that Economics is not a science because it has no models that can predict anything. Economists today are just modern day Oracles/Seers that use their equations/models in a similar manner to how a Seer would throw chicken bones to foretell the future. Because of these Economists seem to break up into factions making it more similar to religious belief IMO. You even see many Economists ignore evidence that contradicts their pet theory. I think it's dangerous to take their ideas too seriously.

jnwatson 6y ago
I'm not sure where you're coming from. Economics does indeed produce models that are predictive.
- JetSpiegel 6y ago
  Tulip prices can only go up. See also 1929, 2008, etc etc.
traek 6y ago
The link explains some practical applications of Milgrom's and Wilson's work on auction theory. Mechanism design and auction theory are definitely predictive and useful in the real world.
johnrgrace 6y ago
The current prize disproves your point.
prionassembly 6y ago
This seems to conflate predictability with determinism. The value of stock options hews very close to what Black-Scholes theory would assume. There's one loose bone: volatility. But reasonable estimates of volatility are close enough for any real applications of derivatives (i.e. hedging, not speculation). The uncovered parity equation of exchange rates has one loose bone: sovereign risk premia. If Cristina Kirschner dies and her successor starts privatizing foreign-owned capital assets, well, there goes the model. And to a smaller extent this is happening all the time. But if you had to take a decision on how local interest rates affect exchange rates, this is an excellent guide. If anything, economics is insufficiently mathematical in the treatment of what it can't determine. It's a reasonable mean field theory but should be more Bayesian about what it takes as assumption (markets will open tomorrow -- fruit and stock alike...). The assumptions are mostly fine but we should, as a general public, have a clearer picture of how fine. Then, how well is epidemiology doing this? 99% confidence intervals from March Covid models should encompass the possibility that there's almost no fomite transmission but the virus remains alive in airborne aerosols for longer distances and time. We might all have gone the Swede route, where true agglomerations were instantly shut down, or at least prevented having the WHO and the Surgeon General telling us not to wear masks.

yakubin 6y ago

If science is about having equations and maths in it, then wait until you hear about astrology.

disown 6y ago

> Economics is absolutely a science. It absolutely is not. It's is a societal study based on artificial rules created by man. It's no more a "science" than a study of monopoly or minecraft. After all, the laws/rules of monpoly or minecraft can be changed since they are man-made and not natural. > there are complex equations beyond most of our understanding behind the theory, just like you’d find in physics or chemistry. Except that in physics or chemistry, the complex equations are testable in nature and hence reproducible and testable. Nothing in economics is objectively testable. The better comparison would be to astrology or christian numeralology. Where people make arbitrary rules and within those rules they use "numbers" to create associations.