3 ms·
Much to the contrary, it is much much much harder than any system in fundamental physics. The economy (like the weather, or cells) is a much more complex system
by andrepd 5y ago
Much to the contrary, it is much much much harder than any system in fundamental physics. The economy (like the weather, or cells) is a much more complex system than a black hole or a hadron.
Furthermore, it actually has a peculiarity unique to studying systems of humans (as does psychology or sociology): predictions about the system affect the system, which makes it even more difficult to distinguish true predictions from self-fulfiling prophecies.
- mahogany 5y agoI agree -- as a "former mathematician", I find economics to be much more daunting than math, and I'm skeptical about anyone who has more than a modicum of certainty about it. Modern mathematics is certainly complex, but there are definitive axioms that are nearly universally agreed-upon, and proofs operate on logic alone. It's like a hard game with known rules. Are there definitive axioms in economics that apply to the real world with irrational actors? As you say, I think the key component that introduces all the uncertainty is: humans. You can't prove anything interesting about a human-based system using pure logic (at least not that I'm aware of). I'm reminded of the quote by Von Neumann: "If people do not believe that mathematics is simple, it is only because they do not realize how complicated life is." But I will be the first to admit that my economics understanding is shallow. I'm curious: what are examples of theorems or definitive truths in economics that we know apply to the real world with real humans?
- paulpauper 5y ago>But I will be the first to admit that my economics understanding is shallow. I'm curious: what are examples of theorems or definitive truths in economics that we know apply to the real world with real humans? Supply/demand, IS-LM model, risk-neutral pricing, no arbitrage conditions. In the latter, 'free lunches' tend to be arbitrag-ed away by market participants (humans).
- satellite2 5y agoEven tough those are very robust models, they can still end up being wrong given some policy (some asset distributed via first come first served or via a lottery to avoid price increase for instance). The only real definition I see is the equation of exchange which is purely mathematical and not linked to any real world data, but there are probably many other that are definitions and not theories / models.
- paulpauper 5y agoModern physics is way more than black holes, which were mathematically understood a long time ago
- andrepd 5y agoWell there's more to black holes than solving the Schwarzschild metric, so there's still a lot to do to "understand black holes"!