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Economics is not a science. Most papers in finance/economics are not repeatable or even applicable in real life - as was displayed when the worlds number one he

Economics is not a science. Most papers in finance/economics are not repeatable or even applicable in real life - as was displayed when the worlds number one hedgefund started the process of reading published financial papers and trying to apply them [1] [1]https://www.goodreads.com/book/show/43889703-the-man-who-solved-the-market https://www.goodreads.com/book/show/43889703-the-man-who-sol...

pas 4y ago
do they use the scientific method? yes. it's science. is it good science? that's of course a bit subjective, but the trend in looking for clever natural experiments is, IHMO, a good direction. of course there is a long way to get there as you point out, replication, due to confounders and whatnot is still a big issue.
- raspberry1337 4y ago
  >do they use the scientific method? yes. it's science. "The scientific method is the process of objectively establishing facts through testing and experimentation" [1] But economics does not objectively establish facts, it establishes subjective facts. Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market - it pretends to investigate reality when in fact all it experiments with is pick-and-choose model of that reality. That picking and choosing is a very subjective process, hence why we can have chicago and marxists economists both claiming each their "scientific" correctness. Take a look at the papers that just won the nobel prize. Not a single one of them is a repeatable experiment, because such a thing is impossible in real-market economics. The market changes at all times, and is unique at all times. Economics can only be a science if we accept that science does not have to able to produce repeteable experiments, merely the attempt of doing so is enough to qualify as science. [1] https://www.techtarget.com/whatis/definition/scientific-method#:~:text=The%20scientific%20method%20is%20the,and%20finally%20analyzing%20the%20results https://www.techtarget.com/whatis/definition/scientific-meth....
  - ianai 4y ago
    If we didn’t know the rules of chess or go and merely watched the games of various skill levels might we come up with something similar? Eventually we’d get the rules, I think. But with people and money there are few rules written down and even the goals of the decision makers are as varied as the decision makers themselves. The things used to facilitate trade themselves vary over time and nature. Probably why Econ theory tends to better characterized as Econ philosophy. It might need/probably has to be studied with something like science but modified to be able to study the phenomena of scarce resource allocation.
  - avidphantasm 4y ago
    Economics is politics dressed up as science.
  - throw0101c 4y ago
    > Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market Really? Because post-GFC there was all sorts of economic experimentation with regards to austerity: * https://www.weforum.org/agenda/2015/09/how-does-austerity-affect-economic-growth/ https://www.weforum.org/agenda/2015/09/how-does-austerity-af... Also: * https://www.businessinsider.com/austerity-has-damaged-europe-vs-us-gdp-growth-2018-11 https://www.businessinsider.com/austerity-has-damaged-europe... * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... * https://www.researchgate.net/figure/The-Impact-of-Austerity-on-GDP-Growth-in-the-Euro-Area-Source-Author-s-elaboration-on_fig13_280621456 https://www.researchgate.net/figure/The-Impact-of-Austerity-... There have been all sorts of experiments with regards to tax policy: * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment Every time there are tax cuts "that will pay for themselves" an experiment is run: * https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises https://www.npr.org/2019/12/20/789540931/2-years-later-trump... When post-GFC QE was enacted one group of people (Keynesians) said no inflation would occur, and another (right-leaning) group said all sorts of things would happen: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Which group was right? Seems that lot of experiments have been done in "the real market".
- belter 4y ago
  Is Economics a Science? - https://www.investopedia.com/ask/answers/030315/economics-science.asp#:~:text=Economics%20is%20generally%20regarded%20as%20a%20social%20science%2C%20which%20revolves,and%20ability%20to%20achieve%20consensus https://www.investopedia.com/ask/answers/030315/economics-sc.... "Economics is generally regarded as a social science, although some critics of the field argue that economics falls short of the definition of a science for a number of reasons, including a lack of testable hypotheses, lack of consensus, and inherent political overtones. Despite these arguments, economics shares the combination of qualitative and quantitative elements common to all social sciences..."
  - bitxbitxbitcoin 4y ago
    I remember participating in many experimental economics experiments (think behavioral psychology experiments and other such ways to test micro economic theory) that were very reproducible while in College.
- ySocMedia 4y ago
ianai 4y ago
As an academic field, too, I found it to be quite toxic. You can get published in the best Econ journals by merely being the only person with the data. So of course it won’t be reproduced. That said, it is understandably hard to run economic experiments. No one’s going to stand up a couple countries to then poke around with policy and see what happens. (Though maybe simulations will or have made this sort of thing possible.)
malshe 4y ago
It’s super difficult, if not impossible, to make money from a published trading strategy!
hnburnsy 4y ago
"Economists are people who wonder if what works in reality can also work in theory." - Ronald Reagan

pas 4y ago

do they use the scientific method? yes. it's science. is it good science? that's of course a bit subjective, but the trend in looking for clever natural experiments is, IHMO, a good direction. of course there is a long way to get there as you point out, replication, due to confounders and whatnot is still a big issue.

raspberry1337 4y ago
>do they use the scientific method? yes. it's science. "The scientific method is the process of objectively establishing facts through testing and experimentation" [1] But economics does not objectively establish facts, it establishes subjective facts. Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market - it pretends to investigate reality when in fact all it experiments with is pick-and-choose model of that reality. That picking and choosing is a very subjective process, hence why we can have chicago and marxists economists both claiming each their "scientific" correctness. Take a look at the papers that just won the nobel prize. Not a single one of them is a repeatable experiment, because such a thing is impossible in real-market economics. The market changes at all times, and is unique at all times. Economics can only be a science if we accept that science does not have to able to produce repeteable experiments, merely the attempt of doing so is enough to qualify as science. [1] https://www.techtarget.com/whatis/definition/scientific-method#:~:text=The%20scientific%20method%20is%20the,and%20finally%20analyzing%20the%20results https://www.techtarget.com/whatis/definition/scientific-meth....
- ianai 4y ago
  If we didn’t know the rules of chess or go and merely watched the games of various skill levels might we come up with something similar? Eventually we’d get the rules, I think. But with people and money there are few rules written down and even the goals of the decision makers are as varied as the decision makers themselves. The things used to facilitate trade themselves vary over time and nature. Probably why Econ theory tends to better characterized as Econ philosophy. It might need/probably has to be studied with something like science but modified to be able to study the phenomena of scarce resource allocation.
- avidphantasm 4y ago
  Economics is politics dressed up as science.
- throw0101c 4y ago
  > Since every "experiment" is conducted in theory or in a simulation at best, and not in the real market Really? Because post-GFC there was all sorts of economic experimentation with regards to austerity: * https://www.weforum.org/agenda/2015/09/how-does-austerity-affect-economic-growth/ https://www.weforum.org/agenda/2015/09/how-does-austerity-af... Also: * https://www.businessinsider.com/austerity-has-damaged-europe-vs-us-gdp-growth-2018-11 https://www.businessinsider.com/austerity-has-damaged-europe... * https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion https://www.theguardian.com/business/ng-interactive/2015/apr... * https://www.researchgate.net/figure/The-Impact-of-Austerity-on-GDP-Growth-in-the-Euro-Area-Source-Author-s-elaboration-on_fig13_280621456 https://www.researchgate.net/figure/The-Impact-of-Austerity-... There have been all sorts of experiments with regards to tax policy: * https://en.wikipedia.org/wiki/Kansas_experiment https://en.wikipedia.org/wiki/Kansas_experiment Every time there are tax cuts "that will pay for themselves" an experiment is run: * https://www.npr.org/2019/12/20/789540931/2-years-later-trump-tax-cuts-have-failed-to-deliver-on-gops-promises https://www.npr.org/2019/12/20/789540931/2-years-later-trump... When post-GFC QE was enacted one group of people (Keynesians) said no inflation would occur, and another (right-leaning) group said all sorts of things would happen: > We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment. * https://economics21.org/html/open-letter-ben-bernanke-287.html https://economics21.org/html/open-letter-ben-bernanke-287.ht... Which group was right? Seems that lot of experiments have been done in "the real market".
belter 4y ago
Is Economics a Science? - https://www.investopedia.com/ask/answers/030315/economics-science.asp#:~:text=Economics%20is%20generally%20regarded%20as%20a%20social%20science%2C%20which%20revolves,and%20ability%20to%20achieve%20consensus https://www.investopedia.com/ask/answers/030315/economics-sc.... "Economics is generally regarded as a social science, although some critics of the field argue that economics falls short of the definition of a science for a number of reasons, including a lack of testable hypotheses, lack of consensus, and inherent political overtones. Despite these arguments, economics shares the combination of qualitative and quantitative elements common to all social sciences..."
- bitxbitxbitcoin 4y ago
  I remember participating in many experimental economics experiments (think behavioral psychology experiments and other such ways to test micro economic theory) that were very reproducible while in College.
ySocMedia 4y ago

ianai 4y ago

As an academic field, too, I found it to be quite toxic. You can get published in the best Econ journals by merely being the only person with the data. So of course it won’t be reproduced. That said, it is understandably hard to run economic experiments. No one’s going to stand up a couple countries to then poke around with policy and see what happens. (Though maybe simulations will or have made this sort of thing possible.)

malshe 4y ago

It’s super difficult, if not impossible, to make money from a published trading strategy!

hnburnsy 4y ago

"Economists are people who wonder if what works in reality can also work in theory." - Ronald Reagan