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I'm a pure math major, and I took several economics classes. The whole field was very baffling for me. The most reliable model was the dead simple IS–LM, which

I'm a pure math major, and I took several economics classes. The whole field was very baffling for me. The most reliable model was the dead simple IS–LM, which is based on observations. But you don't really need a lot of math for it, so it's boring. As a result, researchers keep trying to generalize the microeconomic behavior of people to derive macroeconomic laws. Like we do with the ideal gas laws. And this produces reams of beautiful math that you can investigate and tweak endlessly. But it doesn't seem to have a lot of predictive power.

raffael_de 1y ago
Economists are stuck at a ceteris paribus level of comprehending what's going on. Forget about differential equations.
Findeton 1y ago
Thing is, the part about using math for economics is highly debatable and that's why Austrian School of economics doesn't use it. From that perspective, we use ranking systems for our preferences, at the individual level, so using math for aggregate behaviour is just not well substantiated. This point of view comes from Carl Menger, which started the whole marginalist revolution.
- cyberax 1y ago
  > Austrian School of economics doesn't use it Well, yeah. They're basically a cult with three rules: 1. The market is perfect. 2. If the market is not perfect, then it's the fault of the government. 3. If you have any questions, see 1.
  - Findeton 1y ago
    No, they don't say that the market is perfect. And if you want a cult, that's the current keynesian economics. Anyway, I don't see any way around not using math. Because value is subjective and that means it's a ranking system of preferences, not based in nominal values.
    - Zigurd 1y ago
      No true Austrian Schools economist...
    - cyberax 1y ago
      You can mathematically analyze subjective rankings. That's not at all a problem for model building. What makes the Austrian economics "school" a cult is not the complexity of models. It's their rejection of models altogether and a refusal to make testable predictions.
  - jostylr 1y ago
    As far as I can tell, Austrians believe that analyzing based on individual preferences and actions is the key. I haven't made it very far into Mises Human Action, but I gather that was the starting point and Mises developed many theorems based on that. So if you say that allowing individuals to maximize their preferred choices given the constraints around them is "the market" and artificially restricting those choices, using acts or threats of violence, is "the government", then yes, I suppose that is their framework. One of the main things they would probably push back against is the notion to think of the market or government as independently existing entities. The government is just a collection of individuals who use violence to impose their will on others in a way that most of the society is agreeable to, at least to some extent, and, because they are individuals, they have their own preferences and actions which can also be analyzed in this framework. If you think people in the market do things that are nasty when all the actions are voluntary (and that certainly can happen), shouldn't you be even more skeptical of those who are willing to engage in violence to force the things they want to come to be to happen? Austrians would also object to the notion of something being perfect. But they do analyze situations in which an external force interferes with the normal voluntary flow of actions and generally find that the stated outcomes (probably not the actual desired outcomes) of those external forces is generally not met. For example, rent control is often argued for as about helping more people to be housed and, empirically, that usually is not what happens when rent control is enforced. One could argue that the real intent of rent control is about making life better for the well-connected at the expense of the less well-connected and that probably does happen regularly.
    - cyberax 1y ago
      If I were to summarize the insights of economic schools of thought, then we get: 1. Keynesianism: "Your spending is my income, so when there's not enough spending, the government needs to step in". 2. Monetarism: "The monetary supply directly controls the economy and is the primary reason for economic phenomena". 3. Austrian economy: the market god, the market is king, all hail the market. The first two approaches provide actionable models and make predictions. As with all models, they have limits of applicability, and they are often wrong to some degree. Meanwhile, Austrian economics is always right. And when it's wrong, it's because you haven't done it hard enough. > If you think people in the market do things that are nasty when all the actions are voluntary (and that certainly can happen), shouldn't you be even more skeptical of those who are willing to engage in violence to force the things they want to come to be to happen? Well, let's look at a particular example: pollution regulation. Laws limit the almighty Market by forcing compaines to clean up their waste. Another example is monopolism. In the view of the Austrian economy "school" it is _always_ the result of government actions. And monopolies wouldn't exist otherwise, even for things like water supply and sewer.
avdelazeri 1y ago
Cargo cult mathematics

raffael_de 1y ago

Economists are stuck at a ceteris paribus level of comprehending what's going on. Forget about differential equations.

Findeton 1y ago

Thing is, the part about using math for economics is highly debatable and that's why Austrian School of economics doesn't use it. From that perspective, we use ranking systems for our preferences, at the individual level, so using math for aggregate behaviour is just not well substantiated. This point of view comes from Carl Menger, which started the whole marginalist revolution.

cyberax 1y ago
> Austrian School of economics doesn't use it Well, yeah. They're basically a cult with three rules: 1. The market is perfect. 2. If the market is not perfect, then it's the fault of the government. 3. If you have any questions, see 1.
- Findeton 1y ago
  No, they don't say that the market is perfect. And if you want a cult, that's the current keynesian economics. Anyway, I don't see any way around not using math. Because value is subjective and that means it's a ranking system of preferences, not based in nominal values.
  - Zigurd 1y ago
    No true Austrian Schools economist...
  - cyberax 1y ago
    You can mathematically analyze subjective rankings. That's not at all a problem for model building. What makes the Austrian economics "school" a cult is not the complexity of models. It's their rejection of models altogether and a refusal to make testable predictions.
- jostylr 1y ago
  As far as I can tell, Austrians believe that analyzing based on individual preferences and actions is the key. I haven't made it very far into Mises Human Action, but I gather that was the starting point and Mises developed many theorems based on that. So if you say that allowing individuals to maximize their preferred choices given the constraints around them is "the market" and artificially restricting those choices, using acts or threats of violence, is "the government", then yes, I suppose that is their framework. One of the main things they would probably push back against is the notion to think of the market or government as independently existing entities. The government is just a collection of individuals who use violence to impose their will on others in a way that most of the society is agreeable to, at least to some extent, and, because they are individuals, they have their own preferences and actions which can also be analyzed in this framework. If you think people in the market do things that are nasty when all the actions are voluntary (and that certainly can happen), shouldn't you be even more skeptical of those who are willing to engage in violence to force the things they want to come to be to happen? Austrians would also object to the notion of something being perfect. But they do analyze situations in which an external force interferes with the normal voluntary flow of actions and generally find that the stated outcomes (probably not the actual desired outcomes) of those external forces is generally not met. For example, rent control is often argued for as about helping more people to be housed and, empirically, that usually is not what happens when rent control is enforced. One could argue that the real intent of rent control is about making life better for the well-connected at the expense of the less well-connected and that probably does happen regularly.
  - cyberax 1y ago
    If I were to summarize the insights of economic schools of thought, then we get: 1. Keynesianism: "Your spending is my income, so when there's not enough spending, the government needs to step in". 2. Monetarism: "The monetary supply directly controls the economy and is the primary reason for economic phenomena". 3. Austrian economy: the market god, the market is king, all hail the market. The first two approaches provide actionable models and make predictions. As with all models, they have limits of applicability, and they are often wrong to some degree. Meanwhile, Austrian economics is always right. And when it's wrong, it's because you haven't done it hard enough. > If you think people in the market do things that are nasty when all the actions are voluntary (and that certainly can happen), shouldn't you be even more skeptical of those who are willing to engage in violence to force the things they want to come to be to happen? Well, let's look at a particular example: pollution regulation. Laws limit the almighty Market by forcing compaines to clean up their waste. Another example is monopolism. In the view of the Austrian economy "school" it is _always_ the result of government actions. And monopolies wouldn't exist otherwise, even for things like water supply and sewer.

avdelazeri 1y ago

Cargo cult mathematics