Physics has long been considered the canonical science. It is not the oldest mathematical science, since astronomy predates it by centuries but that discipline lacked an experimental basis. Physics deals with the inanimate world and so is free of the messiness and ethical constraints that complicate other disciplines that deal with living things. It has an empirical basis of observations and experiments and yet has a high level of abstraction that enables simplified models to approximate reality. And the mathematical framework in which its theories are expressed gives its predictions a level of precision and rigor.
As a result, other disciplines, especially those in the social sciences, that seek to view themselves as a science try to model their field along the lines of physics, something that is referred to in academia as ‘physics envy’. John Rapley, a political economist at the University of Cambridge, says that economists who fall prey to the allure of physics envy are making a serious mistake.
Two questions: is it good or bad that professional athletes earn 400 times what nurses do, and is string theory a dead end? Each question goes to the heart of its discipline. Yet while you probably answered the first, you’d hold an opinion on the prospects of string theory only if you’ve studied physics.
That annoys economists, who wonder why everyone feels free to join economic debates instead of leaving them to the experts, as they do with physics or medicine. What economists don’t usually admit is that, on a range of topics they examine, they often had an answer to the question before they began their studies. Scientists are supposed to reach their conclusions after doing research and weighing the evidence but, in economics, conclusions can come first, with economists gravitating towards a thesis that fits their moral worldview.
I don’t quite agree with Rapley who seems to think that scientists work purely inductively, arriving at their conclusions based on the data. The way that science works is more complicated than that as I discuss in my forthcoming book THE GREAT PARADOX OF SCIENCE: Why its conclusions can be relied upon even though they cannot be proven. It is better to say that physics theories are more tightly constrained by data than most other fields since there are usually fewer variables that need to be accommodated.
Where Rapley mainly finds fault is with the idea that the ‘laws’ of economics are as universal as the laws of physics and he says that the theoretical modeling which is highly prized and rewarded in contemporary economics ignores the fact that economic theories deal with the highly messy behavior of human beings and these are so dependent on context and history that any claim to universality is highly dubious, and ignoring this is what leads to major problems such as bubbles and crashes.
Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity. Change the social context – in economic parlance, change the incentive structure – and people will alter their behaviour to adapt to the new framework.
That’s something that ‘physics envy’ can’t capture – that the social nature of human beings makes any laws of behaviour tentative and contextual. In fact, the very term ‘social science’ is probably best seen as an oxymoron.
…The apogee of economic ‘scientism’ came in the 1990s, a decade in which economists such as Alan Greenspan were lionised as gurus, Bill Clinton was describing globalisation as a force of nature to which governments had to submit, and whizzkid experts such as Jeffrey Sachs were jetting into one country after another advising former communists how to re-align their countries with this presumed natural order.
Hindsight has revealed the misplaced hubris of that decade, one during which Greenspan helped to fuel a speculative bubble that nearly destroyed the world economy, and the Soviet Union’s failed reform knocked seven years off its life expectancy. Many economists, Sachs included, defend themselves on the grounds that their advice was not actually taken: bad politics got in the way of good economics.
He reminds us that Adam Smith, considered by many to be the founder of this field, was a moral philosopher and that “economics has always been an ethical and social exercise, its purpose being to produce the rules by which a community organises its production” and that to ignore that human dimension with all its variability is to risk going astray in a big way.
The Foundation series by Isaac Asimov kind of had the same premise — that history itself could be more or less “solved” by the scientific method, and thus predicted and guided into a specific path. I think that may have influenced some economists and others into thinking this could be a real thing.
What people forget is that, even in Asimov’s books, a main theme of the books was that psychohistory didn’t really work. Events and people could show up (like a “Napoleon” character) who weren’t anticipated and couldn’t be planned for.
Asimov’s other major series, all the robot stories, falls into a similar pattern in my interpretation. It’s an attempt to reduce an entire messy field (ethics) into a simplistic set of scientific rules (the three laws). Then, all the stories detail ways in which that reduction fails.
The first is a moral judgement, not an empirical question. I’ve argued in the past that a great deal of what passes for economics consists of trying to define ethical values so as to render them amenable to algebra.
How empirical is economics? I generally see a lot of handwaving and anything hard to explain is an “externality.” I really do not know, bit economists do experiments?
@brucegee1962, #1, as much as I enjoyed the Foundation Trilogy, I think it may have been the other way around. I believe that Asimov got the idea from the work of contemporary sociologists and historians, particularly Arnold J. Toynbee.
@Marcus Ranum, #3, there are a lot of empirical studies in economics, both at individual levels and societal levels. But there is also lot of theoretical stuff which has little supporting data (like a lot of psychology). We shouldn’t reject an entire field of study because the replicability is currently low. Instead we should be skeptical of people who say they fully understand the problem and have all the answers, but continue to study it. I feel the best way to view economics is through the lens of behavioral psychology. I am neither a behavioral psychologist or an economist, but having read moderately deeply into both fields I believe they are intimately related.
To mount one of my pet hobby-horses, at the root of economics is the idea that a decision has to be made. The study of economics is the study of why decisions are made. Humans tend to make decisions based on an idea of value, and value is not a physical thing but a mental construct. Since each person assigns different levels of value to different goods (physical, cultural, knowledge, etc.), and to their feeling about other people (status, reciprocity, familial relationship, etc.) trade can occur (satisfactory or unsatisfactory). I’ve read numberless theories about how value is intrinsic to various things, scare metals and human labor are two which have been discussed endlessly. But in the end it doesn’t matter, value is a human construct.
The myriad of motivations for an individual human to engage in trade can be modelled on a societal scale, but only as much as the individual humans share a culture. If the cultural motivations are different, and they generally are different between both regions and across generations, the generalized rules of economics break down.
Seventy years ago, economists were creating economic theories based on the idea of decision making among scare resources (which is where Roddenberry got his idea for Star Trek in a post-scarcity world). The work of behavioral psychologists since then has raised the very interesting idea that even in a post-scarcity world human beings will engage in economic behavior, maybe not by collecting goods, but in other ways.
Marcus,
Behavioral economists like Dan Ariely do experiments to see how people behave under various economic stimuli.
As for macroeconomic experiments, that requires them to get governments to sign on and one can view the policies that the World Bank and the IMF impose on countries as experiments in economic theory.
There are also so-called ‘natural experiments’ where conditions arise that enable the comparison of one group with a control group.
Yes, some economists do do experiments. As an undergrad, I participated in some small-scale experiments — no idea what the experiments were specifically testing — to earn a bit of pocket change. From memory, the amount of real money I “earned” was directly related to the amount of “profit” I accumulated in the experiments. I wasn’t very good at it…
blf,
In these experiments, participants like you are usually led astray as to the purpose of the experiment. They are told they are being tested for one thing when in reality the experimenters are looking for something else.
I agree with Dunc #2; the first question is about values, the second is about empirical fact. You should not disagree with empirical fact.
Example: You might say it is “good” or “bad” to lower taxes on the rich, that would be a matter of your personal values. But if you say that lowering taxes on the rich will reduce unemployment and increase overall economic health for all strata of society, then you have ventured into questions of empirical fact, and hard data will show you to be wrong.