Friday, February 15, 2013

Against "Science", "Reality", And "Free Will"

1.0 Introduction

You may have noticed. I am not overly fond of neoclassical economics. But today I thought I would talk about criticisms you might find in the blogosphere that I find unpersuasive. That is, I do not like certain one-line assertions, without additional elaborations. I make no attempt to demonstrate here that some make these assertions.

2.0 "Economics Is Not Science"

If you are not arguing about the history, philosophy, or sociology of science, why would you care if a particular field is a science? Should you not be more concerned if the arguments in a field tend to be persuasive, if the norms in the field lead to such arguments? I can see a role here for classifying types of assumptions. One can argue about whether economists put forth supposedly substantial theories that cannot be falsified by any logical or empirical findings. Likewise, perhaps some communities of economics are not as quick as they should be to discard empirically falsified theories. Or one could ask if whatever laws are supposed to be embedded in economic models are restricted to certain institutional and historical instances of capitalism. I hope in putting forth criticisms along these lines, I try to provide concrete examples, not just abstract claims.

3.0 "Economic Theory Does Not Correspond To Reality"

What does use of the word "reality" add to an argument about the persuasiveness or non-persuasiveness of a certain set of doctrines? (I do not mean here to downgrade Tony Lawson's research into ontology and economics. In particular, I do not have a problem with the idea that economic systems are invariably open systems. I guess this idea is in tension with my simultaneous interest in natural experiments.)

4.0 "People Have Free-Will; Thus, Economies Cannot Be Modeled With Mathematics"

I am also not fond of the claim that, since people have free will, one cannot apply mathematics to economics. First, I think at least some applications of mathematics in economics are about algorithms and accounting conventions. I do not see how ideas about consumer choice are relevant to much of this work. Second, I tend to think of the distinction between free will versus determinism as one of those tired dualisms that the linguistic turn in philosophy should have dissolved. I usually cite work drawing on Ludwig Wittgenstein for this sort of point. But let me mention J. L. Austin's "A Plea For Excuses" as being directly relevant for an analysis of when an action is voluntary and of when an agent is responsible or blameworthy for what they do. Austin argues for distinctions that you might not initially see. Third, I agree that describing agents as if they calculate how to obtain a maximum utility curve, given preferences and constraints does not leave room for genuine individual choice. One might try to problematize individual choice and seek more sophisticated models. Such an approach does not necessitate the rejection of mathematics.


Tao Jonesing said...

The first two assertions-- "economics is not science" and "economic theory does not correspond to reality"-- are best viewed as retorts to economics apologists who claim that economics accurately describes reality and, therefore, can be used to predict the future and make policy decisions based on such predictions. The fact is that political economy is NOT value-neutral, and stripping away the word "political" from its labeling does not change that fact. Those responding to economics apologists would be better served making that point directly instead of engaging them in a false debate of the apologists' choosing.

I suppose whether economies can be modeled with mathematics depends entirely on what the model is intended to do. I think an economy can be modeled mathematically to understand the past, but not to predict the future except in a very coarse manner that gives one a sense of the economy's magnitude and direction.

Robert Vienneau said...

I agree that the first two assertions are used as such retorts. I suppose I would have to find examples if I want to argue that some of those who make such retorts are not always clear about what arguments they want to summarize.

Ashok Rao said...

Your second argument sounds similar to Milton Friedman's response to a similar criticism. He questioned whether it was worthwhile to care how or why a theory worked, as long as it worked.

A scientist (I can't remember who) retorted that well, consider we suppose that a giant paints the sky blue every morning. It's true, it predicts the truth, but do we learn anything?

For any theory to be worthwhile, it ought to be scientific. And to the extent that economic theories are not scientifically proved, they may not be as objectively valuable (though may be hugely important in the political economy).

Maybe I misunderstood that point (I certainly agree with your opinion on reality and free will).

Robert Vienneau said...

I do not think what I am saying is close to Milton Friedman. I think of myself as closer to echoing E. Roy Weintraub or Deidre McCloskey.

Consider the two statements: (1) "Individuals do not maximize utility" and (2) "Individuals do not maximize utility in reality." What does "in reality" add?

It seems to be some rhetorical trope, incorrectly asserting that we have unquestioned access to some ultimate reality, independent of all theories and conceptual schemes. Perhaps we are better off without such suggestions.

Unlearningecon said...

Another one that annoys me is "well, economic theory assumes everyone is rational, perfect competition, etc, which would be nice but we don't have it."

It doesn't annoy me because it's necessarily incorrect (though it is at higher levels, I guess); it annoys me because it concedes that perfect competition is some 'ideal' state that we might like to aspire to if we could.

Robert Vienneau said...

I do not think those putting forth that point are necessarily heterodox. In fact, Eichner and Kregel (1975) claim the purpose of neoclassical economics is "To demonstrate the social optimality if the real world were to resemble the model."