Jul 26, 2015 05:51 PM
http://opinionator.blogs.nytimes.com/201...ore-157642
(EXCERPT) Gary Gutting: It would seem that in situations like the current Greek crisis, we should be able to rely on economics to tell us which policies are most likely to work. But does the discipline have sufficient predictive power to play an important role in our debates about public policy?
Daniel Hausman: Speaking of predictive power can be misleading. Scientists (and I include economists) are not fortunetellers. Their theories only allow them to predict what will happen if initial conditions are satisfied. Elementary physics enables us to predict how long it will take an object to fall to the ground, provided that gravity is the only force acting on the object. Predicting how long it will take a leaf falling from a tree to reach the ground or where it will land is a much harder problem.
[...] In John Stuart Mill’s view, which I believe is basically correct, economics is a separate and inexact science. It is separate from the other social sciences, because it focuses on only a small number of the causal factors that influence social phenomena. It is inexact because the phenomena with which it deals are influenced by many other causes than the few it focuses on.
G.G.: But then what is the practical value of an inexact science?
D. H.: Mill gives the example of the science of tides. Although the conclusions deducible from Newtonian mechanics, given the positions of the sun and moon, do not predict the nuances of tidal behavior in a particular harbor, they capture the most important causes. Similarly, economic theory identifies the most important causes of economic phenomena. The analytical tools of economics thereby help people avoid jumping to fallacious conclusions.
[...] G.G.: How are those of us who are not experts able to judge when controversies like those concerning austerity reflect the biases of economists — toward, say, liberal or conservative views?
D.H.: In my view, the question is not whether economists are biased, but whether their biases lead them to defend false conclusions. How are most people — who are not experts — to judge? In the case of successful mature sciences, such as physics or biology, the sensible course is to rely on the consensus among experts (as opposed to some website that tells you what you’d like to believe). It is much harder to know what to believe about economics, because its success is controversial, because there is often no consensus among economists, and because economic and political interests and ideologies motivate people to distort and deny what economists have established.
First-rate journalism helps, but journalists have their own limitations; and some make matters worse by presenting as credible all sides of an issue, regardless of how unsupported some positions may be. Given how easy it is to make specious arguments for economic conclusions, it very difficult for most people to judge which economic conclusions are correct and whom to trust. Our political leaders are unfortunately in no better position....
(EXCERPT) Gary Gutting: It would seem that in situations like the current Greek crisis, we should be able to rely on economics to tell us which policies are most likely to work. But does the discipline have sufficient predictive power to play an important role in our debates about public policy?
Daniel Hausman: Speaking of predictive power can be misleading. Scientists (and I include economists) are not fortunetellers. Their theories only allow them to predict what will happen if initial conditions are satisfied. Elementary physics enables us to predict how long it will take an object to fall to the ground, provided that gravity is the only force acting on the object. Predicting how long it will take a leaf falling from a tree to reach the ground or where it will land is a much harder problem.
[...] In John Stuart Mill’s view, which I believe is basically correct, economics is a separate and inexact science. It is separate from the other social sciences, because it focuses on only a small number of the causal factors that influence social phenomena. It is inexact because the phenomena with which it deals are influenced by many other causes than the few it focuses on.
G.G.: But then what is the practical value of an inexact science?
D. H.: Mill gives the example of the science of tides. Although the conclusions deducible from Newtonian mechanics, given the positions of the sun and moon, do not predict the nuances of tidal behavior in a particular harbor, they capture the most important causes. Similarly, economic theory identifies the most important causes of economic phenomena. The analytical tools of economics thereby help people avoid jumping to fallacious conclusions.
[...] G.G.: How are those of us who are not experts able to judge when controversies like those concerning austerity reflect the biases of economists — toward, say, liberal or conservative views?
D.H.: In my view, the question is not whether economists are biased, but whether their biases lead them to defend false conclusions. How are most people — who are not experts — to judge? In the case of successful mature sciences, such as physics or biology, the sensible course is to rely on the consensus among experts (as opposed to some website that tells you what you’d like to believe). It is much harder to know what to believe about economics, because its success is controversial, because there is often no consensus among economists, and because economic and political interests and ideologies motivate people to distort and deny what economists have established.
First-rate journalism helps, but journalists have their own limitations; and some make matters worse by presenting as credible all sides of an issue, regardless of how unsupported some positions may be. Given how easy it is to make specious arguments for economic conclusions, it very difficult for most people to judge which economic conclusions are correct and whom to trust. Our political leaders are unfortunately in no better position....