Wednesday, April 26, 2017

Falsehoods scientists believe about economics

I stumbled upon a fun list of "falsehoods programmers believe about economics", and tweeted that I thought it also seems pretty representative of falsehoods scientists believe about economics. However, after I thought about it for a bit I realized that there are really two classes of scientists: scientists who believe those falsehoods and those that don't. 

Just kidding.

But really, there are just one of two falsehoods scientists believe about economics:
  1. Economics is a scientific field like any other that speaks in the public sphere using theories that are empirically grounded and responds to changes in the data, or ...
  2. Economics is a field rife with methodological issues and bad models that can be greatly improved by not only the approaches used in the scientist in question's own discipline, but in fact in the scientist in question's own work.
I used to be in category 1, but have since moved into category 2 [1].



[1] That's a bit of a self-deprecating joke. Actually, the version (v2) of Fielitz and Borchardt's paper that I saw (which wasn't really relevant to my work at the time) came up during a search for something entirely different (which was relevant). I recalled the F&B paper (particularly the reference to "non-physical systems") while sitting through a presentation on prediction markets, and bit later Paul Krugman wrote this blog post ("It is not easy to derive supply and demand curves for an individual good from general equilibrium with rational consumers blah blah.") which I took as a challenge and started this blog.

The F&B paper was subsequently updated (v4) to include a reference to this blog.

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