Wednesday, March 23, 2011

What Kind of Science Would Economics Be if it Were Really a Science?

A nice rant about economists not understanding biology or living up to its intellectual standards has been bouncing around the blogosphere. At the egotistical pleasure risk of blowing my own horn, here's something I wrote back in 2008:

After explaining why I thought the two chief characteristics of "real" science are minimization of Type 1 error and pursuit of causal mechanisms, I point out
Economists have been seduced by a different vision of science, with its roots in those same ancient geometric proofs: that the foundation of science rests on a deductive theory, where “explanation” means “producing a story that can itself be expressed as a deduction from top-level theory”. This is a dream of mathematics and much of physics. It is not characteristic of scientific work in general, however, and its usefulness is limited in fields of research that are extremely complex and dependent on a vast array of contingent factors. Geology would be such a case, where certain general concepts (like plate tectonics) are broadly accepted, but what matters in practice is the knowledge of concrete mechanisms, such as what forces are at work in the subduction of plates or, on a more mundane level, the movement of subsurface water through various soil and rock strata. Geologists cannot give you a general theory of earthquakes, but they can describe rather accurately the process by which the force generated by plate collisions is stored and transmitted in specific formations, and the same can be said for the skills of the hydrologist you might consult before deciding whether you ought to build your house on a particular slope.

Causal mechanisms are the preferred subject matter of science for several reasons. They appease our curiosity. They are more likely to be testable in ways that minimize Type I error than process-independent claims about prior and subsequent states. Above all, they provide knowledge that is frequently useful even when it is incomplete—as knowledge invariably is in complex domains. If you know some mechanisms but not all of them, you still know something about how a system works.
Any my conclusion:
So what would a scientific economics look like? I have mostly answered this already: it would look like other sciences whose objects of study are complex, heterogeneous and context-dependent. It would study mechanisms primarily and end states only for heuristic purposes. It would be predominantly empirical, where this encompasses both statistical work and direct observations on economic behavior (which may also entail statistical analysis). It would ruthlessly identify potential sources of Type I error and strive to eliminate them in hypothesis testing. Experimentation, in the lab and in the field, would become more common, but even more important, primary data collection of all sorts would be accorded a very high value, as is the case in all true sciences. Its macro models would come to look like macro models in hydrology or biogeochemistry: simultaneous differential equations representing mechanisms rather than static end states embodying (a single) equilibrium. Economists would increasingly find it useful to collaborate with researchers from other fields, as their methodological eccentricities are abandoned. Finally, there would be a much clearer distinction between the criteria governing scientific and policy work, insulating the former from some of the influence exerted by powerful economic interests and freeing the latter to adopt an ecumenical and risk-taking approach to tackling the world’s problems.

7 comments:

Nathan Tankus said...

not to claim that the periphery is necessarily scientific but, many in outlying economic schools (post keynesians even, gasp,Marxists! etc) use simultaneous differential equations, collaborate with other disciplines extensively (umkc even has an interdisciplinary phd) and are very rigorous in their data collection and analysis.

Erik said...

Wow. Excellent article.

And that journal look very interesting as well.

JW Mason said...

Very nice piece. One of the best brief discussions of the subject I've seen.

JW Mason said...

More specifically: The account of what's specific to scientific reasoning is very compelling. Whose writing on science (philosophers, historians, etc.) shape your views on this stuff?

Sandwichman said...

I would think that the first criteria would be that when a proposition is shown to be utterly groundless, economists would cease repeating it as if it was gospel truth and their professional identity depended on defending it to the hilt.

Peter Dorman said...

JWM,

Fair question, and a somewhat embarrassing answer:

I spent quite a bit of time reading up on the philosophy of science during grad school, with a smattering of stuff thereafter. The Kuhn debates, Popper, positivism, debates on the scientific status of evolutionary functionalism (wrote a paper on functionalism), etc. None of it seemed compelling, however. Then I had the opportunity to co-teach with several natural scientists (mostly biologists and geologists) in an interdisciplinary masters program for four years, and their day-to-day research practice made things much clearer for me. In the end, I can't cite any heavyweight support for my take on the matter; it is really a generalization from participant observation. (And, as an economist, I was asking different questions from someone like, say, Latour. I was less interested in chipping away at their self-conception than to identify what they were doing that my economist buddies weren't.)

Audio Investigator said...

Economic lab experimentation, how does that work?

I believe that some observation based sciences (Astronomy, is that a science?) are not generally based on controlled lab experiments, but can nevertheless proceed in scientific fashion by respecting the outcome of natural experiments or truly new findings. Regardless of lack of ability to control experiments, progress is possible. Consider what we know now about the universe compared with what Greeks thought they knew.

The problem with Economics may be cultural and institutional as well as methodological. Somehow the culture does not relentlessly seek to minimize type 1 error.

BTW, I think your ideas are great thinking and I have linked them on my blog http://verydeepleft.blogspot.com