Last year, economist Paul Romer made headlines when he accused many modern economists of “mathiness,” which is the sin of using mathematics to cover up what should be regarded as implausible and unconvincing research. This can include, as Romer noted, slipping in “preposterous assumptions” into mathematical models to forward one’s own ideological agenda.
Romer’s accusations were then taken further by business/finance writers Justin Fox and Noah Smith who noted that, yes, the economics profession’s reputation appears to be outrageously inflated given the fact that most mainstream economists are obviously incapable of predicting any significant business cycle problems, and they’re also terrible at simply applying their theories to real world phenomena.
Moreover, when these economists use mathematics, they’re not using actual observed measurements. They’re usually using made-up theoretical values in order to construct a neat and tidy theory that makes them look good. (See: “Economists Don’t Use Mathematics ‘the way physicists or biologists or engineers use it.”)
Few people have noticed this, however, since most of the people who have the skills to properly critique these nonsensical models have built their careers on making friends with the people who use the very same nonsensical models.
(This situation shows the importance of understanding the models, even if one does not want to use them. After all, one can’t have an informed opinion about statistical and mathematical methods if one doesn’t have the slightest idea about how they work. Mathematical analysis, of course, can be informative and useful, but only if you can tell the difference between good analysis and bad.)
But even among those who have spent careers working on such models, such as Romer, the uselessness of the models has begun to cause some to question them, and outside the academic economic profession, many of us would be happy to use their theories, if only they actually told us anything useful.
Thus, in an article today at Aeon magazine, philosophy and religion professor Alan Jay Levinovitz looks at the modern economics and concludes it’s largely pseudoscience that is comparable to astrology. In spite of this, the economics profession only continues to see increases in its prestige and in the size of the paychecks enjoyed by the economists themselves. Levinovitz explains this is largely a result of an intellectual atmosphere that ”imbues economic theory with unearned empirical authority.”
Economists in general, and especially those who revel in their highly abstract mathematical models, like to think of themselves as empirical scientists, but as Levinovitz notes
measurement and mathematics do not guarantee the status of science — they guarantee only the semblance of science. When the presumptions or conclusions of a scientific theory are absurd or simply false, the theory ought to be questioned and, eventually, rejected. The discipline of economics, however, is presently so blinkered by the talismanic authority of mathematics that theories go overvalued and unchecked.
These criticisms are nothing new, though. Lebinovitz discovers an 1886 article in Science that accuses economists of using mathematics to conceal “emptiness behind a breastwork of mathematical formulas.” A long time later, after the total and obvious failure of mainstream economics to diagnose, predict, or explain the 2008 financial crisis, even Paul Krugman was forced to admit that economists can’t tell the difference between a model and reality.
Lebinovitz goes on to compare the economics profession to the Chinese astrologers of old, who, like the modern economics profession, were heavily subsidized by government funds because government elites believed then, as now, that “science” could solve most of their problems.
Ultimately, though, all of these critiques may prove useless, at least in the medium or short term. Those who are familiar with the subculture and industry known as “academia” know that once a scholar has built his or her career on one set of assumptions and methods, almost no amount of evidence to the contrary will cause the researcher to suddenly pursue a new path in one’s career. The old guys who control the profession simply aren’t going to turn around and decide that, yes, they were all wrong after all. Moreover, the young graduate students — the ones who do almost all the real work, and who are aggressive careerists who depend on the approval of the old guys — will simply accept the perpetuation of the old status quo in pursuit of a prestigious job. Actual science won’t be allowed to get in the way of anyone’s career path.
