by Mathematical modeling in economics If scientific progress in economics lies in our ability to tell ‘better and better stories’ one would, of course, expect economics journals to be filled with articles supporting the stories with empirical evidence confirming the predictions. However, the journals still show a striking and embarrassing paucity of empirical studies that (try to) substantiate these predictive claims. Equally amazing is how little one has to say about the relationship between the model and real-world target systems. It is as though explicit discussion, argumentation, and justification on the subject aren’t considered to be required. In mathematics, the deductive-axiomatic method has worked just fine. But science is not mathematics.
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Lars Pålsson Syll considers the following as important: Economics
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Mathematical modeling in economics
If scientific progress in economics lies in our ability to tell ‘better and better stories’ one would, of course, expect economics journals to be filled with articles supporting the stories with empirical evidence confirming the predictions. However, the journals still show a striking and embarrassing paucity of empirical studies that (try to) substantiate these predictive claims. Equally amazing is how little one has to say about the relationship between the model and real-world target systems. It is as though explicit discussion, argumentation, and justification on the subject aren’t considered to be required.
In mathematics, the deductive-axiomatic method has worked just fine. But science is not mathematics. Conflating those two domains of knowledge has been one of the most fundamental mistakes made in modern — both mainstream and heterodox — economics. Applying it to real-world open systems immediately proves it to be excessively narrow and hopelessly irrelevant. Both the confirmatory and explanatory ilk of hypothetico-deductive reasoning fails since there is no way you can relevantly analyze confirmation or explanation as a purely logical relation between hypothesis and evidence or between law-like rules and explananda. In science, we argue and try to substantiate our beliefs and hypotheses with reliable evidence. Propositional and predicate deductive logic, on the other hand, is not about reliability, but the validity of the conclusions given that the premises are true.
In his seminal book Economics and Reality (1997), Tony Lawson traced the irrelevance of modern economics to the failure of economists to match their mathematical models and deductive-axiomatic methods with their subject. In pure mathematics and logic, we do not have to worry about external validity. But economics is not pure mathematics or logic. It’s about society. The real world.
Economics and Reality was a great inspiration to yours truly when it was published twenty-five years ago. It still is.