by My new book is out Contemporary mainstream economics — still — focuses on studying what happens in abstract and unrealistic models. A deeper study of underlying causal mechanisms in the economy could make economic science more realistic. However, when faced with the monumental gap between empirical data and models, mainstream economists often resort to one of their four favourite strategies to immunize the models against facts: 1. Treat the model as an axiomatic system, which necessarily gives rise to pure logical tautologies. 2. Use unspecified ceteris paribus assumptions, which give each model assertion an unlimited ‘alibi’. 3. Limit the applicability of the model to spatiotemporal problems where the assumptions/axioms are (possibly) valid. 4. Leave
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My new book is out
Contemporary mainstream economics — still — focuses on studying what happens in abstract and unrealistic models. A deeper study of underlying causal mechanisms in the economy could make economic science more realistic. However, when faced with the monumental gap between empirical data and models, mainstream economists often resort to one of their four favourite strategies to immunize the models against facts:
1. Treat the model as an axiomatic system, which necessarily gives rise to pure logical tautologies.
2. Use unspecified ceteris paribus assumptions, which give each model assertion an unlimited ‘alibi’.
3. Limit the applicability of the model to spatiotemporal problems where the assumptions/axioms are (possibly) valid.
4. Leave the application of the model open-ended, making empirical falsification of the model impossible.
From a scientific standpoint, the value of these types of rescue actions is equal to zero. The real challenge for an economic science worth its name should be to confront reality as it is, instead of conjuring away all kinds of ‘problems’ through the formulation of models and theories that are nothing more than sterile deductive-axiomatic systems.
Science should not be reduced to substanceless fictional storytelling. This has been going on for far too long in economics.
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