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Yanis Varoufakis – Economics Is not like physics

Summary:
"Well, because economics is not like physics. And what is the profound difference? If you look at the curricula of economics departments, [...] if you look at textbooks, if you look at mainstream articles published in 'Econometrica', in 'Journal of Political Economy' ... it's not obvious that economics is not like physics. You start with assumptions. You build theorems. You prove the theorems. You have lemmas. Then, usually, somebody, maybe not the same author, collects some data and tests empirically, econometricly mostly, the reduced forms of the equations that derive from the theorems ... Isn't that what physicists do? ... More or less. ... But the profound difference, allow me to say, between economics and physics, is that, in physics the phenomenon doesn't give a damn about our

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"Well, because economics is not like physics. And what is the profound difference? If you look at the curricula of economics departments, [...] if you look at textbooks, if you look at mainstream articles published in 'Econometrica', in 'Journal of Political Economy' ... it's not obvious that economics is not like physics. You start with assumptions. You build theorems. You prove the theorems. You have lemmas. Then, usually, somebody, maybe not the same author, collects some data and tests empirically, econometricly mostly, the reduced forms of the equations that derive from the theorems ... Isn't that what physicists do? ... More or less. ... But the profound difference, allow me to say, between economics and physics, is that, in physics the phenomenon doesn't give a damn about our models of the phenomenon. So, a meteorologist doesn't have to worry that the weather may change its ways because he or she has made a particular prediction. Whereas in social science, whether it's sociology, economics, whatever. The phenomenon really cares about our theories about the phenomenon. Because, as theories have the capacity to alter our behavior in accordance to the theory. So you get, to put it in statistical terms, a plethora of false positives and false negatives."



From:

"Yanis Varoufakis: From an Economics without Capitalism to Markets without Capitalism | DiEM25"

https://youtu.be/9aK4OztueuE
Yanis Varoufakis
An accidental economist Let me begin with a confession: I am a Professor of Economics who has never really trained as an economist. But let’s take things one at a time.

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