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How to argue with economists

from Lars Syll

from Noah Smith: Seven principles for arguing with economists


Principle 1: Credentials are not an argument.

Example: “You say Theory X is wrong…but don’t you know that Theory X is supported by Nobel Prize winners A, B, and C, not to mention famous and distinguished professors D, E, F, G, and H?”

Suggested Retort: Loud, barking laughter.

Alternative Suggested Retort: “Richard Feynman said that ‘Science is the belief in the ignorance of experts.’ And you’re not going to argue with HIM, are you?”

Reason You’re Right: Credentials? Gimme a break. Nobody accepts received wisdom from sages these days. Show me the argument!

Principle 2: “All theories are wrong” is false.

Example: “Sure, Theory X fails to forecast any variable of interest or match important features of the data. But don’t you know that all models are wrong? I mean, look at Newton’s Laws…THOSE ended up turning out to be wrong, ha ha ha.”

Suggested Retort: Empty an entire can of Silly String onto anyone who says this. (I carry Silly String expressly for this purpose.)

Alternative Suggested Retort: “Yeah, well, when your theory is anywhere near as useful as Newton’s Laws, come back and see me, K?”

Reason You’re Right: To say models are “wrong” is fatuous semantics; philosophically, models can only have degrees of predictive power within domains of validity. Newton’s Laws are only “wrong” if you are studying something very small or moving very fast. For most everyday applications, Newton’s Laws are very, very right. 

Principle 3: “We have theories for that” is not good enough.

Example: “How can you say that macroeconomists have ignored Phenomenon X? We have theories in which X plays a role! Several, in fact!”

Suggested Retort: “Then how come no one was paying attention to those theories before Phenomenon X emerged and slapped us upside the head?”

Reason You’re Right: Actually, there are two reasons. Reason 1 is that it is possible to make many models to describe any phenomenon, and thus there is no guarantee that Phenomenon X is correctly describe by Theory Y rather than some other theory, unless there is good solid evidence that Theory Y is right, in which case economists should be paying more a lot attention to Theory Y. Reason 2 is that if the profession doesn’t have a good way to choose which theories to apply and when, then simply having a bunch of theories sitting around gathering dust is a little pointless.

Principle 4: Argument by accounting identity almost never works.

Example: “But your theory is wrong, because Y = C + I + G!”

Suggested Retort: “If my theory violates an accounting identity, wouldn’t people have noticed that before? Wouldn’t this fact be common knowledge?”

Reason You’re Right: Accounting identities are mostly just definitions. Very rarely do definitions tell us anything useful about the behavior of variables in the real world. The only exception is when you have a very good understanding of the behavior of all but one of the variables in an accounting identity, in which case of course it is useful. But that is a very rare situation indeed.

Principle 5: The Efficient Markets Hypothesis does not automatically render all models useless.

Example: “But if your model could predict financial crises, then people could use it to conduct a riskless arbitrage; therefore, by the EMH, your model cannot predict financial crises.”

Suggested Retort: “By your logic, astrophysics can never predict when an asteroid is going to hit the Earth.”

Reason You’re Right: Conditional predictions are different than unconditional predictions. A macro model that is useful for making policy will not say “Tomorrow X will happen.” It will say “Tomorrow X will happen unless you do something to stop it.” If policy is taken to be exogenous to a model (a “shock”), then the EMH does not say anything about whether you can see an event coming and do something about it.

Principle 6: Models that only fit one piece of the data are not very good models.

Example: “Sure, this model doesn’t fit facts A, B, and C, but it does fit fact D, and therefore it is a ‘laboratory’ that we can use to study the impact of changes in the factors that affect D.”

Suggested Retort: “Nope!”

Reason You’re Right: Suppose you make a different model to fit each phenomenon. Only if all your models don’t interact will you be able to use each different model to study its own phenomenon. And this is highly unlikely to happen. Also, it’s generally pretty easy to make a large number of different models that fit any one given fact, but very hard to make models that fit a whole bunch of facts at once. For these reasons, many philosophers of science claim that science theories should explain a whole bunch of phenomena in terms of some smaller, simpler subset of underlying phenomena. Or, in other words, wrong theories are wrong.

Principle 7: The message is not the messenger.

Example: “Well, that argument is being made by Person X, who is obviously just angry/a political hack/ignorant/not a real economist/a commie/stupid/corrupt.”

Suggested Retort: “Well, now it’s me making the argument! So what are you going to say about me?”

Reason You’re Right: This should be fairly obvious, but people seem to forget it. Even angry hackish ignorant stupid communist corrupt non-economists can make good cogent correct arguments (or, at least, repeat them from some more reputable source!). Arguments should be argued on the merits. This is the converse of Principle 1.

There are, of course, a lot more principles than these, and I’ll include some in a later post. The set of silly things that people can and will say to try to beat an interlocutor down is, well, very large. But I think these seven principles will guard you against much of the worst of the silliness. Keep them always with you at your side … Happy arguing!

Noah Smith: Seven principles for arguing with economists 

  1. September 25, 2013 at 12:10 pm

    Theories are not wrong, but in far too many cases those who should know better draw invalid conclusions from them. That is why I am proposing a “practical real world” approach to the teaching of economics for the general public, completely void of theories, yet consistent with the actual theories (sans the invalid conclusions). I do this not to discredit the theories or the academic work within economics, but as a method of educating the public without the confusion created by invalid conclusions form theories. Case in point: The inability of economists, the media, and political advocates to adequately account for the effects of isolating assumptions that form the basis for theories.

    As for accounting identity, this is one of my pet peeves. The variables all have issues involving definitions and measurements. In other words, whether you realize it or not, there are underlying assumptions behind each identity. To argue that “my conclusion about what is going to happen if X occurs is a mathematical fact” is completely invalid. Case in point: any such conclusion that requires calculations involving the money supply, or money velocity.

  2. Ken Zimmerman
    September 29, 2013 at 8:43 am

    I don’t know what Noah Smith has been smoking, but his “Seven principles for arguing with economists” seems lost in a cloud of some sort of smoke.

    1. I don’t know about you, but for many people in everyday life credentials matter a lot. Ask any assistant professor or junior account executive.
    2. Theories are neither wrong nor right. They just are. They are generally never intended to be anything else. Although there are actors who use them as hammers and cutting tools to hurt those with whom they disagree. Smith is correct that for most everyday applications Newton’s “laws” work okay. I have no idea how that conclusion applies to everyday economics, if at all.
    3. Once you tell us precisely what “good solid evidence” and “a good way to choose which theories to apply and when” are then I’ll buy this one.
    4. Accounting identities can tell us some things, maybe even a lot about how they were made and the ways of life they carve out. Like all other “explanations” they both describe and make a world. Using them for anything else is just wishful thinking.
    5. As to an asteroid hitting the earth, prediction also depends on timing. In the short-term we can predict the hit or at least come close, but not in the longer-term. First, our laws of motion are not sufficient to predict the motions of objects in space outside a narrow time window. Second, other actors are always intervening to change our predictions. These include gravity, new objects coming in, changes in solar and cosmic radiation, etc. Economists latched onto a Latin phrase early on that allows them to protect themselves from wrong predictions: Ceteris paribus (all other things being equal). And, of course never are all other things equal. Physical scientists generally were simply too arrogant to use the phrase. Choosing instead to insist that their predictions were not conditional, or that their theories overcame the conditionality. Neither of which is the case.
    6. Again, I’ll buy this one if you tell us precisely what “a whole bunch of facts” are. When do you have “facts?” And don’t you need some guidelines (a theory) to figure out what the facts are? Or do the facts just come up to you on street and introduce themselves? As brilliant as he was Feynman never really understood this, or if he did it was intuitively.
    7. “Arguments should be argued on the merits” is easily one of the most useless statements ever made. To accept it at face value you would also have to accept that merit is something apart from the actors that make and use it. Possible I guess. Although there is no practical way I know of to distinguish between merit that is made and used by actors and merit that is not made and used by actors.

    Smith’s principles are almost worse than the economists he wants to protect us against.

    • davetaylor1
      September 29, 2013 at 8:23 pm


      At least Smith was trying to be constructive and fun, which you are clearly not.

      1. There is all the difference in the world between using a reference as a short cut to a comparable argument and an attempt to use it to avoid looking at the argument. It would of course be an argument to say X disagrees because Y.

      2. You are confusing theorems with theories. The theory is that the theorem applies.

      3. Good reasons theorems apply are specific to the case.

      4. On accounting identities, okay: the purpose of such arguments may be to create self-fulfilling prophecies; but surely all the more reason to be wary of them?

      5. Similarly on inviting riskless arbitrages; seeing that invites the long overdue legal pre-emption of riskless arbitrages.

      6. You should be asking that of Smith’s interlocutor. In any case, a fact here is a situation which prima facie fits a definition in the proposition.

      7. “Arguments should be argued on their merits” is not useless, but only needs saying when not being acted upon, as in the example here.

      And in view of your damning Smith with intoxicating smoke, now its me arguing that!

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