Home > The Economics Profession > Paul Romer is ‘busy’ …

Paul Romer is ‘busy’ …

from Lars Syll

About math: I have an undergraduate degree in physics. I’ve seen clear evidence that math can facilitate scientific progress toward the truth.

If you think that math is worthless or dangerous, I’m sure that there are people who will be happy to discuss this with you. I’m not interested. I’m busy.  too-busy-people-workplace-ecard-someecards

About truth and science: My fundamental premise is that there is an objective notion of truth and that science can help us make progress toward truth.

If you do not accept this premise, I’m sure that there are people who would be happy to debate it with you. I’m not interested. I’m busy.

Paul Romer

Hmm … 

To me this sounds more like a person afraid of methodological self-reflection, rather than an open-minded and pluralist person.

Where does this methodology-aversion come from?

As far as yours truly can see it all grinds down to a misplaced belief in deductivist mathematical reasoning being the only kind of scientific economics around. If economics isn’t performed as a mathematical modeling it’s not really science in Romer’s world-view. There is no problem with that view — as long as you have done some ontological and methodological reflection and presented arguments for the appropriateness of insisting on deductivist-mathematical modeling being the preferred scientific procedure in economics. No such argumentation is presented.

When applying deductivist thinking to economics, Romer and other mainstream economists usually set up “as if” models based on a set of tight axiomatic assumptions from which consistent and precise inferences are made. The beauty of this procedure is of course that if the axiomatic premises are true, the conclusions necessarily follow. The snag is that if the models are to be relevant, we also have to argue that their precision and rigour still holds when they are applied to real-world situations. They often don’t. When addressing real economies, the idealizations necessary for the deductivist machinery to work, simply don’t hold.

So how should we evaluate the search for ever greater precision and the concomitant arsenal of mathematical and formalist models? To a large extent, the answer hinges on what we want our models to perform and how we basically understand the world.

The world in which we live is inherently uncertain and quantifiable probabilities are the exception rather than the rule. To every statement about it is attached a “weight of argument” that makes it impossible to reduce our beliefs and expectations to a one-dimensional stochastic probability distribution. If “God does not play dice” as Einstein maintained, I would add “nor do people”. The world as we know it, has limited scope for certainty and perfect knowledge. Its intrinsic and almost unlimited complexity and the interrelatedness of its organic parts prevent the possibility of treating it as constituted by “legal atoms” with discretely distinct, separable and stable causal relations. Our knowledge accordingly has to be of a rather fallible kind.

To search for precision and rigour in such a world is self-defeating, at least if precision and rigour are supposed to assure external validity. The only way to defend such an endeavour is to take a blind eye to ontology and restrict oneself to prove things in closed model-worlds. Why we should care about these and not ask questions of relevance is hard to see. We have to at least justify our disregard for the gap between the nature of the real world and our theories and models of it.

Now, if the real world is fuzzy, vague and indeterminate, then why should our models build upon a desire to describe it as precise and predictable? Even if there always has to be a trade-off between theory-internal validity and external validity, we have to ask ourselves if our models are relevant.

Models preferably ought to somehow reflect/express/correspond to reality. I’m not saying that the answers are self-evident, but at least you have to do some methodological and philosophical under-labouring to rest your case. Too often that is wanting in modern economics, where methodological justifications of chosen models and methods as a rule are non-existent.

“Human logic” has to supplant the classical, formal, logic of deductivism if we want to have anything of interest to say of the real world we inhabit. Logic is a marvellous tool in mathematics and axiomatic-deductivist systems, but a poor guide for action in real-world systems, in which concepts and entities are without clear boundaries and continually interact and overlap. In this world I would say we are better served with a methodology that takes into account that “the more we know the more we know we don’t know”.

The models and methods we choose to work with have to be in conjunction with the economy as it is situated and structured. Epistemology has to be founded on ontology. Deductivist closed-system theories, as all the varieties of the Walrasian general equilibrium kind, could perhaps adequately represent an economy showing closed-system characteristics. But since the economy clearly has more in common with an open-system ontology we ought to look out for other theories – theories who are rigorous and precise in the meaning that they can be deployed for enabling us to detect important causal mechanisms, capacities and tendencies pertaining to deep layers of the real world.

Rigour, coherence and consistency have to be defined relative to the entities for which they are supposed to apply. Too often they have been restricted to questions internal to the theory or model. But clearly the nodal point has to concern external questions, such as how our theories and models relate to real-world structures and relations. Applicability rather than internal validity ought to be the arbiter of taste.

But obviosly Paul Romer doesn’t want to talk about these scary methodological-philosophical issues. He is ‘busy’ …

  1. Macrocompassion
    May 22, 2015 at 12:30 pm

    There should be defined a set of criteria which, if followed in full, will allow a fully comprehensive and exact general theory to be found. Such a theory will then allow us firstly to represent and simulate the way that the economy behaves after a particular set of circumstances are introduced. This behavior, if allowed to continue will tend to a state of equilibrium, after a relatively long time has elapsed. But if the theory is only good for this first trend to equilibrium, it is not sufficiently flexible to allow later disturbances to be included.

    So the general theory needs more capacity than to merely respond to one new set of conditions. As soon as the conditions are prescribed and the system begins to react, another set of conditions or at least one other new kind of disturbance kicks in, and the whole system needs to repeat its search for equilibrium once again (even before it has got close to it with the previous set of conditions). This business of continuous reaction to changes is what we should be incorporating in the definitions for a suitable model.

    Due to the need for this kind of flexibility, an partial model of the whole system is unsuitable, and this unfortunately is the way the past models have been arranged and is why they are unsatisfactory. It might appear that the complete model is too complex or difficult to arrange, but this is not necessarily true if and when one is sufficiently cleaver in model design. (I might add that I have a means for modelling which is both comprehensive and sufficiently simple to understand, which meets the Einstein criterion for a proper scientific theory). As Henry Hazlitt (Economics in One Lesson) has pointed out, the art of economics is being able to cover the whole system.

  2. merijnknibbe
    May 22, 2015 at 3:18 pm

    It’s also about the question: what is math? Accounting systems surely are a kind of math. Input-output tables are applied math. The same for arima models and whatever.

    Non of these are deductive. But all of them require (because of this!) well-defined and wel-measured data. Unlike the deductive stuff people like Gary Becker (seemingly admired by Romer) used, which allow for a, to me, horrifying amount of fuzzyness – fuzzyness which is allowed, in a technical sense, by the very fact that therese models are deductive. They are because of this not governed by the kind of empirical discipline which you will find in amny other sciences. Be wary of deductive models!.

  3. May 22, 2015 at 3:35 pm

    The irony of Romer’s position is that he wants to exclude politicians from science, yet the decision processes he (mistakenly) commits himself to in science are precisely those advocated for the political process in 1740 by David Hume. That guy redefined morality as parliamentary law on the basis of a philosophical choice, i.e. of refusing to believe in God and thence in creation, causes, historical/consequential truths and motivation by anything (e.g. gratitude and rejection of manifest injustice) other than personal likes and dislikes. I say mistaken because the results have been catastropic: Machiavellian lies concealing self-serving, fraudulent and willfully ignorant post-1694 financial control of constitutional government, industrial exploitation, war-making, genocide and now ecological suicide. Take the Creation/God the Father option and at least the Brotherhood of Man follows, if not always grateful appreciation of Providence, and of how much we owe each other.

  4. May 23, 2015 at 6:20 am

    Unfortunately the idea that science is the pursuit of Truth is no longer tenable. Like so many things in mainstream economics, this idea harks back to dated nineteenth-century thinking.

    Mathematics is a tool, useful in science, but not itself science.


    • May 23, 2015 at 8:56 am

      “Unfortunately the idea that science is the pursuit of Truth is no longer tenable”.

      Why, Geoff? Isn’t the truth rather that much of what CLAIMS to be science no longer IS the pursuit of truth, and this because Hume (source of the “dated nineteenth-century thinking”) changed the received definition of truth?

      That is, from that which (like a sign-post) points the recipient’s activities in near enough the right direction, to a misunderstanding of it as like quantitative mathematical certainty and accuracy, which in numerical calculations not constantly corrected via reality are necessary to avoid (probably divergent) error. This is not scientifically tenable, but its pursuit provides a convenient cover for elite-serving political misdirection.

      • June 2, 2015 at 4:36 am

        Dave – For some unknown reason the email notification of your 24 May post only just arrived. I confess I struggle to follow your points. My “19th century” comment may have been inaccurate, I’m not very familiar with the philosophers. I was referring to the idea that science is finding the Truth, or reading the Mind of God. I think science is about finding progressively more useful descriptions of what we observe. I certainly don’t take that as an excuse for Machiavellian scheming. And neoclassical economists stopped worrying about the observable economy and just floated off in their mathematical abstractions.

    • Ack Nice
      May 23, 2015 at 3:48 pm

      psst psst, Geoff – you are simply going to have to do your tour of Oz all over again – you somehow forgot to take me with yiz the first time! (Yah, love your site…)

      • May 24, 2015 at 2:59 am

        Thanks Ack, glad you like it.

    • May 24, 2015 at 2:58 am

      Dave, read the link. Einstein’s theory is more useful than Newton’s, but Newton’s is still useful. So it’s not helpful to call Newton’s “wrong”. And someone may do better than Eintstein, so we can’t say his is the Truth. Capital T.

      But we can still decide that some theories and their mathematical expression so little resemble the observable world they are not useful, or are grossly misleading. e.g. neoclassical models.

      • May 24, 2015 at 10:50 pm

        Geoff, of course I’ve read the link, but from your man walking his dog you are making deductions, not retroductions to a more fundamental level of understanding in terms of which you can visualise sufficiently well how he is able to walk at all (which of course tends only to become an issue when he can’t). But see Tony Lawson’s “Reorienting Economics” p.25.

        Roughly speaking you are describing what Thomas Kuhn called “normal science”, whereas the type I have been involved in (asking the question “why?” of failures) Kuhn called “revolutionary science”. The difference between Bacon’s extending Aristotle’s scientific observation into “taking things to bits to see how they work”, was Newton’s seeing how orbiting works in terms of mutual attraction between moving masses in Euclidian space, and Einstein seeing mass-less light bending in terms of the curvature of space in non-Euclidian space-time. A hundred years’ development of radio telescopy and information science have enabled us to retroduce the origins of all the motions to a Big Bang inside an expanding Einsteinian space.

        Where “normal scientists” remain reluctant to go is to the energy of the wind they cannot see, retroduced from the rustling of the leaves long before Einstein deduced its capture in subatomic particles. Economists still assume it “trickles down” everywhere, unconfined by private circulation.

        Tit for tat, Geoff: read my comment on May 23rd. I didn’t say Newton was wrong etc. I said that Hume had changed the understanding of [the word] Truth. It used to mean more or less what you mean by “useful”. The “medieval” definition offered me around 1964 was “an adequate expression of reality for the purpose in question”.

      • June 2, 2015 at 10:00 am

        From Geoff, posted out of sequence above: “Dave – For some unknown reason the email notification of your 24 May post only just arrived. I confess I struggle to follow your points.”

        Geoff, I struggle to understand Ack’s points, but would I had her ability to make the struggle a delight rather than a worry!

        I wasn’t actually disagreeing with you, only drawing your attention to Truth involving language and the fact that by denying causality Hume changed the scope of the word “truth” from something doing to our describing. Is it true that “it DOES what it says on the tin”? That (I agree with you) cannot be deduced from the fact that it says it, but the latter is not what the word ‘Truth’ meant before Hume laid the foundations of our statistical methodology and [elitist] representative democracy.

        In my field of computing, the data may be more or less accurate, the data descriptions more or less adequate and the computing operations more or less defined, but a program as a whole is true only if it does near enough just what it is intended to do: “what it says on the tin”.

  5. Ack Nice
    May 23, 2015 at 3:41 pm

    I have a graduate degree from the School of Hard Knocks, and I’ve seen evidence that whatever a dollar is worth, a billion dollars will always be worth a billion times as much as one dollar.

    I’ve also scene evidence that money is power – economic, social, and political power – power to buy the food, shelter, clothing, medicine I need to stay alive, power to educate my kids, etc. … and I’ve scene evidence: that concentrated money is concentrated power (I tried to buy the government with my one dollar and they told me to come back when I had a billon) … that profit, speaking economically, means take more than you give, that business is just buy cheap sell dear, that interest payments means money is legally allowed to rake money for no work done, that only work creates the substantial wealth the money is token of, that the total pool of wealth is a finite number (finite number of workers working times finite number of hours each can work = a finite number), that only demand creates jobs, that work = sacrifice of time, that it is physically impossible for any being living in a human body, over a lifetime, to sacrifice more than twice the amount of time to working than average people working average hard do.

    When I add all those observations up, it seems valid to me to conclude that ‘the rich get richer poor get poorer’ can only mean the rich keep getting more and more and more moneypower for an hour’s work while the poor get less and less and less money and power for their hour’s work.

    Math whiz that I am, I finds it quite odd and interesting that the work in the world can be so evenly spread while the wealth is so extremely concentrated. Seems a real and really relevant problem somebody should be tackling one of these days, eh? Maybe professional economists should busy themselves with a diligent, unbiased, comprehensive search for the many ways moneypower manages to pile up in the wrong hands instead of staying with its rightful earner-owner? Call it the Search for Legal Thefts?

    I also wrote poetry while I was attending SHK. I got a B plus for this one:

    we did as you willed
    we lived, did things and died
    awaiting the resurrection
    yours sincerely

    Anyways, what I’m still pondering is how it is even possible that humans can have come so far – using math to get back from the moon safely and to analyze the water content in passing comets as we’ve done – only to fail to use math to see that the giga-overpay the rich are allowed has nowhere to come from but from the severe underpay given the poor. Why are humans so reluctant to count up the enormous downside knock-on costs to everyone of us that result from tolerating such glaring injustice as this unconscionable maldistribution is? What is it keeps humans so in love with the idea to allow an indefensible billions-to-one ratio with zero legitimacy behind it – the overpayunderpay overpowerunderpower ratio – to go on causing the colossal destruction of human and planet happiness?

    Seriously, this sorry state of affairs is even stressing out my poor little rescue league dogs. The price of Alpo is up to a dollar a can, and that’s 7 dollars in dog money!

    Lastly, before i go get busy planting the other garden today – – we had a most unfortunate incident on campus last week: all the toilets were stolen from the building that houses the econ department. The case remains unsolved, as detectives have nothing to go on.

    (Hey, smiles are good – they haven’t made it illegal to have fun while we’re saving the world, yet, have they?)

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