Home > Uncategorized > Noah Smith — confusing mathematical masturbation with intercourse between research and reality

Noah Smith — confusing mathematical masturbation with intercourse between research and reality

from Lars Syll

There’s no question that mainstream academic macroeconomics failed pretty spectacularly in 2008 …

Many among the heterodox would have us believe that their paradigm worked perfectly well in 2008 and after … This is dramatically overselling the product. First, heterodox models didn’t “predict” the crisis in the sense of an actual quantitative forecast.

64f5d94d9836c6a09b5d2009f0d4634a845bb2d7ba56bbaa16176c2fd0e958c0This is because much of heterodox theory is non-quantitative. Basically, people write down English words explaining their conceptual ideas about how the economy works. This describes the ideas of mid-20th-century economist Hyman Minsky, who wrote books and essays about the instability of the financial system. Minsky, though trained in math, chose not to use equations to model the economy — instead, he sketched broad ideas in plain English …

At the end of the day, policymakers and investors need to make quantitative decisions — how much to raise or lower interest rates, how big of a deficit to run, or how much wealth to allocate to Treasury bonds.

Noah Smith

Noah Smith — like so many other mainstream economists — obviously has the unfounded and ridiculous idea that because heterodox people like yours truly, Hyman Minsky, Steve Keen, or Tony Lawson, often criticize the application of mathematics in mainstream economics, we are critical of math.

I don’t know how many times I’ve been asked to answer this straw-man objection to heterodox economics– but here we go again.

No, there is nothing wrong with mathematics per se.

No, there is nothing wrong with applying mathematics to economics.

amathMathematics is one valuable tool among other valuable tools for understanding and explaining things in economics.

What is, however, totally wrong, are the utterly simplistic beliefs that

• “math is the only valid tool”

• “math is always and everywhere self-evidently applicable”

• “math is all that really counts”

• “if it’s not in math, it’s not really economics”

“almost everything can be adequately understood and analyzed with math”

So — please — let’s have no more of this feeble-minded pseudo debate where heterodox economics is described as simply anti-math!

russell_ackoffNo real problem worth solving can be solved without some basic research. Therefore the engagement of faculty and students on real problems yields basic research problems whose solutions are of practical significance. Furthermore, the validity of these solutions can be tested in the most effective way known: in application. This avoids one’s confusing mathematical masturbation with intercourse between research and reality.

Russell L. Ackoff

  1. August 15, 2016 at 2:15 pm

    “Cynics know the price of everything and the value of nothing” (Oscar Wilde)

  2. August 15, 2016 at 6:49 pm

    I agree with you. However, I see general problem of heterodox economists that occurs on the level of discourse. Firstly, my impression is that commentators such as Smith deliberately refer to a pejorative caricature of heterodox economists implying heterodox economists are anti-mathematics.

    The allegation of refusing mathematics in economics typically leads to a defensive reaction, i.e. heterodox economists are forced – or feel being forced – to show that they do not criticize mathematics and its application per se.

    Consequently, blaming heterodox economists for refusing mathematics within economics is the best strategy to avoid any discussion about alternative approaches (especially the non-mathematical approaches such as approaches from old institutionalism or German neo-historism).

  3. August 15, 2016 at 6:58 pm

    Where is cynicism here?

    • August 15, 2016 at 7:18 pm

      “Where is cynicism here?”

      I think Marcs point is that orthodox Economists with their painstakingly developed mathematical models can calculate with extremely great precision what the economy is not doing because the models’ assumptions are unrealistic. This feels to some a little bit like the Oscar Wilde quote

      • jlegge
        August 16, 2016 at 11:19 am

        Yes. Good point.

  4. August 15, 2016 at 7:22 pm

    Another interesting quote:

    “Also, vague ideas can’t easily be tested against data and rejected. The heart of science is throwing away models that don’t work. … But ideas like Minsky’s, with no equations or quantitative predictions, are almost impossible to reject — if they seem not to fit with events, they can simply be reinterpreted. ”

    This point seems valid on the surface, but it assumes that the mainstream view represents a better alternative. He admits the problems:

    “One of mainstream macro’s biggest failings is that theories that don’t fit the data continue to be regarded as good and useful models.”

    … but he doesn’t go far enough in that he seems to ignore the fact that the mainstream approach often uses equilibrium assumptions to describe a chaotic system, which is arguably not better than “mere words”.

    • August 15, 2016 at 7:26 pm

      This quote seems pretty reasonable:

      “So heterodox economics hasn’t really produced a replacement for mainstream macro. It remains an important source of new concepts and hypotheses — and in fact, mainstream academics probably make use of those outside ideas more than they would like to admit.”

      • August 15, 2016 at 10:01 pm

        @jeff1089:

        This shows the main misunderstanding of Smith’s article: he concentrates on macroeconomics and seems to imply that criticism of macroecnomics should be accompanied by calling for an alternative approach in terms of macroeconomics. However, there are some heterodox approaches without categories such as macro. Consequently, an heterodox economist may criticise macroeconomics without referrering any alternative macroeconomic approach.

  5. August 15, 2016 at 7:24 pm

    For a moment I believe that cynic was Lars. Perhaps because that mainstream academics are hypocrites I’m my opinion. Or Pangloss was cynical, Not hypocrite? Don’t know

  6. August 15, 2016 at 7:30 pm

    I agree with all you say. However, recognizing that mathematics applied to the study of economic concerns can be useful (e.g., the patterns of purchasing, the numerical growth in production, consumption, money supply) does not remove the use of mathematics for other not quite so useful or enlightening purposes in these studies. For example, mathematics is used to “keep students so busy they don’t have time to examine economic actions of actual actors.” Mathematics is also used as a tool to support and spread economic ways of life supported by powerful political, economic, and social interest groups. Finally, mathematics is used to squash questions about economic actors who are not “trained” economists. The universal response – you couldn’t possibly understand what I (the economist) am saying since you the lack the proper background in mathematics.

  7. August 16, 2016 at 6:51 am

    Mainstream economists may be hypocrites. And some are certainly a menace to just about everything in the world they wrap in their models/theories. And many are just dumb followers of the leader, or just devoid of integrity and empathy. All of us suffer from these maladies to some extent. Though if it goes too far we are “lost souls.” The real danger of mainstream economists is they don’t now and likely never will recognize just how dangerous their actions and thoughts are for humans and the planet. Economists cannot bring themselves to perform science and the humanities are beyond their grasp. So how are economists attached to the world around them? By their misuse and misunderstanding of mathematics and their fear of the actors who inhabit the world with them. My clinical psychologist coming through.

  8. August 16, 2016 at 9:08 am

    That’s right

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