Home > Uncategorized > Are methodological discussions risky?

Are methodological discussions risky?

from Lars Syll

Most mainstream economists are reluctant to have a methodological discussion. They usually think it’s too ‘risky.’

Well, maybe it is. But on the other hand, if we’re not prepared to take that risk, economics can’t progress, as Tony Lawson forcefully argues in his Essays on the Nature and State of Modern Economics:

Twenty common myths and/or fallacies of modern economics

1. The widely observed crisis of the modern economics discipline turns on problems that originate at the level of economic theory and/or policy.

onedoesIt does not. The basic problems mostly originate at the level of methodology, and in particular with the current emphasis on methods of mathematical modelling.The latter emphasis is an error given the lack of match of the methods in question to the conditions in which they are applied. So long as the critical focus remains only, or even mainly, at the level of substantive economic theory and/or policy matters, then no amount of alternative text books, popular monographs, introductory pocketbooks, journal or magazine articles … or whatever, are going to get at the nub of the problems and so have the wherewithal to help make economics a sufficiently relevant discipline. It is the methods and manner of their use that are the basic problem.

If scientific progress in economics – as Robert Lucas and other latter days followers of Milton Friedman seem to think – lies in our ability to tell ‘better and better stories’ one would of course expect economics journal being filled with articles supporting the stories with empirical evidence confirming the predictions. However, I would argue that the journals still show a striking and embarrassing paucity of empirical studies that (try to) substantiate these predictive claims. Equally amazing is how little one has to say about the relationship between the model and real world target systems. It is as though thinking explicit discussion, argumentation and justification on the subject isn’t considered required.

If the ultimate criteria of success of a deductivist system is to what extent it predicts and coheres with (parts of) reality, modern mainstream economics seems to be a hopeless misallocation of scientific resources. To focus scientific endeavours on proving things in models, is a gross misapprehension of what an economic theory ought to be about. Deductivist models and methods disconnected from reality are not relevant to predict, explain or understand real world economies.

No matter how precise and rigorous the analysis is, and no matter how hard one tries to cast the argument in modern mathematical form, they do not push economic science forwards one millimeter if they do not stand the acid test of relevance to the target. No matter how clear, precise, rigorous or certain the inferences delivered inside these models are, they do not per se say anything about real world economies.

keynes-right-and-wrong

  1. July 20, 2017 at 7:38 pm

    I disagree. The ‘methodology’ is based upon faulty theory that contains undefined notions passing as ‘concepts’ that are then given mathematical form to disguise their lack of defined meaning. One cannot ‘optimize’ what is undefined to begin with.

    Illness is preventing me from commenting in detail.

    • July 20, 2017 at 9:49 pm

      You seem to be at cross purposes here, Larry. The un-discussed methodological problems are much like your ‘not defining notions’ and ‘applying formal mathematics’ to meaningfully varying feedback systems.

      Sorry to hear you are ill. Get well soon.

  2. July 22, 2017 at 10:25 am

    The focus of a methodological discussion depends on what you consider to be science. If science is a logical/mathematical design for finding truth, then methodology must stay within the bounds set by that design. Any deviation would render the work of scientists not just useless, but more importantly non-scientific. If, on the other hand science is taken as a socio-cultural process that pursues the creation of empirical knowledge via observation, then any methodology that serves this process is acceptable. Richard Feynman when asked about scientific method would always reply, use whatever works. And herein lies the death knell of many parts of mathematics in economics comparison and verification. Except for some basic arithmetic mathematics and flow equations for information and social interaction mathematics just doesn’t work for verifying observations of economic actions. I suggest that what does work as methodology in most areas of economics is varying observational perspectives and ways of observing. These results can be compared, and then compared again with new observations in new situations or with changing actors. Mathematics can certainly play a role in such comparisons and re-verification. Albeit a limited one.

    • July 22, 2017 at 1:12 pm

      Agreed, Ken. I would only add that studying (e.g. Bell’s) the development of mathematics, and the technology of observation (e.g. telescopes, microscopes and magnetic metering of hidden electrical flows), offers quite an education in what may be worth looking for. It is also fascinating to look back through past surveys of scientific development and see first-hand what people have thought at different times in the past. (I’m looking at Cambridge University’s “Background to Modern Science”, 1938, from which I first learned of Soddy and the significance of his work). Here’s a nice little quote from a paper in it by John Ryle:

      “Scientific history is particularly concerned with movements of ideas, discoveries of fact and the integration of new knowledge. Political and national histories, on the other hand, are both concerned with and swayed by human passions as well as human thought, and are for these and other reasons more complex and less consecutive”.

      That relative continuity makes teaching science by recapitulation of its history rather a saner idea than brainwashing novices in the latest largely-automated techniques of mathematical modelling on computers with scarcely a thought as to how computers and automation work, to say nothing about brains and how language works.

      • July 25, 2017 at 10:16 am

        Yes, studying the “development of science” is important. So long as we recognize that science is universal. It’s not an invention of the west. Every culture on Earth invented and uses science. Per Laura Nader in “Science for the West, Myth for the Rest?” in “Naked Science …”

        Do Cree hunters practice science? The answer to this question would seem to depend on whether one defines science according to universal features, or culturally specific ones. If one means by science a social activity that draws deductive inferences from first premises, that these inferences are deliberately and systematically verified in relation to experience, and that models of the world are reflexively adjusted to conform to observed regularities in the course of events, then, yes, Cree hunters practice science—as surely all human societies do. At the same time, the paradigms and social contexts of Cree science differ markedly from those of Western science — accustomed as we are in the West to a “root metaphor” of impersonal causal forces that opposes “nature” to “mind,” “spirit,” and “culture,” and conditioned as we also are to view legitimate scientific procedure and production as the prerogative of particular professional and institutionalized elites. While there is no a priori reason to expect that knowledge generated out of non-Western paradigms or social processes should be empirically or predictively less adequate, it has been an effect of Western ethnocentrism to construe non-Western knowledge processes as “pseudoscientific,” “protoscientific,” or merely “unscientific.” Western science, in fostering an ideology of knowledge that supports its own elite status, has assisted the exclusion and disqualification of innumerable “subjugated knowledges.”

        Western histories of science still make these errors, even some of the more recent histories. Histories before 1990 have these errors embedded in the foundation of their work.

        Teaching scientific work via imitation and mirroring, and by re-telling of stories is a part of the cultural transmission of science in all cultures. But what’s passed on, how it’s passed on, and what those who receive it are expected to do with it varies from culture to culture. But it’s all science.

    • robert locke
      July 22, 2017 at 3:06 pm

      When operations research people took up problems, they insisted that the problems be affronted by scientific teams, drawn from various disciplines, because they would bring a variety of outlooks to a problem that would help solve it. Hence, when working on anti-submarine operations research in WWII, they discovered that psychological studies on human reactions gave them the insight necessary to program accurate bombing, not mathematical scientific models. People I have met who work on teams are often quite excited about how much they learn about their own disciplines in such milieux.

      • July 25, 2017 at 10:17 am

        Robert, the key word here is problem. Understanding and solving problems requires as you note and operations researchers demand, teams of social scientists, philosophers, historians, and physical scientists, etc. Problems do not fall into the province of one discipline or another. And over time the problems relationships to the disciplines changes. Scientists and historians too frequently become overly attached to a certain perspective on the world. Events in the world feel no obligation to meet the needs of one science or scientist.

      • robert locke
        July 27, 2017 at 12:16 pm

        Russell Ackoff, the OR guru, concluded in 1979, after years of model building that “OR models can never be a perfect representation of a problem. The leave out the human dimension, the motivational one; the successful treatment of managerial problems deserves the application not only of science with a capital S but also all the arts and humanities we can command.” (“The Future of Operational Research is Past.” JORS, 30, 1979, 93-104)
        What is true of problem solving in or is true in economics; teams of workers drawn from various disciplines provide the most successful outcomes.

      • July 28, 2017 at 8:43 am

        Ackhoff’s partner in helping to invent Operations Research was C. West Churchman. Churchman set out what he called a deception-perception approach to systems.
        1. The systems approach begins when first you see the world through the eyes of another.
        2. The systems approach goes on to discovering that every world view is terribly restricted.
        3. There are no experts in the systems approach.
        4. The systems approach is not a bad idea.

        System models can be useful but none are wholly accurate or complete. Use them with these limitations always in mind.

  3. victoria chick
    July 26, 2017 at 1:16 pm

    All good quotes are attributed to Keynes, whether he said them or not.
    Avner Offer, in a comment on a RWER blog September 19, 2013 at 11:41 am cites Wikiquote :
    ‘Misattributed:
    It is better to be roughly right than precisely wrong.
    Not attributed to Keynes until after his death. The original quote comes from Carveth Read and is:
    “It is better to be vaguely right than exactly wrong.”
    _Logic, deductive and inductive_ (1898), p. 351.’

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