Home > Uncategorized > Weekend Read – Flawed foundations of social sciences

Weekend Read – Flawed foundations of social sciences

from Asad Zaman

While the car is functioning well, one does not usually open up the engine. But when the car breaks down, it becomes necessary to open it up to see what is wrong. This is the situation today, as the failure of econometric models manifested itself in the global financial crisis, as well as many other occasions. The tragedy is that these same failed models continue to be used today; no serious alternatives have been developed. The reason for this is that the methodology used to develop these models is inherently flawed, and incapable of producing knowledge. It is necessary to understand the engine – the philosophy of science underlying statistics and econometrics – to see why this is so. A capsule summary outline of why it is necessary to discuss philosophy of science is given below:

  1. Science was imported into Europe from Al-Andalus (Islamic Spain) via the Reconquest in 1492, which made available to the West, millions of books in the libraries of the Islamic Civilization. See “Is Science Western in Origin?”.
  2.  These books ended the dark ages of Europe and led to the Enlightenment.
  3. Over the next two centuries, there was a tremendous battle between “Science” (Islamic philosophies, science, and other types of knowledge) and “Religion” or Christianity.
  4. This battle was won by science, and the “Philosophy of Science” emerged as separate discipline, distinct from science itself. The goal of this philosophy was the prove that science was a source of certain knowledge, and it was the ONLY such source – in particular, all religious knowledge was merely ignorance and superstition.
  5. Because of these ideological blinders, the philosophy of science set for itself an impossible task. Therefore, it was not able to make any progress in understanding the true nature of science. To this day, there is massive confusion about what science is, and how it works (for example, see Chalmers “What is this thing called science?”).
  6. Mistaken “positivist” understandings of science were used to build the foundations of economics, statistics, and econometrics. Today, it is an urgent need to recognize these flawed foundations, and rebuild these disciplines (and all of the social sciences) on new foundations.

The First Scientist: Ibnul Haytham

Mathematics, especially the geometry of Euclid, was the first discipline of knowledge established by Greek Philosophers. This was based on taking intuitive certainties as axioms, and then deducing more complex truths by using logical deductions. This is called the axiomatic-deductive methodology. When the Greeks turned to the natural sciences, they attempted to use the same methodology. Unfortunately, this methodology does not work well in this case. For centuries, philosophers were divided on the issue of whether light emanates from eyes to strike the object, or whether light comes from the object to the eye. There were axiomatic-deductive demonstrations for both positions. Ibnul Haytham was the first to use empirical methods to resolve this controversy, laying the basis for the scientific method. It is worth discussing his contribution in detail, because the concept of a “MODEL” emerges from his study. This concept is central to understanding the problems with current foundations of the social sciences. See “Models & Reality” for further discussion on this point.

The diagram below describes the understanding of vision which Ibnul Haytham came to, as a result of his scientific methods of investigation:

Light from the object (woman) travels in straight lines, is focused onto our retina within our eyes. An inverted image of the woman is formed in the two retinas. Our MIND analyzes the two images and RECONSTRUCTS the external object. What we see directly are the images on the retina, and the picture of reality is created by the MIND based on calculations and past experience in interpretation of such images. Thus we see with our minds, not with our eyes. A schematic sketch of how we see is given in the diagram below:

It is crucial to understand that we do NOT directly see the external world. Our mind re-creates a picture of external reality based on clues furnished by the images on our retina, which actually give us an inverted picture of reality. An amazing experiment was performed to show how we see with our minds. A student was fitted with inverting glasses, which make the world appear upside down, and told to keep them on constantly. After a few days of dizziness and disorientation, he learned to see through these glasses without difficulty. THEN the world appeared upside down when the glasses were removed. The mind was able to re-interpret the inverted image and fix it, to enable the person to see the world as it is.

The quest of traditional philosophers was to establish that our mental models of reality matched (or did not match) external reality. Kant argued that this problem was impossible to solve, since we had no access to reality other than by our observations. So, he proposed to CHANGE the problem. Instead of asking whether our mental models matched external reality, he said that we should assess how our mental models are constructed from the observations. After Kant, instead of matching mental models to reality, the focus shifted to matching mental models to observations; see Kant’s Blunder.

A realist philosophy of science asks us to build models which are closely matched to hidden structures of reality which generate the observations that we can see. However, a nominalist (empiricist, positivist) philosophy is concerned only with building models which provide a good match to the observations, without any concern about reality. The shift from realism to nominalism – for reasons far more complex than Kant’s philosophy discussed above – had disastrous consequences, especially for the social sciences. Modern social sciences were create in the early 20th century, based on conscious adoption and imitation of methods of the physical sciences. However, these methods were misunderstood; it was assumed that “science” only deals with observables, and not with unobservables. This has led to deeply flawed foundations for social science. We briefly explain the implications for economics and econometrics.

Impact of Positivist Methodology on Economics & Econometrics

The most famous and widely read methodological essay in economics is Friedman’s “The Methodology of Positive Economics”. In this essay, Friedman argues that good models have “bad” (false) assumptions – in fact, “The more wildly inaccurate the assumptions, the better the model”. The meaning here is that if a drastic over-simplification of a complex reality gives good results in terms of providing a good fit to observations, this is the sign of a good model. However, this methodological principle gives us a license to make any assumption we like, as long is it produces a good fit to the data. This is what results in terrible models in economics, statistics, and econometrics, as we briefly illustrate.

Top ranked economist Lucas writes that “Unlike anthropologists, however, economists simply invent the primitive societies we study.” The “invented society” is populated by “homo economicus” a robot with behavior predictable by mathematical laws. In principle, economists are supposed to check if the results from their artificial models match observed reality. In practice, they rarely bother to do so. See my paper on “Models and Reality: How Models divorced from Reality became epistemologically acceptable”, for details.

In statistics, we start with data on a variable X, observed across time to get observations X(1), X(2), …, X(T). We assume, without any justification, that all of these observations are random samples from a common infinite population. If the data appears to “fit” our assumption, this by itself justifies the assumption, without any need of checking the assumption against external reality. We have argued in this course that this leads to defective inference, and we should approach data analysis without making such unjustifiable assumptions, in accordance with a  realist philosophy of science.

In econometrics, we go several steps further. Given MULTIPLE data series X, Y, Z, we choose the variable we want to explain; say Y. Then we  IMAGINE causes of this variable (say X, Z) and call them the explanatory variables. Next, we IMAGINE that there is a LINEAR relationship: Y= aX + bZ + error. Next, we make ASSUMPTIONS about the errors, and causal relationships between Y, X, Z, error. In particular, we assume that X, Z, are causes of Y and are independent of the error (no causal relationships in either direction). After making all of these unjustifiable assumptions, we  do calculations on this basis. If our regression model fits well to the observed data, this is taken as sufficient justification for all of our assumptions. We will show in remaining lectures that this methodology leads to disastrously bad models, which yield hopelessly poor policy implications. Below are some quotes in support of this assertion:

  1. JM Keynes: “professional economists … were apparently unmoved by the lack of correspondence between the results of their theory and the facts of observation”
  2. Solow: To discuss economic theory seriously with Lucas & Sargent is like discussing cavalry tactics at Austerlitz with a madman who believes himself to be Napoleon Bonaparte. Instead, I prefer to just laugh!
  3. Romer: modern macro theories give wildly incorrect predictions and are based on fundamentally flawed doctrines, beyond the possibility of repair.

LINKS to related materials: Flawed foundations of social sciences: The Emergence of Logical Positivism (shortlink: http://bit.do/azelp ) Sources for above quotes, and additional Quotes Critical of Economics – http://bit.do/azquo More details about above arguments How Economic Models became Substitutes for Realityhttps://ssrn.com/abstract=3591782

  1. Edward Ross
    March 20, 2021 at 1:53 am

    Great!

  2. pfeffertag
    March 20, 2021 at 9:52 am

    “the failure of econometric models manifested itself in the global financial crisis”

    To some extent perhaps. But the GFC was mainly a failure of American politics. Economic models do not actually prescribe unsecured loans. The crisis was global because the US is so dominant. Places where banks were properly regulated were not so affected.

    American politics goes psycho at least once a generation. In 2008 it happened to be economics but previously it was Iraq, Vietnam, McCarthyism, Jim Crow, mass sterilisation, prohibition, Great Depression, civil war… American politics is an ongoing freak show and every now and again it suffers an extreme psychotic episode.

    “The goal of this philosophy was the prove that science was a source of certain knowledge, and it was the ONLY such source – in particular, all religious knowledge was merely ignorance and superstition.”

    Hmm. The philosophers’ goal was to figure out what science was, to try to see what it was that made the new “scientific” knowledge so astonishingly effective. There had been a tendency to regard scientific knowledge as certain but Einstein’s upset of Newton spiked that and Popper knocked it on the head formally. Religion was not so much a target as collateral damage—surely inevitable.

    I agree that Chalmers’s “What is this thing called science” illustrates and entails confusion. He, like most philosophers, talks of scientific “statements” (or “sentences”), a term which says exactly nothing. (What is not a “statement”?) This vagueness seems to give a licence to illustrate with “statements” which have nothing to do with science. “All swans are white” is a favourite but insofar as examples are given to leaven the reams of abstraction, they are almost always non-scientific. So everyone’s thinking becomes muddled.

    Econometrics certainly does go further. It is not science at all; it is statistics. AFAIK the philosophers of science do not discuss statistics so cannot have had any influence. Statistics concerns counts of defined things. Science concerns measures (not counts) of undefined things. I think science only gets statistical when it concerns atoms.

    Overall, I have a hard time seeing that philosophy of science had influence on economics (or on science for that matter). The founders of both fields were enlightenment thinkers but the two fields seem to have hit their stride in the late 19C and that seems to me to have been each in pursuit of its own ideas.

  3. March 20, 2021 at 12:43 pm

    This is barest outline of a sketch. A very deep and detailed discussion is in Peter T Manicas – History and Philosophy of the Social Sciences (download: bit.ly/Manicas ). This is dense and difficult to follow. I am in process of preparing a simplified and readable version. WIll post when done. Currently, for a little bit more detail on this thesis, see bit.ly/AZpss – The Puzzle of Western Social Science

  4. Craig
    March 20, 2021 at 6:28 pm

    What economics, social science and science in general needs is not more theorizing and re-gurgitation of already agreed upon heterodox theorizing, but rather a new philosophy with a new concept that applied, changes their entire patterns. That concept is the natural philosophical concept of grace as in 1) dynamic free flowingness, 2) unitary thirdness greater oneness and 3) wisdom as in personal/naturalistic higher consciousness.

    Man became self aware hundreds of thousands of years ago and every one of the advances the species has made since then has been the application of one or more of the aspects of the natural philosophical concept of grace to himself and to his various endeavors. Grace applied to the economy, the money system and to science, and grace personally contemplated are simply the next areas to receive its consciousness raising effects.

    Oh, and if you deplore the formalism and anti-science tendencies of religion, then grace is YOUR concept.

  5. Meta Capitalism
    March 22, 2021 at 2:13 am

    The philosophers’ goal was to figure out what science was, to try to see what it was that made the new “scientific” knowledge so astonishingly effective…. Religion was not so much a target as collateral damage—surely inevitable. ~ pfeffertag

    .
    History makes a mess of stereotypes:
    .
    The End of the Soul: Scientific Modernity, Atheism, and Anthropology in France:
    .

  6. pfeffertag
    March 22, 2021 at 7:39 am

    Thanks Meta. I had never heard of these “freethinking anthropologists.” I note they were not philosophers of science. They were anti-clerical activists and naturally science was their main argument. It’s a very French thing—the revolution was deeply anti-Catholic.

    It is interesting that they saw a need to introduce ritual to replace Catholic ritual. Only a century later, the whole world has that problem. Science has undermined the comforting myths with the result that society has no vision for the future. The world’s “developed” societies are in a sort of holding pattern with no plan except to try to minimise social dysfunction—no upside and a lot of potential downside. This looks like the program for the next hundred years. Gradually the realisation will seep into the social soul that it is humanity’s dreary prospect forever. What will be the effect?

  7. Gerald Holtham
    March 22, 2021 at 10:44 am

    I have just one question that puzzles me about Asad’s article. Consider two scientists testing a hypothesis. One is what Asad calls a philosophical realist who wants to know whether the hypothesis reflects underlying reality. The other is what he calls a nominalist who wants to know whether the hypothesis is consistent with observations. Here’s my question: how would that difference affect their empirical testing and how could it lead to a different conclusion about the hypothesis? Is this a distinction without a practical difference?
    Milton Friedman is a red herring in this context. He was not a “nominalist” but an extreme instrumentalist. Employing plainly counterfactual assumptions is, after all, flouting a set of available observations.

  8. Gerald Holtham
    March 22, 2021 at 7:12 pm

    Asad says: “In econometrics, we go several steps further. Given MULTIPLE data series X, Y, Z, we choose the variable we want to explain; say Y. Then we IMAGINE causes of this variable (say X, Z) and call them the explanatory variables. { Actually we hypothesize that X and Z are explanatory variables and proceed to test the hypothesis. Aren’t all theories imagined?} Next, we IMAGINE that there is a LINEAR relationship: Y= aX + bZ + error. {Sometimes we hypothesize that the relationship is linear but not necessarily. Good practice is to start with a more general functional form and see if it can be simplified – the encompassing approach.} Next, we make ASSUMPTIONS about the errors, and causal relationships between Y, X, Z, error. In particular, we assume that X, Z, are causes of Y and are independent of the error (no causal relationships in either direction).{No, no. We test whether the errors are independent of the variables X and Y; we also test whether they are serially independent and whether a normal distribution of errors is rejected by the data. Standard statistical tests are available for all these and quoting the results is standard good practice.} After making all of these unjustifiable assumptions, we do calculations on this basis. {You know whether propositions (“assumptions”) are unjustified by testing them} If our regression model fits well to the observed data, this is taken as sufficient justification for all of our assumptions. “(Absolute nonsense. You must have been mixing with a real bunch of charlatans to write like this. First we test for spurious correlations with cointegration tests. Because “fit” is meaningless with non-stationary series, as all first-year students learn. Then we specify a model, then we test it. If the model passes the tests we can retain our hypothesis and use it for projections. Economic theorists don’t like their models being rejected; econometricians are the sanitary inspectors to do it. If you found people behaving as you describe you would be right to excoriate them but not all Englishmen are Jack the Ripper and it is wrong to make a grotesque caricature of bad practice and write as if it defines a whole method of research. Perhaps if you learned a bit more about it….}

  9. Miguel Bedolla
    March 23, 2021 at 12:22 pm

    I think the author first needs to understand the History of Science, from Athens to Toledo and the role of the School of Toledo Translators in transmitting science to Europe, long before the Reconquista, which ended in 1492 with the Conquest of Granada but has started centuries earlier in the mountains of Asturias. And he also needs to remember who burned the Library at Alexandria.

    • Robert Locke
      March 23, 2021 at 2:45 pm

      Medievalists in the West called it the Renaissance of the 12th century, a book title made famous by Arthur Homer Haskins.

      • Robert Locke
        March 23, 2021 at 3:04 pm

        Contributing to the growth of European science was the major search by European scholars such as Gerard of Cremona for new learning. These scholars were interested in ancient Greek philosophical and scientific texts (notably the Almagest) which were not obtainable in Latin in Western Europe, but which had survived and been translated into Arabic in the Muslim world. Gerard was said to have made his way to Toledo in Spain and learnt Arabic specifically because of his “love of the Almagest”. While there he took advantage of the “abundance of books in Arabic on every subject”.[20] Islamic Spain and Sicily were particularly productive areas because of the proximity of multi-lingual scholars. These scholars translated many scientific and philosophical texts from Arabic into Latin.[21][22] Gerard personally translated 87 books from Arabic into Latin, including the Almagest, and also Muhammad ibn Mūsā al-Khwārizmī’s On Algebra and Almucabala, Jabir ibn Aflah’s Elementa astronomica,[23] al-Kindi’s On Optics, Ahmad ibn Muhammad ibn Kathīr al-Farghānī’s On Elements of Astronomy on the Celestial Motions, al-Farabi’s On the Classification of the Sciences,[24] the chemical and medical works of Rhazes,[25] the works of Thabit ibn Qurra and Hunayn ibn Ishaq,[26] and the works of Arzachel, Jabir ibn Aflah, the Banū Mūsā, Abū Kāmil Shujā ibn Aslam, Abu al-Qasim al-Zahrawi (Abulcasis), and Ibn al-Haytham (including the Book of Optics).

      • Robert Locke
        March 23, 2021 at 3:24 pm

        charles homer haskins

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: