Knzn has posted on the truth and worth of economics in one of the best posts I’ve seen – partially because it corresponds to my views. Partially too, because of the plain speaking involved.
It is well worth the read. An excerpt:
Here’s my take: to begin with, economics is basically bulls**t. I mean, it’s necessary bulls**t, sometimes even useful bulls**t, but I’m extremely skeptical of people who think economics is a science or that it could be a science. We have to make policy decisions (and investment decisions and personal consumption decisions etc.), and we have to have some basis for making them. We could just use intuition, and we often do, but it’s helpful to use logical thought and empirical data also, and systematic study using fields like economics can help us to clarify our intuition, our logical arguments, and our interpretation of the empirical data. The same way that bulls**t discussions that don’t make any pretense at being science can help.
Economics is bulls**t because it relies on the premise that human beings behave in a systematic way, and they don’t. Once you have done enough research to convince yourself that they behave in a certain way, they will change and start behaving in another way. Particularly if they read your research and realize that you’re trying to manipulate them by expecting them to continue behaving the way they have. But even if they don’t read your research, they may change the way they behave just because the zeitgeist changes – cultural sunspots, if you will.
The last paragraph may vaguely remind you of the Lucas critique. Lucas basically said that macroeconomics (as it was being practiced at the time) was bulls**t, but he held out the hope that it could receive micro-foundations that wouldn’t be bulls**t. The problem with Lucas’ argument, though, is that microeconomics is also bulls**t. And Noah Smith, writing some 36 years after the Lucas critique and observing its unwholesome results, takes it one step further by saying, if I may paraphrase, “Yes, the microeconomics upon which modern macro has now been founded is indeed bulls**t, but if we do the micro right, then we can come up with non-bulls**t macro.”
And a nice line:
when it comes to bulls**t, there is not a monotonic relationship between rigor and usefulness.
A bit of chatter update: nice take on models and mechanisms in econ here, and Noah Smith replies here. Comments worth reading.
UPDATE: Friends given me a hard time for buying the Knzn argument that as theory is known, people adjust to invalidate it. In general I don’t, though it clearly applies in some circumstances. What I like about Knzn’s post is that it calls out Economics as a grand, if implicit, conspiracy to overstate how much we know, and how much we can know.