Economics Is Guesswork Masquerading As Science
While some may argue that economics is guesswork masquerading as science, it is important to recognize that economics is a complex and ever-evolving field that seeks to understand and explain the behavior of human beings and economic systems.
Like all social sciences, economics is concerned with studying complex human behavior, which is difficult to predict with complete accuracy.
Economists use models and theories to explain how the economy works, and they often rely on data and statistical analysis to test these models. Models and theories!
While economics is a discipline that uses scientific methods to analyze economic phenomena, it is also subject to limitations and uncertainties. Economists make assumptions and predictions but their conclusions are rarely correct.
Neither you nor I have ever met an economist who correctly predicted the future of the economy, because economics is guesswork masquerading as science.
Increased complexity is not the only problem.
Forecasts are made less trustworthy because of a feedback loop. So if an economist forecasts that inflation will rise by 3% and we react by asking for at least a 3% rise in wages, we have changed the basis on which the forecast was made. Inflation is now likely to rise by more than 3%. The fact that the forecast exists changes the reality it is trying to predict. Perhaps what we need is economists to say something like, there is a one in two chance that this will happen, but I can’t be sure.
Because of the unpredictable nature of human behavior, economic models and predictions are never accurate. Economic forecasts and policy recommendations are often revised as new information becomes available, and they can be influenced by political and social factors.
The question of whether or not economics is a science is decades-old, but its answer still seems elusive to most people. And the question is consequential.
How much should we trust our economic predictions and explanations? Are we willing to use economics’ conclusions to guide public policy, both locally and worldwide?
While economics is generally considered a science, there are some limitations and differences between economics and other natural sciences, such as physics or chemistry.
Some of these limitations include:
Difficulty in conducting controlled experiments. In natural sciences, researchers often conduct controlled experiments to test their hypotheses. However, in economics, experiments are difficult to control as there are many variables that are difficult to isolate or control.
Inability to test theories in a laboratory. Economic theories are often tested through observational data, as it is not feasible to conduct experiments in a laboratory. This makes it difficult to test the theories under controlled conditions.
Dynamic and evolving nature of economic systems. Economic systems are dynamic and constantly evolving. Therefore, economic outcomes are influenced by a wide range of factors, including changes in technology, government policies, and consumer behavior. As a result, economic theories and models need to be regularly updated and revised.
Ethical considerations. Economic decisions often involve ethical considerations, such as issues of fairness and equity. While natural sciences are generally value-neutral, economics is subject to ethical considerations that influence economic outcomes.
Despite these limitations, economics is widely recognized as a scientific discipline.
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