Is Economics a Science?

Kurt Bouwhuis, Mackinac Center Intern

EconTalk host Russ Roberts talks about the role of empirical evidence and bias in economics and why economists disagree.  Is approximately an hour and 15 minutes but well worth your time.  If you are on a huge time crunch, the first 40 minutes will suffice.

Click here to listen


2 thoughts on “Is Economics a Science?

  1. And if you only have 1 minute, here’s a passage from Henry Kaufmnan’s “The Great Interest Rate Wave” from the Feb. 14 WSJ:

    Why are we so poor at managing our key economic institutions while at the same time so accomplished in medicine, engineering and telecommunications? Why can we land men on the moon with pinpoint accuracy, yet fail to steer our economy away from the rocks? Why do our computers work so well — except when we use them to manage derivatives and hedge funds? The answer lies in methodology. In science and technology, we rely on the scientific method: experimental design with dependent and independent variables and with reproducible results.

    Economists and financial experts like to fancy themselves as exact scientists as well. Back in the 1960s, when we landed on the moon, economists emulated the terminology of Space Age navigation. They spoke of “midcourse corrections” and of bringing in the economy for a “soft landing.” Since then, quantification and modeling have only grown thicker in the economics profession, where econometricians and other “quants” employ complicated analytical techniques and mathematical formulas.

    By the 1980s, many economists had embraced the theory of “rational expectations,” which essentially held that markets were all knowing and infallible. All of this infused the profession with an aura of authority, authenticity and accuracy.

    The computations were correct, but far too often the conclusions drawn from them were not. This is because the models rely on historical data but fail to take into account the profound impact of structural changes in our economy and in financial markets that have unfolded in the postwar decades.

    These structural changes — including securitization, globalization and the explosion of debt — have altered financial behavior in ways that the econometric models miss. In the decades since World War II, they have liberated financial risk-taking, as markets learned to game the system beyond the parameters of quantitative models. That is a critical difference between now and the last time interest rates were comparably low six decades ago.

  2. I have to make it public. It’s suppose to be secret, however most people in Austin, Tx knows about it. The government not up there, but your regular police department has a machine that can give you the urge to do things. Sexually impulses, anger, and all sorts of other feelings can sent into your body. This means it can cause a girl to feel a certain way so their friends can get rape them with the girl thinking shes likes it. There are a lot of people all over the United States knowing about this machine that can read and manipulate your mind. Just talk about it and start thinking about how the government has given the police department a weapon to commit not only one of the biggest civil rights violations of all time, but to commit crimes such as rape and getting their victims to like it.

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