Thursday, December 31, 2009

Economics as a science

Or rather, what is a science? There has been much ink spilled over whether economics constitutes a science but - what does it mean to be a science? There are natural sciences (mechanical/engineering and natural/geology), biological (e.g. medicine) and social sciences (in which economics claims to be "higher ranked" than sociology). What claims do some or all of these fields have on what it means to be a science?

Is medicine more scientific than economics? Watching "House" one would not think so - diagnostic medicine seems to be more trial and error and method of elimination and less scientific than one would be comfortable with. Yet some would agree that medicine is more scientific than economics. Why? Because at the end of the day someone is cured, a diseased is eradicated, or a cause is found via blood tests and other diagnostic tools. In economics, causality is as elusive as the natural experiment or instrumental variable that can be found - which is to say not very often.

What about engineering? Is predicting loads that a bridge can withstand more scientific than predicting GDP the next quarter? Without a doubt, yes. What about the safety of a bridge 30 or even 100 years from the day it was built? Perhaps it may not be possible to be absolutely positive that the bridge will withstand the stress of loads over this perod but then again, engineering is more of a science because there is less error in making these predictions than in economics (plus the bridge can be over-engineered).

What about natural science e.g. physics? For instance, we observe an apple falling and attribute this to an unseen force called gravity. In the same way we observe stock markets rising and falling and attribute this to an unseen force called "animal spirits" or "fundamentals". Yet, why is gravity more credible a force than animal spirits or fundaments? Perhaps because gravity is predictable. We can posit an equation which will predict the consequence without exception. (QED not withstanding.)

So what makes a science:
1. Causality
2. Predictability
3. Equations

1 comment:

CrisisMaven said...

Hello, maybe this can be of help for you and your readers: I have just added a Reference List to my economics blog with economic data series, history, bibliographies etc. for students & researchers. Currently over 200 meta sources, it will in the next days grow to over a thousand. Check it out and if you miss something, feel free to leave a comment.