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Thread: Does economics' inexact nature invalid it as a science?

  1. #1 Does economics' inexact nature invalid it as a science? 
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    There are some parts of economics that are not rationally grounded, or are based on guesswork.

    But then I'd challenge anybody who says that economics is "not scientific" to cite how the following are not empirical facts:

    - the law of supply
    - the law of demand
    - elasticities
    - market forms (,e.g. monopoly, oligopoly, monopolistic competition, etc.)
    - externalities
    - sunk costs
    - short run and long-run costs
    - the law of diminishing returns
    - the minimum efficient scale
    - economies of scale/scope
    - the quantity theory of money

    I'm not an economist incidentally, but I makes me laugh to read and hear so many people label economics as bunk, when there are many rooted and grounded concepts accepted by many in the profession. Even fringes schools like the Austrians or even the Marxists would accept many if not all of the above concepts.


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  3. #2  
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    you are Smart ass !
    not being political , this is my reply....

    Each and every existing thing cannot be considered resources unnecessarily . Each and every Considered resources cannot be registered in perfect manner (to implement TAX system) .
    So , if you could grow vegetables in your backyard , it's not that necessary to register it's growth and be bothered about paying tax for it.

    just image , vegetable took 4 ( 30 days) weeks to grow ,

    you had 30 neighbors including you who had the backyard just like yours
    The quantity of growth in each backyard is capable of yielding enough to share with all the rest 29 members.
    so you and your neighbors colony is certainly not going to export or import anything ,
    but trying to be independently dependent on their own resources they own.


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    Well I guess it's a question that will continue to pop up, some people think that economics shouldn't be seen as a science but then there are also many others that do, certainly some economists approach their work very scientifically. Invalidated by inexactness is perhaps though not the favourite reason of those who choose to see it as other than a science.

    One area that seems to lend itself to volatility within the field of economics is the time scale over which changes occur, if for example you were to make a comparison with cosmology you will find that there are still the same basic principles in effect, there are specific rules that govern how things work so to a point if you know the causes then set outcomes are predictable, however these rules are subject to external influences which can also take effect very quickly, certainly something we're not used to seeing in a field of science such as cosmology where the timescales for changes occurring can take millions or even billions of years.

    But if we take economics and place it on a par say with that of evolutionary biology we can start to see changes taking effect very quickly in the evolution of some species, Darwin's fruit flies being a classic example. Also it shows how different species can be effected differently by the same events and conditions, pretty much like the miriad of stocks, shares, investments, financial instruments and millions of other things all encompassed within the field of economics. Again everything is governed by the same basic rules but because they started off differently from each other they continue to develop differently.

    What this means is that just like evolution economics is extremely complicated and capable of changing very fast or very slowly all depending on which particular aspect you are examining at any given time.

    But back to the question, it seems probably unfair to say that economics is invalid a science when for the most it's very complexity makes it so complicated to really know whether given enough information all outcomes could be predicted or that the very foundations of which other branches of science are built upon have to be constantly refined to take account of changing conditions. Guess work seems only the product of not knowing how new conditions will interact, certainly not a prefered aspect of economics but predictability is also part of mainstream science.

    Some perhaps argue that not all economists agree, yes that's certainly true. This however doesn't make it unscientific, just that some will be wrong and others right, just like many scientifists in other fields, because being a scientist doesn't always guaruntee you get everything right.

    But maybe above all, and here just like many of the other sciences, economics is built upon mathmatics, it is at heart a product of science. But it also requires a solid grounding in statistics, analysis, politics, history, sociology and common sense, so some might also argue an advanced man made form of science.
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    I'd have thought economics was a branch of mathematics (statistics?) that's closer to chaos theory than a science.

    I think any area which relies on somewhat arbitrary variables to predict results is more of a sub-science than a "real" one.

    That's not to say such fields of study aren't valuable, there's a lot to learn and much that can be predicted - just nothing as definite as when dealing with a typical or classical "science" subject.
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    First of all, We should start by defining science:

    "Science is an intellectual activity carried on by humans that is designed to discover information about the (natural) world in which humans live and to discover the ways in which this information can be organized into meaningful patterns. A primary aim of science is to collect facts (data). An ultimate purpose of science is to discern the order that exists between and amongst the various facts."

    (What is Science?)

    In short a science examines the various phenomena by using
    1) reasonableness/rationalism (explanation through cause->effect)
    2) mundane provability (in other words, justification cited in the real world, not in supernatural phenomena)

    Thus, Science is a special category of theory (a subset of the total theory). A systematic, coherent, demonstrable (through casualty/rationalism) set of theories.

    So, is economics a science? The answer is quite clear, yes it is. It's not a natural science though. That means, it doesn't discover information of natural phenomena but from social processes. Thus, it's a social science.

    There are 3 categories of social phenomena:
    1) Economic sphere
    2) Social sphere
    3) Political sphere

    So, what is economic sphere? Is the total of processes composed within a society that produce/provide the various products/goods necessary for the reproduction of the society. Furthermore, these processes can be fall into 3 sub-categories:
    1) Prodution
    2) Circulation
    3) Distribution
    There are 2 approaches in economic science. Economics and political economy.
    Economics focus mainly in (2), circulation through analytic- synthetic methods. Indeed, they focus almost exclusively in markets and how they function. 3 is only mentioned as derivatives of market function and 1 is incompletely discussed as a production function (99,99% as a cobb-douglas function). There's also a distinction between "positive" economics (pure science, cut out from social and historical prospects, like physics or chemistry) and "normative" economics (economic policies).
    Also, the most famous sub-category of economics, the neoclassical school, due to its method (individualism+ constrained maximisation) may define it's field as "the science that determines how an individual (society= sum of individuals) decides what to produce, how much,"... etc.." in order to satisfy it's unlimited needs under the constraint of limited sources". But, these definitions do not represent the whole total of economic science nor is a valid definition for each approach. Also, it is argued that this definition is not valid for a science since it doesn't discover information about the real world. (more on that maybe in another post)

    The alternative approach which is called political economy, focuses on these 3 sub-categories separately and does not distinguish between positive and normative approach nor uses the analytic-synthetic method but the dialectical/historical method. The rejection of analytic-synthetic method is based on the vast differences between social and natural phenomena.

    I would say that there are parts of economics that can not be considered as science (especially neoclassical economics--> I'm expecting dissents in here) but, that is not valid for the total of economic science nor for several sub-categories (eg financial engineering, political economy, cleometrics, etc).
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    Time for a humour break...It is a undeniable empirical FACT, that a fart in a hot closed elevator is worse than a fart on a windy alpine mountain top. Its called the Law of Nefarious Propagation Confinement. The Fartonomics department of Somethingy University has even used mathematics and statisics to describe it empirically, they even have graphs with a curve showing the shorter the distance the stronger the stench based on data and rigorous surveys and statistcal work. Since we have facts and scientific methods, data and nice graphs, we must ignore the human/social context or arbitrary nature of Fartonomics and consider it on par with physics!You can resume the serious discusion
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    Quote Originally Posted by Daecon View Post
    I'd have thought economics was a branch of mathematics (statistics?) that's closer to chaos theory than a science.
    Unfortunately, mainstream economics at least, does not use chaos theory. Well, in most cases economics doesn't even use dynamic analysis at all. Theory sticks to static equilibrium. Only some few heteredox schools of economic thought uses chaos theory, complex systems, non linearity, dynamics, etc.
    The most complete economics models used by central banks, IMF and governments, the so called DSGE (dynamic stochastic general equilibrium) models are always in equilibrium. No chaos in here.



    - the law of supply
    - the law of demand
    - elasticities
    - market forms (,e.g. monopoly, oligopoly, monopolistic competition, etc.)
    - externalities
    - sunk costs
    - short run and long-run costs
    - the law of diminishing returns
    - the minimum efficient scale
    - economies of scale/scope
    - the quantity theory of money
    I do argue that these are not empirical facts. These are theoretical concepts, mostly derived from neoclassical school of thought. Through econometrics and basic statistics we can find all short of correlations. That doesn't lead to causality though.
    Some comments:
    Law of Demand (as a downward monotonous function) & Law of Supply (as an upward monotonous function) are invalid if we assume more than one person. ("sold quantities= bought quantities" is just a tautology and doesn't mean that D(p)=S(p)).

    Elasticity is "just" the slope of a function, the derivative function (if we assume that the first function is differentiable). The empirical β, (in an econometric function) may represent various differently determined elasticities. A very useful tool, though.
    Theoretical market forms may be determined by various ways. You refer to neoclassical forms of markets. The two core forms (perfect competition and monopoly) have several important fallacies (eg Sraffa's critique, Sononheim-Debreau-Mantel theorem, etc). Other school of thoughts may determine a market by comparing the long-term specific % of profit with the adjusting capital (determined by competition) ) Obviously, different theoretical market forms will lead to different observations.
    The law of diminishing returns is a 100% theoretical concept and literally there's no way to estimate it since marginal products don't exist. Also, the various econometric functions based on Cobb-Douglas are rather problematic (for more, Shaikh has a great paper on that).
    The Quantity Theory of Money. This is actually an old theory (since mid 1700s). In any case, money is an endogenous variable (especially money-commodity and credit money through the law of the reflux). QTM has several applications in specific cases (eg in certain cases in over"printed" fiat money) but in the way it is used (MV=PQ --> Ms=Md) it's rather problematic as well.
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    Science itself does not know all the rules of the world it operates in. If it did there would be no need for experimentation. It creates experiments based on a rational that may be completely reversed by future scientific study, so it's only logical and rational based on the circumstances it operates within.

    Economics is as much of a science therefore as science. I think it's intellectual snobbery to insist that unless you know all the variables before you experiment you are just making educated guesses. Economic theory may well be flawed but it's sufficiently proved by events not to equate it with voodoo.

    I sincerely hope economics is a science albeit one that is as developed as traditional science was during the Druid era. If it's not then the most powerful force in the world has no means to shape, predict or tailor it to our betterment. Economics is just a young science that the older science needs to embrace as a sibling.
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    blaa. just object to the title. Science is a long ways from being exact--only math can make that claim for narrow parts of their field.
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    Valid or invalid. Using a crude early economic model. There were two indian ladies sitting near a river that made blankets,they had a lot of blankets. Along came a young brave who had a lot of feathers, lots of pretty colored feathers,but he needed a blanket as it was getting colder. He traded some pretty colored feathers for a blanket from the nice indian ladies. Ok, now for valid or invalid. Since none of the traders along the river there were scientists or science oriented, it makes it for the most part invalid as a science.
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    Quote Originally Posted by Hill Billy Holmes View Post
    Valid or invalid. Using a crude early economic model. There were two indian ladies sitting near a river that made blankets,they had a lot of blankets. Along came a young brave who had a lot of feathers, lots of pretty colored feathers,but he needed a blanket as it was getting colder. He traded some pretty colored feathers for a blanket from the nice indian ladies. Ok, now for valid or invalid. Since none of the traders along the river there were scientists or science oriented, it makes it for the most part invalid as a science.
    You don't have to be an economist to trade. That's definitely true. But, if you had to examine why they exchanged 3 feathers for 1 blanket, then you should refer to an economist.

    @Citadel, economics does not use experiment. There is experimental economics but it's an exception. Instead of experiment, economics use deduction and quantitative methods.
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    Or a phycholgst could work too. I see people as the main variables in both the supply and the demand ends. Then again, I suppose that system would be too simple. Ok, back to the mathmaticians.
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    Hmmm... It may not be as phsychological as it seems. I may want to sell my feather asap for a blanket at any price but behind my intentions there are laws that determine mass exchange rates.

    For example, let's asume that:

    1 feather= 1 hour of work
    1 blanket= 3 hours of work

    I may like blankets a lot but, the exchange rate will be 3 feathers for 1 blanket in the long term:
    Clearly, a feather producer would possibly exchange 1 blanket for 10 feathers (due to his pshychology, needs, madness or whatever) but that would be only a temporary exchange rate.
    Assume that the exchange starts at 1f=1b. Then, everybody would produce feathers and blanket producers would vanish. In let's say 10 hours someone can exchange 10f for 10b which equals to 30 hours of work. Clearly that can't be the solution. In the long term, the equilibrium price must be 1$ for feather, 3$ for blanket. This exchange rate (1/3) will always attract market prices. It may be 0,8$ and 3,8$ (due to expectations for cold forthcoming winter) or 1,5$ and 2,5$ (in to the warm summer) but in the long term you expect to see the 1/3 exchange rate.
    That's not psychology nor mathematics. It's economics :P
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    Full of flaws. For example the use of the words long term, that is not garanteed. Then the temp exchange rate, the madness example,it could also be a just buyers market. And everyone producing feathers, seems a temporary thing at best due to dollar chasing, the beggars.Then lastly,e quilibrium isn't nessesarily determined by goods base value even in the long run. It is determined by market and psycology. I look at things oddly.
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    It is just an oversimplified example. Long term refers to logical time, not natural. It's a common term in economics. I'm not sure I understand where's the flaw with madness. An economic unit may be full of illusions and can act highly irrational. Thus, he can buy overvalued products and vice versa . We are actually talking for two separate markets and their interconnections. We may assume barter markets, the conclusions doesn't change in this simple example. Of course over-production of feathers is temporary, I totally agree. The market is in inequilibrium and it is expected to equilibrate at some point. That's why I said that 1f=1b can not be the relative price (the exchange rate between two commodities).
    Also, equilibrium is a theoretical concept. Depending on your assumptions/theory you can have various concepts of equilibrium. It generally equals to steady state. In our example steady state is when price equals exchange value and that happens when demand and supply equilibrate (in other words when there are no any radical changes in supply and demand). That's a market mechanism that functions in the long term. In the short-term illusions, psychology, expectations and others, affect the exchange rate, no doubt.

    If we want to make the example more realistic then we must take into consideration rate of profit for each market + general rate of profit + time of (capital) circulation + gold production characteristics (if we assume that money is related to gold), etc.
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    This is sort of a market explanation, I have already said this but it seems to have disappeared. Rembrant stops at the hardware store and picks up a buck and a half gallon of paint and a box of crayons for color. Then he gets home and splashes it on the canvas. Base goods value equals two bucks. Why does his painting sell for two million?
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    Quote Originally Posted by Hill Billy Holmes View Post
    This is sort of a market explanation, I have already said this but it seems to have disappeared. Rembrant stops at the hardware store and picks up a buck and a half gallon of paint and a box of crayons for color. Then he gets home and splashes it on the canvas. Base goods value equals two bucks. Why does his painting sell for two million?
    Nah, you just posted it in another thread.
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    Got it. Thanks.
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    Quote Originally Posted by Achilleas View Post
    Quote Originally Posted by Daecon View Post
    I'd have thought economics was a branch of mathematics (statistics?) that's closer to chaos theory than a science.
    Unfortunately, mainstream economics at least, does not use chaos theory. Well, in most cases economics doesn't even use dynamic analysis at all. Theory sticks to static equilibrium. Only some few heteredox schools of economic thought uses chaos theory, complex systems, non linearity, dynamics, etc.
    The most complete economics models used by central banks, IMF and governments, the so called DSGE (dynamic stochastic general equilibrium) models are always in equilibrium. No chaos in here.



    - the law of supply
    - the law of demand
    - elasticities
    - market forms (,e.g. monopoly, oligopoly, monopolistic competition, etc.)
    - externalities
    - sunk costs
    - short run and long-run costs
    - the law of diminishing returns
    - the minimum efficient scale
    - economies of scale/scope
    - the quantity theory of money
    I do argue that these are not empirical facts. These are theoretical concepts, mostly derived from neoclassical school of thought. Through econometrics and basic statistics we can find all short of correlations. That doesn't lead to causality though.
    Some comments:
    Law of Demand (as a downward monotonous function) & Law of Supply (as an upward monotonous function) are invalid if we assume more than one person. ("sold quantities= bought quantities" is just a tautology and doesn't mean that D(p)=S(p)).

    Elasticity is "just" the slope of a function, the derivative function (if we assume that the first function is differentiable). The empirical β, (in an econometric function) may represent various differently determined elasticities. A very useful tool, though.
    Theoretical market forms may be determined by various ways. You refer to neoclassical forms of markets. The two core forms (perfect competition and monopoly) have several important fallacies (eg Sraffa's critique, Sononheim-Debreau-Mantel theorem, etc). Other school of thoughts may determine a market by comparing the long-term specific % of profit with the adjusting capital (determined by competition) ) Obviously, different theoretical market forms will lead to different observations.
    The law of diminishing returns is a 100% theoretical concept and literally there's no way to estimate it since marginal products don't exist. Also, the various econometric functions based on Cobb-Douglas are rather problematic (for more, Shaikh has a great paper on that).
    The Quantity Theory of Money. This is actually an old theory (since mid 1700s). In any case, money is an endogenous variable (especially money-commodity and credit money through the law of the reflux). QTM has several applications in specific cases (eg in certain cases in over"printed" fiat money) but in the way it is used (MV=PQ --> Ms=Md) it's rather problematic as well.
    Son oligopoly doesn't exist? And yes, there are different modes of determining things, so what? this doesn't mean that the base concept is invalid.
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    Quote Originally Posted by sarnamluvu View Post
    Quote Originally Posted by Achilleas View Post
    Quote Originally Posted by Daecon View Post
    I'd have thought economics was a branch of mathematics (statistics?) that's closer to chaos theory than a science.
    Unfortunately, mainstream economics at least, does not use chaos theory. Well, in most cases economics doesn't even use dynamic analysis at all. Theory sticks to static equilibrium. Only some few heteredox schools of economic thought uses chaos theory, complex systems, non linearity, dynamics, etc.
    The most complete economics models used by central banks, IMF and governments, the so called DSGE (dynamic stochastic general equilibrium) models are always in equilibrium. No chaos in here.



    - the law of supply
    - the law of demand
    - elasticities
    - market forms (,e.g. monopoly, oligopoly, monopolistic competition, etc.)
    - externalities
    - sunk costs
    - short run and long-run costs
    - the law of diminishing returns
    - the minimum efficient scale
    - economies of scale/scope
    - the quantity theory of money
    I do argue that these are not empirical facts. These are theoretical concepts, mostly derived from neoclassical school of thought. Through econometrics and basic statistics we can find all short of correlations. That doesn't lead to causality though.
    Some comments:
    Law of Demand (as a downward monotonous function) & Law of Supply (as an upward monotonous function) are invalid if we assume more than one person. ("sold quantities= bought quantities" is just a tautology and doesn't mean that D(p)=S(p)).

    Elasticity is "just" the slope of a function, the derivative function (if we assume that the first function is differentiable). The empirical β, (in an econometric function) may represent various differently determined elasticities. A very useful tool, though.
    Theoretical market forms may be determined by various ways. You refer to neoclassical forms of markets. The two core forms (perfect competition and monopoly) have several important fallacies (eg Sraffa's critique, Sononheim-Debreau-Mantel theorem, etc). Other school of thoughts may determine a market by comparing the long-term specific % of profit with the adjusting capital (determined by competition) ) Obviously, different theoretical market forms will lead to different observations.
    The law of diminishing returns is a 100% theoretical concept and literally there's no way to estimate it since marginal products don't exist. Also, the various econometric functions based on Cobb-Douglas are rather problematic (for more, Shaikh has a great paper on that).
    The Quantity Theory of Money. This is actually an old theory (since mid 1700s). In any case, money is an endogenous variable (especially money-commodity and credit money through the law of the reflux). QTM has several applications in specific cases (eg in certain cases in over"printed" fiat money) but in the way it is used (MV=PQ --> Ms=Md) it's rather problematic as well.
    Son oligopoly doesn't exist? And yes, there are different modes of determining things, so what? this doesn't mean that the base concept is invalid.
    Monopoly theory is much better than perfect competition, for sure. At least, it provides fertile ground for economic policy and state intervention. But, it has important fallacies derived from partial equilibrium, marginalism and neoclassical concept of competition. On the other hand in economic policy debates perfect competition still functions as the benchmark.

    The neoclassical theory on it's core is individuals who maximize/minimize certain things (profit, utility, risk, etc). We could criticize the theory from numerous points of view. I'll just mention the most famous concept of neoclassical theory as an example. S=D.

    Note that the law of the supply still doesn't function even under monopoly (have a look at Sraffa's late work & capital theory debates for more) for several reasons. You can't draw a supply curve since marginal products don't exist, Capital is not homogenous (this is a macro implication), etc Or you may draw a supply curve which is not upward moving. Also, you can't derive the Supply of capital. It is always assumed that capital is not produced at the current period (even though these models are static) so in the capital market you there's no a supply curve.

    The law of Demand doesn't function for several reasons as well (if you're not familiar with the criticism let me know, I can post some more info- it's really interesting).
    Most notably, Schonenheim-Debreu-Mantel theorem argues that each polyonimal derived from individual utility functions can function as an aggregate demand curve and literally, can have very strange shapes, not necessarily a downward slope. Furthermore, if we wanted to draw a downward demand function we should assume that each individual's Engel curves are parallel but, since Engel curves pass through O (0,0) we should assume that all individuals have the same Engel curve. Nonsense, it's like saying that each individual is the same replica of a given individual.
    The problem is that neither aggrigate nor individual demand curves function as downward slopes.

    These are just a few examples that I can recall without referencing to other sources. The critique can become much bigger.

    Real sciences start on aggregate level. Also, all other social sciences start on aggregate level. (possible exception, psychology) Only neoclassical economics starts on the concept of individualism. If you dig a bit the core of the theory, you'll find the "axioms of revealed preference":
    1) Completeness
    2) Transitivity
    3) non-satiation
    4) convexity

    Under these circumstances utility functions exist, etc.
    Now, how can you argue that this is a science since indiference curves are unobervable? You create a "science" that its main axioms are about an unobservable thing.
    Paul Samuelson did answer by creating the "revealed preference".
    Some empirical research has been done (Sippel, 1995,1997). He askef from his students in the economic department to compare goods given a fixed income and write down their preferences. Later, he tried to draw their indiference curves. The key proposisions being tested were the "weak axiom of revealed preference" "strong axiom of revealed preference" and "general axiom of revealed preference". The results were smashing. None of these axioms are empiricaly correct.
    Also, the maximisation under the constraint of income is unrealistic.

    A blowmind example. Suppose that you enter a supermarket which has 100 commodities. Assume that you have 2 options related to quantity (buy/not to buy- no other quantities). Each commodity adds an extra dimension on your indiference curve.

    So with 100 commodities and 2 options for each commodity you have:

    2^100= 1,267,650,600,228,229,401,496,703,205,376 combinations.

    like 1st combination: 1 beikon, 0 banana, 1 carrot, 1 DVD, 0 orange juice, 1 water bottle, 1 lager beer, 1 stout beer, 0 pizza, 0 batteries, 1 plastic fork,....... and so on.

    If you add more options (0,1,2,3..,5 quantities of eg bananas, beers, etc) you have 5^100 combinations.
    If you add more commodities (supermarkets have thousands) you have 5^1000 combinations.

    A computer needs 3-5 years to calculate is utility function in a 50 commodities store with only 2 options.

    Does anyone beleive that it is "rational" to compare so many combinations in order to find which basket maximizes the utility? it just doesn't scale to reality. Yet, you say the concept is valid.



    My main argument is that economic sphere is certainly a subject of scientific research. But, not all schools of thought have scientific characteristics.
    On the one hand, economy is described by conflicts, endless motion, institutional, social and historical changes.
    On the other hand, neoclassical economics describe a harmonious, peaceful world were "rational"selfish agents in "free" markets act according to their very personal goals and all markets stabilize in their equilibrium simultaneously. There are no social classes, no conflict interests, no motion, no (historical and most times not even natural) time. No offense but, how can you say that this concept is valid?
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    On the other hand, neoclassical economics describe a harmonious, peaceful world were "rational"selfish agents in "free" markets act according to their very personal goals and all markets stabilize in their equilibrium simultaneously. There are no social classes, no conflict interests, no motion, no (historical and most times not even natural) time. No offense but, how can you say that this concept is valid?
    Quoted for truth!

    Personally, the thing I find most teeth-grindingly irritating in these ideas is the brushing aside of science, technology, creativity, invention. (That world is not just harmonious and peaceful, it's static.)

    Sure inventions and discoveries have an impact, but - lots of blithe, dismissive hand-waving ensues - what we're talking about is how things are, those things are changes to how things are, that's why we use the term ceteris paribus.

    This is all very well for talking about a scientific analysis at a particular point in time. Science is always provisional if not tentative. It's entirely another thing to say it boldly in economics with the implication that the whole picture of whatever you've analysed or concluded has to be recalibrated because it very likely could be overthrown in a decade (or a year or a day) if some clever clogs discovers something important or invents something nifty.

    If your so-called "scientific" description excludes the entirely predictable facts of changes in a society or an environment (if not the specific changes themselves) then you're kidding yourself. (And that's overlooking the outdated 19th century notion of an idealised, isolated, individual, rational actor in the first place.)
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    Science is a process. There is good methodology and bad methodology. The subject matter isn't the issue. I,ve been in geology for 40 years...geology may be a science but it doesn't mean everything called 'geology' is science.
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    [QUOTE=adelady;490157]
    (And that's overlooking the outdated 19th century notion of an idealised, isolated, individual, rational actor in the first place.)
    Well, 19th century political economy had a much more realistic approach to economic phenomena than modern neoclassical economics. Most notably, Ricardo, Marx and Mill had great understanding of the fundamentals and never tried to create a static concept of (non) competition based on individuals like neoclassicals nor they created models with such unrealistic assumptions. It's only normal to read Marx calling marginal school as "vulgar political economy".
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    I always thought the "rational actor" came from areas other than economics. As a way of ducking the issue of class and those other complicated, messy, human, and political issues raised by Marx, Mill and the like.
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    I never saw economics as a science. It's some sort of juju-magic ugly brother of true statistics.
    It is by will alone I set my mind in motion.
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    Quote Originally Posted by pyoko View Post
    I never saw economics as a science. It's some sort of juju-magic ugly brother of true statistics.
    Statistics are made to observe and estimate but your science will tell you what to observe. Economics is much more than finding correlations & covariances and fitting regression lines.
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    It's some sort of juju-magic ugly brother of true statistics.
    It doesn't need to be.

    My impression from doing just Eco 1 and nothing more was that you had to slog your way through three years of mud and tangled jungle roots of hidebound ideology and technical trickery. Out on the other side in the glorious fresh air of post grad freedom, you suddenly got the opportunity to do real economics. Trouble is, too many students got stuck in the hidebound, rigid rules of the totally inadequate theory they'd assiduously absorbed for 3 years.
    "Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." Winston Churchill
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    If economics isn't a true science should become one. We need a science of economics. Do people enjoy being broke. Until economics becomes an exacting science, we are just gambling in the midst of inflation. Spare change?
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    Quote Originally Posted by Hill Billy Holmes View Post
    If economics isn't a true science should become one. We need a science of economics. Do people enjoy being broke. Until economics becomes an exacting science, we are just gambling in the midst of inflation. Spare change?
    A good idea but human greed is incompatible with an idea of pure science version of economics that will make the world a better place for everyone.
    It is by will alone I set my mind in motion.
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    Never regarded economics as a science at all.
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    Quote Originally Posted by Achilleas View Post
    Quote Originally Posted by sarnamluvu View Post
    Quote Originally Posted by Achilleas View Post
    Quote Originally Posted by Daecon View Post
    I'd have thought economics was a branch of mathematics (statistics?) that's closer to chaos theory than a science.
    Unfortunately, mainstream economics at least, does not use chaos theory. Well, in most cases economics doesn't even use dynamic analysis at all. Theory sticks to static equilibrium. Only some few heteredox schools of economic thought uses chaos theory, complex systems, non linearity, dynamics, etc.
    The most complete economics models used by central banks, IMF and governments, the so called DSGE (dynamic stochastic general equilibrium) models are always in equilibrium. No chaos in here.



    - the law of supply
    - the law of demand
    - elasticities
    - market forms (,e.g. monopoly, oligopoly, monopolistic competition, etc.)
    - externalities
    - sunk costs
    - short run and long-run costs
    - the law of diminishing returns
    - the minimum efficient scale
    - economies of scale/scope
    - the quantity theory of money
    I do argue that these are not empirical facts. These are theoretical concepts, mostly derived from neoclassical school of thought. Through econometrics and basic statistics we can find all short of correlations. That doesn't lead to causality though.
    Some comments:
    Law of Demand (as a downward monotonous function) & Law of Supply (as an upward monotonous function) are invalid if we assume more than one person. ("sold quantities= bought quantities" is just a tautology and doesn't mean that D(p)=S(p)).

    Elasticity is "just" the slope of a function, the derivative function (if we assume that the first function is differentiable). The empirical β, (in an econometric function) may represent various differently determined elasticities. A very useful tool, though.
    Theoretical market forms may be determined by various ways. You refer to neoclassical forms of markets. The two core forms (perfect competition and monopoly) have several important fallacies (eg Sraffa's critique, Sononheim-Debreau-Mantel theorem, etc). Other school of thoughts may determine a market by comparing the long-term specific % of profit with the adjusting capital (determined by competition) ) Obviously, different theoretical market forms will lead to different observations.
    The law of diminishing returns is a 100% theoretical concept and literally there's no way to estimate it since marginal products don't exist. Also, the various econometric functions based on Cobb-Douglas are rather problematic (for more, Shaikh has a great paper on that).
    The Quantity Theory of Money. This is actually an old theory (since mid 1700s). In any case, money is an endogenous variable (especially money-commodity and credit money through the law of the reflux). QTM has several applications in specific cases (eg in certain cases in over"printed" fiat money) but in the way it is used (MV=PQ --> Ms=Md) it's rather problematic as well.
    Son oligopoly doesn't exist? And yes, there are different modes of determining things, so what? this doesn't mean that the base concept is invalid.
    Monopoly theory is much better than perfect competition, for sure. At least, it provides fertile ground for economic policy and state intervention. But, it has important fallacies derived from partial equilibrium, marginalism and neoclassical concept of competition. On the other hand in economic policy debates perfect competition still functions as the benchmark.

    The neoclassical theory on it's core is individuals who maximize/minimize certain things (profit, utility, risk, etc). We could criticize the theory from numerous points of view. I'll just mention the most famous concept of neoclassical theory as an example. S=D.

    Note that the law of the supply still doesn't function even under monopoly (have a look at Sraffa's late work & capital theory debates for more) for several reasons. You can't draw a supply curve since marginal products don't exist, Capital is not homogenous (this is a macro implication), etc Or you may draw a supply curve which is not upward moving. Also, you can't derive the Supply of capital. It is always assumed that capital is not produced at the current period (even though these models are static) so in the capital market you there's no a supply curve.

    The law of Demand doesn't function for several reasons as well (if you're not familiar with the criticism let me know, I can post some more info- it's really interesting).
    Most notably, Schonenheim-Debreu-Mantel theorem argues that each polyonimal derived from individual utility functions can function as an aggregate demand curve and literally, can have very strange shapes, not necessarily a downward slope. Furthermore, if we wanted to draw a downward demand function we should assume that each individual's Engel curves are parallel but, since Engel curves pass through O (0,0) we should assume that all individuals have the same Engel curve. Nonsense, it's like saying that each individual is the same replica of a given individual.
    The problem is that neither aggrigate nor individual demand curves function as downward slopes.

    These are just a few examples that I can recall without referencing to other sources. The critique can become much bigger.

    Real sciences start on aggregate level. Also, all other social sciences start on aggregate level. (possible exception, psychology) Only neoclassical economics starts on the concept of individualism. If you dig a bit the core of the theory, you'll find the "axioms of revealed preference":
    1) Completeness
    2) Transitivity
    3) non-satiation
    4) convexity

    Under these circumstances utility functions exist, etc.
    Now, how can you argue that this is a science since indiference curves are unobervable? You create a "science" that its main axioms are about an unobservable thing.
    Paul Samuelson did answer by creating the "revealed preference".
    Some empirical research has been done (Sippel, 1995,1997). He askef from his students in the economic department to compare goods given a fixed income and write down their preferences. Later, he tried to draw their indiference curves. The key proposisions being tested were the "weak axiom of revealed preference" "strong axiom of revealed preference" and "general axiom of revealed preference". The results were smashing. None of these axioms are empiricaly correct.
    Also, the maximisation under the constraint of income is unrealistic.

    A blowmind example. Suppose that you enter a supermarket which has 100 commodities. Assume that you have 2 options related to quantity (buy/not to buy- no other quantities). Each commodity adds an extra dimension on your indiference curve.

    So with 100 commodities and 2 options for each commodity you have:

    2^100= 1,267,650,600,228,229,401,496,703,205,376 combinations.

    like 1st combination: 1 beikon, 0 banana, 1 carrot, 1 DVD, 0 orange juice, 1 water bottle, 1 lager beer, 1 stout beer, 0 pizza, 0 batteries, 1 plastic fork,....... and so on.

    If you add more options (0,1,2,3..,5 quantities of eg bananas, beers, etc) you have 5^100 combinations.
    If you add more commodities (supermarkets have thousands) you have 5^1000 combinations.

    A computer needs 3-5 years to calculate is utility function in a 50 commodities store with only 2 options.

    Does anyone beleive that it is "rational" to compare so many combinations in order to find which basket maximizes the utility? it just doesn't scale to reality. Yet, you say the concept is valid.



    My main argument is that economic sphere is certainly a subject of scientific research. But, not all schools of thought have scientific characteristics.
    On the one hand, economy is described by conflicts, endless motion, institutional, social and historical changes.
    On the other hand, neoclassical economics describe a harmonious, peaceful world were "rational"selfish agents in "free" markets act according to their very personal goals and all markets stabilize in their equilibrium simultaneously. There are no social classes, no conflict interests, no motion, no (historical and most times not even natural) time. No offense but, how can you say that this concept is valid?
    eh?

    Oh, yeah I know, I only answer to respectful/nice people...
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    Considered as a science, economics is unusually complex for the simple reason the thing being studied changes its behavior based on the published and accepted theorems of the science. Major players in the economy, such as corporate CEOs, stock market traders, and government run central banks study the latest theories of economics and try to use the principles to accomplish their goals. Thus, every time a new economic theory comes out, changes in the economy quickly follow as the big players adjust their strategies. Its sort of like the Heisenberg uncertainty principle of quantum physics, the very act of studying the economy changes how it operates.
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    Beauty is in the eye of the beholder. Two parties exchanging goods in trade. Both are happy. Both have profited. Both trade.
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    eh?

    Oh, yeah I know, I only answer to respectful/nice people..
    I didn't mean to be disrespectful nor rude. I'm not a native speaker thus my messages may be offensive. After all, my sincere apologies. Many serious and genius people devote their lives to these theories, I would be arrogant-at least- to show disrespect.

    Never regarded economics as a science at all.
    What do you think that economics is, then? Do you regard sociology as a science?
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    Well it's grounded on empirical observation and mathematical abstractions that can be falsified; sure it's much more complex and difficult to control variables than the natural sciences but it's not exactly nonsense speculation either.
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    What is money. Why do we use money. Where is money. What is our connection to money. Economics is a science that answers those questions.
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    I have a question for any of you economic geniuses. How on the market can a single dollar be a million dollars, where $1=$1*10^6. This is a good question for commoners as most people in the world are. Can 1 dollar equal a million dollars? Anyone can get a dollar if they try ie hang around 7-11 panhandling for change for a day. Getting a million dollars is nearly impossible. Someone has mentioned this shortcut, and I was wondering if there was any truth to it, or if it was just some complicated theoretical nonsense.
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    Hillbilly, you're going to have to start making a whole lot more sense if you want to continue posting on this forum.
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    Thank you Harold14370* for your guidance in helping me to "Follow The Stupid Rules".It is apreciated, and I am doing the best that I can. Reworded, I am not trying to break them. Thank you Harold.
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    My posts are now being modified and removed. Thank you Harold14370. Oh and by the way you have a problem with trying to threaten people. You should study psychology or something. Corse ,hard,crude,primitave ,Harry.
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