Of course, this statement:
Sounds great, until we remember that the laws of physics are actually less fully supported and more rigourously disputed among physicists than are the laws of economics among economists.
However, that's not really the main problem. The main problem is that of unobservables. In physics, unobservables are usually things that theoretically CAN be observed so the problem is finding out how to observe them in order to support or refute one's theory about how the physical world works. What's interesting to physicists is what should be observable in the world but isn't.
In economics, like all social sciences, the unobservables are usually things that theoretically can never be observed but are presumed to exist based on thinking about the world in socially and existentially relevant ways. What's interesting to economists are what can NEVER be observed -- things like justice, power, happiness, and capability. For example, in economics, one frequently is interested in human well-being, also called welfare. However, we know that a large part of human well-being is relative to subjective judgements, a priori, just like aesthetics. This means that observable proxies for well-being have to suffice, such as income, or deprivation. But they will always be proxies and there is always a danger when trying to apply discoveries based on those proxies to cases where the proxy might be a very misleading indicator of the underlying concept. The neoliberal prescription that economic growth necessarily makes the poor better off even if it helps the rich even more is a classic example of the perverse consequences of mistaking the observable proxy of income for the unobservable concept of well-being.
In economics, like all social sciences, the unobservables are usually things that theoretically can never be observed but are presumed to exist based on thinking about the world in socially and existentially relevant ways.
Part of this reads like an American Institutionalist critiquing mainstream economics, except for the false premise that this applies to all approaches in all social sciences. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
On the natural side, are not the observables, theoretically if not actually, the interesting questions in natural sciences?
Look at your list.
"Human nature". What is relevant to providing cause and effect explanations are regularities of human behavior. As an evolved social primate, there will be innate biases, and to the extent that they are relevant to regular behavior, they will be subject to scientific observation. And of course, those behaviors include the internalization of the regular rules of behavior in the social contexts that we encounter, which leads to institutions that are themselves observables in their rules of behavior and the folkviews regarding those rules of behavior held by their participants.
Any unobservable element of human nature over and above that is beside the point in providing cause and effect explanations human behavior.
"Motivations". Mainstream economics has a strong reliance on unobserved and unobservable utility preference maps as the motivation for the incessant decision making followed by performance that is its unit of analysis. But that is required for the scientific study of human behavior, but only for application of that particular unit of analysis of evaluation followed by decision followed by performance. Replace the unit of analysis with social transaction followed by performance, and then to the extent that motives are relevant to the transaction, they are observables.
"Inherent attributes". Inherent attributes are either observables or excuses in lieu of study of regularities of human behavior.
"Justice". The various rules of appeal to various internalized models of justice are quite observable, as is the regularity that models of justice are formed and internalized. Often those models of justice have a folkview that the model of justice itself is intrinsically valid rather than socially grounded. There is an "unobservable" there if we attempt to find that intrinsic grounding of some particular model of justice, but that is the same as the unobservability of the orbits of the sun and the planets around the earth ... we cannot observe what is not there.
"Equity". This is, of course, a specific facet of some specific models of justice.
"Well being". Basic needs of humans can be identified, without difficulty. The idea of some generic unstructured quantity of "well being" is, of course, more of the long falsified utilitarianism of mainstream economics. Those aspects of well being that are observable and identifiable are precisely those aspects that social science can address. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
Most economist wouldn't agree that your definition describes the field, currently or ever. Certainly the classical economists, Smith, Ricardo, and Marx wouldn't have. Economics was a branch of moral philosophy, and material provisions were always proxies for broader concepts of justice and ethics. That hasn't changed. Economics is the study of how to organize society in ways that provide for more justice and greater well-being. It is a normative discipline, in that economists are expected to prefer social organizations that provide greater justice and greater well-being to those that don't.
Regarding your criticisms of my partial list of unobservable phenomenon that make up the basis of what are concerned "interesting" research questions in the social sciences, I refer to you the seminal work on the topic of causality by the eminent computer scientist and mathematician (not an economist) Judea Pearl (http://bayes.cs.ucla.edu/BOOK-2K/) whose work on the science and philosophy of causality is considered foundational in both the natural and social sciences.
(As a sad aside, Dr. Pearl is also, quite tragically, better known outside of academia as the father of David Pearl, the Wall Street Journal reporter who was beheaded on international TV by his captors in Pakistan in 2002.)
I'll take just one topic from your list, because it is the biggest problem in all of social science research, from psychology to sociology to economics -- inherent unobservable attributes. A really good example that comes from the the controversial arena of teen pregnancy, sex education, abortion, and life outcomes. Up until recently, most research showed, unsurprisingly, that girls who became pregnant at a young age had worse life outcomes than girls who didn't when categorized into those two groups and other factors were sufficiently controlled for in statistical models of the relevent relationships. However, that still never satisfied the on-going problem in statistics of missing variables -- what didn't get included, and how that might have biased the inference of causality between pregnancy and poor outcomes. What is a missing variable? It's almost always some unobservable phenomenon for which it is impossible, or nearly so, to find data. In the case of pregnant teens, the question is, "Is there something else about these girls that both causes them to get pregnant early and also causes them to have worse life outcomes?" That is, is there some unobserved characteristic in some girls that causes them to BOTH get pregnant and have other problems unrelated to the pregnancy? If so, pregnancy can't be the cause of poor life outcomes, and policies and social mores focusing on preventing teen pregnancy are probably misplaced.
Well, a few labor economists (http://jhr.uwpress.org/cgi/content/abstract/XL/3/683)came up with a novel solution to the problem by looking at the US longitudinal survey data and grouping teens into different categories -- those who got pregnant and gave birth, and those who got pregnant but didn't give birth. Their finding was surprising to them. Girls who gave birth had as good or better life outcomes after 10 years than girls who didn't give birth. This provides some evidence about causality -- that pregnancy cannot be said to cause poor life outcomes in and of itself. Rather there is some still unidentified characteristic(s) inherent in some girls that explains both getting pregnant early and having poor life outcomes. Girls should therefore not expect poor life outcomes if they have a child as a teen, ceteris paribus, but they should wonder if there is something else about them that might still lead to poor outcomes whether or not they carry a child to term.
There is always a tradeoff between modelling a process correctly (ie without missing variables, entirely in terms of what has actually been observed and nothing else) and adapting an off the shelf model while hoping it will work out.
The reality is that the substantial effort required to model a process from scratch is not justified in nearly all cases. The few standard (statistical and physical) models that were developed from scratch since the Renaissance have been reused and extended many times, to the point that the cost of using them is merely a few years of university education. -- $E(X_t|F_s) = X_s,\quad t > s$
You're quite right that in most cases the substantial effort to make a new model from scratch is unjustified, and this gets to the heart of Bruce's issue with the institutionalist critique. We're biased by the nature and necessity of our circumstances to accept and build on the models and mistakes of others. Which means that we're likely to miss important things that don't fit the models, such as unobservable phenomenon.
However, even in making a model from scratch there is still the non-trivial issue of unobservables. This is the real problem that most economists, as well as many other social scientists, and even medical researchers, struggle to answer: "What WOULD have happened if X were true instead of Y?" -- a counterfactual, in other words. That's how causality is best inferred and how statistics is used to find the answer, but doing so is really hard work because counterfactuals are, by definition, unobservable, which means that a better theory makes all the difference.
A missing variable is a problem IF there is, in fact, a variable missing from a statistical model. The problem is that often only theory can tell you if it is missing or not -- not anything in your model itself. This means that you'll never know if it's missing if you haven't thought sufficiently about your problem.
That is why you make control experiments.
This is the real problem that most economists, as well as many other social scientists, and even medical researchers, struggle to answer: "What WOULD have happened if X were true instead of Y?" -- a counterfactual, in other words. That's how causality is best inferred and how statistics is used to find the answer, but doing so is really hard work because counterfactuals are, by definition, unobservable, which means that a better theory makes all the difference.
And this is why you do double-blind placebo-controlled clinical trials.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Seen from the perspective of an anthropologist and a historian, the history of the field of economics has been one of a long flight from the complexity of reality into a warm numerical cocoon of fantasy.
We don't understand why people do things? Let's just pretend that all people try to maximize their utility. We can't model asymmetrical information in an adversarial market situation? Let's pretend everybody knows everything.
The fact that these models and this way of thinking encouraged people to look away from the structural problems causing poverty, to look away from gluttonous parasitism at the top, to look away from the role of hierarchy and power in defining the market situation, was merely a bonus. It's so much easier to just blame poor people for failing to maximize their utility.
A theory that is constructed based on what can be identified as unobservables that can never be observed but are presumed to exist ... is a theory that has been constructed blithely ignoring the institutionalist critique.
And then you continue to pander to the mainstream economists pretense that their's is the only approach with which to study economics by identifying the incorporation of the critique with a field of study rather than an approach to a field of study. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
The institutionalist critique provides no solution other than maintaining some humility (also called reflexivity) about both the methods of inquiries and the discoveries one might make. Neoclassical economics frequently ignores the critique by (perhaps blithely) assuming that economic agents have more power and knowledge about things than can be possible if the institutionialist critique is true.
The critique can also be modified and applied to much of physical science as well by attacking the assumption on the part of the researcher that there really exists some objective vantage point from which the world can possibly be imagined -- that you can imagine a world without you, but still call it the same world. (This was the real mental breakthrough of Galileo, for instance, which has since been shown and accepted by philosphers since des Cartes as clearly false. We can't really separate our first-hand perspective from reality -- to do so is imagination.) But for most things in the physical sciences, like most things in social science, it doesn't make much difference. You can build sound bridges and supercomputers without resolving the existentialist dilemma. However, as Einstein pointed out in relativity, there are places where it makes all the difference and ignoring that problem masks the truth. Even the physical sciences must engage in unproven imaginations about how reality works -- called heuristics -- before analysis occurs, and the end result of analysis is always necessarily biased by possible misspecifications in that original, dreamed-up view. For Galileo, his epiphany was that human beings weren't the center of the universe. But Einstein had to have the opposite epiphany to solve the problem of relativity -- that he really WAS the center of it, as far as observing and measuring it is concerned.
Likewise, markets tend to work most of the time without taking account of the fact that institutional constructions bias actors through power and limits of information. The assumption that people really do know enough and are powerful enough to make rational choices is basically true regarding what we can observe. But there are certain cases where things go dramatically wrong when such ideas are applied, through policy or become ideological.
There's nothing wrong, in the institutionalist critique, with trying to find out the truth about things that cannot possibly be observed -- it just means that there are some reasonable limits to using observational methodologies to do it and researchers need to be honest about those limits.
And as a researcher within the radical school of economics, I've certainly never been accused of "pandering" to mainstream before.
There is everything wrong, in the institutionalist critique, to trying to find "the truth" about things that cannot possibly be observed and calling it science.
This is not the point at issue:
The assumption that people really do know enough and are powerful enough to make rational choices is basically true regarding what we can observe.
This is only possible true by redefining "rational choices" away from what it means in the context of mainstream economic modelling ... people clearly can not know enough to make perfectly foresighted rational choices regarding each action that they make and do not have the capacity to engage in the incessant decision making at the foundation of the mainstream model.
So the "rational choice" in that statement is a shell game, a claim about the plausibility of a more constrained form of rational choice than is presumed in utility maximizing modelling on a more constrained set of actions than a model of human behavior based strictly on utility maximizing is engaged in modelling.
However, beyond that, there is the point that the utility maximizing model of rational decision making is invalid, so whether people are or are not in fact capable of engaging in the form of rational decision making specified in mainstream economic models, we know that they do not do so.
If you are a researcher in radical economics, it makes it all the more puzzling why you defer to the right of mainstream economists to define a single approach to economics as the same as the field of economics. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
I have never argued that the neoclassical approach is the same as the whole field of economics. You've somehow inferred that yourself from things outside of my comments and have been misinterpreting my responses based on that.
The institutionalist critique is not at all concerned about searching for unobservables and "calling it science." That's what social science is, after all. The important thing is to recognize that it is what you're doing and presume that discoveries have universal conclusions. The institutionalist critique is concerned about presuming that one particular way of imagining the world is necessarily the right way, which is an assumption particularly strong today (although certainly not universal) in neoclassical economics and other fields that are "consultants to power" rather than critics of power. In physical science today, the institutional critique may be most valid for medicine, where institutional bias as well as profit incentives appear particularly corrosive regarding health care questions.
It would be good if you and Bruce took this debate to a separate diary... The brainless should not be in banking. — Willem Buiter
Some fields have merely already incorporated that critique better than others.
The institutionalist critique is not at all concerned about searching for unobservables and "calling it science."
Clearly you are only willing to recognize a portion of our critique. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
While there is a set of people who don't like calling social science, "science," (and which apparently includes you) that is really not a central part of the critique -- that is a mere semantic part. The counter-argument to them is that much of physical science is not really "science" then either -- much of medicine, genetics, etc., including a lot of theoretical physics. But that would be taking the argument too far, I hope you would agree. So I refuse to get hung up on yours or anyone else's obsession over a word, choosing instead to go after the heart of the critique, which remains valid: Especially in social questions, which usually involve unobservables because of the subjective, social nature of social science, an observer's institutional bias must be taken into account in some way in order to preserve some degree of honesty.
For example, Karl Polanyi, an important contributer to the institutionalist critique, did not expend a lot of effort pointing out how natural science was valid but social science was not. Rather, he argued that neoclassical economics is a political philosophy first and foremost and that distinctions necessarily biases its so-called scientific conclusions. Much work in History of Science uses the same strategy to critique virtually all of the natural sciences as well, particularly the applied parts of it in engineering and medicine.
So the critique is not centered, or really shouldn't be if some of you are, on categories of "real" science versus "fake" science. Rather the critique is centered, where is is useful, on the concept of honesty in any rational inquiry.
It is true that much of what goes out under the banner of social science is the fruitless chase of the unobservable, pursued sometimes by calculating the incomputable, sometimes by deploying the indecipherable in the attack on the inexcusable.
But much of what goes out under the banner of social science is indeed science, offering and contesting cause and effect explanations of observable social behavior and activity. Sadly, less commonly in my field of economics than in the other nomethetic fields of the social sciences. I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
However, a lot has changed in the field since him, even if his critique still has validity. Heckman, for example, has re-focused much of what is considered economic inquiry precisely to question of cause and effect based on observables. However, the primary focus of social science remains on what one can deduce about unobservables -- justice, well-being, inherent traits -- from observable data. This differs from much work in natural science in one way very little: even if a phenomenon is unobservable to human senses, it's presence can be deduced from theory and observation of what can be observed. However, the key difference in social science are that the unobservable components are dependent upon social contexts, which are not the case in most questions of natural science.
Anyway, Migeru has warned me to not discuss this anymore in this thread. Good discussion.
However, as Einstein pointed out in relativity, there are places where it makes all the difference and ignoring that problem masks the truth.
No. Just... no. The equations involved are simply transformation properties of spacetime. Nowhere in the theory is the observer invoked, except in a same didactic sense that electrons are said to "want to go towards" the lower potential.
But far more fundamentally, the laws of nature involved do not invoke the observer. Special relativity states simply that the length of the four-vector is invariant under transformation between inertial systems. Full stop. This does not invoke the observer any more than stating that the length of the three-vector is invariant under rotational transformations.
How Einstein discovered this does not matter. He could have come to this conclusion while tripping on acid, he could have had a divine revelation, he could have consulted an astrologer, for that matter. None of that would have changed the way the equations behave, nor the experimental results that confirm their utility.
Keep on keeping on... Fai de bèn a Bertrand, te lou rendra en cagant
Welcome back, by the way. The brainless should not be in banking. — Willem Buiter
But I don't agree, either. To say that intuition, or one's mental picture of the world has nothing to do with a discovery of a fundemental explanation of how the world works is just wrong. Maybe he could have solved the equation from the insights of an acid trip, but he didn't. That's says something about the difference between acid trips and human reason and experience. Instead he spent much of his time in a patent office imagining the issue of observing the same phenomenon and getting different results at different vantage points when a constant was needed instead. The observer was invoked for the expressed purpose of determining what is universal without an observer. And the implications of the theory are important for observers as well.
The observer was invoked for the expressed purpose of determining what is universal without an observer.
But you have one point which is that, at the time Einstein wrote, they were still mentally wedded to coordinate systems and the important thing was the rules for changing coordinates. In that sense Einstein was concerned with observers and not with what was universal. It's been over a century since 1905 and in the meantime physicists have adopted the mathematical point of view that what matters is the transformation group and its invariants, and that coordinates are not important. This transition started almost immediately with the work of Minkowski and others, especially Wheeler in the mid-1900's.
So you may be right about Einstein's heuristic basis for his discoveries but we already have a different understanding of them. Nevertheless, Einstein's thought experiments about train conductors flashing lights around relativistic trains remain useful to build intuition - too bad they are seldom mentioned to physicists in training. The brainless should not be in banking. — Willem Buiter
To say that intuition, or one's mental picture of the world has nothing to do with a discovery of a fundemental explanation of how the world works is just wrong.
But I'm not. I'm saying that there are three distinct aspects of science:
You are using the language of bullets 2) and 3).
An insight to that effect may have inspired his discovery of special relativity, but it is not pointed out as an assumption in the theory itself. And the original source of inspiration is no more necessary to understand the theory of relativity than having an apple-induced headache is a prerequisite for understanding Newtonian gravity.
an apple-induced headache
