Avner Offer says economics is “more like literature than like physics”. This might be seen as high-class trolling. Physics contains sums which are hard and scientific and manly, whereas literature is girly and so obviously inferior. For this reason, some economists have long had physics envy, writing papers whose titles offer “exact solutions” and “robust optimization”.
Such a reaction is wrong. Offer is right in ways that reflect both credit and discredit upon economics.
Let’s deal with the discredit first. Economists’ attempts to emulate physics have at least sometimes failed. Romer’s critique of “mathiness” and McCloskey’s accusation of scientism have some force. There’s nothing necessarily scientific about long lines of equations: Ronald Coase’s two (pdf) great papers (pdf), for example, gave fantastic insights without any.
What’s more, economics is more like literature than physics in that it doesn’t always progress. We can read 19th century novels with profit, but few physicists would advise their students to study 19th century work on the subject. Likewise, we should read the classical economists, not least because they were interested in issues with much of later economics overlooked, such as the distribution of income between capital and labour.
And some economics is like literature in a bad way. Those RBC models that assume continuous labour market clearing are like Iain M. Banks’ culture novels: they describe societies which do not exist, have not existed and will not exist in our lifetimes. And a common criticism of at least early versions of DSGE models was that they were as scrupulous in ignoring important matters as Jane Austen was in ignoring the source of her gentlemen’s incomes: Charles Goodhart said of the DSGE approach that “it excludes everything I am interested in.”
Nevertheless, there are two ways in which economics is and should be like literature.
One is that it asks the same question as writers do of their characters: given his motives, information set and constraints, how does he act and with what effects? Sloppy writers and economists give simplistic and implausible answers – as in the “incentives-magic!!-nice effects” approach of simple-minded free market economics. Great writers and economists, however, are much more careful and insightful. You can think of the recent Nobel prizes given to Hart, Bengstrom and Tirole as rewards for such carefulness.
Secondly, economics must be unlike physics because there are, as Jon Elster said, no (or few) law-like generalizations in the social sciences. Instead, like literature, there can only be detailed studies of time and place – although the best such studies yield great insights.
Does this mean that economics isn’t a “science”? I side with McCloskey. It’s a stupid question. What matters is whether the study is careful and disciplined? The objection to “mathy” economics is that it doesn’t bother with the discipline imposed by pesky facts.
In this sense, economics is like literature in that in both there is a constrained subjectivity. Literary scholars might reasonably differ on whether, say, Virginia Woolf was a better writer than D.H Lawrence but most would agree that both are better than, say, Louise Bagshawe. Likewise, whilst there might be disagreement in economics, there can also be unity or at least general consensus about what constitutes rank bad economics.