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October 13, 2016


Luis Enrique

The smarter (imo) economists are explicit about this. I think I have linked to this before but here are Gilboa, Postlewaite, Samuelson and Schmeidler on Economic Models as Analogies


They also have a new one, I have only just come across, called

Economics: Between prediction and Criticism


which sounds quite literary.

Luis Enrique

also: there is a place for theory that does not bother with pesky facts, so long as it's kept in its place. Division of labour. Some economists are good at highly abstract posing of, and solving, problems. Other economists (or sometimes the same ones) can take those idea and methods and maybe do something reality-based with it. If you don't allow room for that kind of stuff, you end up with the sort of stupid criticisms that, for example, one sometimes sees leveled at papers like Markets For Lemons. i.e. this model says nobody would trade used cars, but they do, there this model is wrong.

Dave Timoney

Of course, literature sometimes suffers from physics envy as well, e.g. Charlie Stross's Accelerando. Part of the attraction of Banks's Culture series is the evident fun he has in assuming a can opener.


"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" - bit unfair to write those novels off because they are they describe societies which do not exist, have not existed and will not exist in our lifetimes. Literature doesn't necessarily claim to tell us anything about the world, just to entertain


@ JDT - of course; I meant no disrespect to Banks whatsoever. RBC models, however, don't entertain.
@ Luis - Yes. There are two types of wrong models. Some invite us to a deeper understanding of the world, because they raise real puzzles because the theory seems robust but inconsistent with the facts. Eg:
1, Markets for lemons. People are cheats - so why do we trust them?
2. Equity premium puzzle. Small gambles should have small pay-offs. So why have equities done so well.
3. Miller-Modigliani. You can't change the size of a pizza by cutting it into 8 rather than 6 slices. So why does the way we cut it matter?
Some other wrong theories, though,are just daft.


Ian banks did not pretend to write anything other than non-fiction.
Books on DSGE do pretend to be non-fiction.

... I suppose the real difference is there is more truth to be found carefully reading Ian Banks.

B.L. Zebub


You wrote:

"Offer is right in ways that reflect both credit and discredit upon economics."

I agree 100%. You dealt with many of the things he said. You, however, did not comment on something he also said. That point Offer made but you left out is related to democratic debate and is particularly relevant to the Brexit debate. To wit, this:

"I think that in the absence of an agreement about what the objectives of policy should be, what we know about the real world, and how to achieve these objectives, we should listen to economists, but we should not pay them any greater respect than to other people who are making valid arguments from other premises.

"In practice, we do that much of the time. We don't let economists run our society, although what central bankers are doing right now is coming dangerously close to that. I think we should listen to economists with respect. They are smart people, they have good arguments, but they don't have decisive arguments. In that respect, it's more like literature than like physics: When physicists agree, laypeople are in no position to contradict them, no position to argue. That's not the case with economists."

In your opinion, is Offer right on that?


@ B.L Zeebub - I was hoping to avoid that question! I wish Offer had given examples. Often, public "contradictions" of economists are based upon ignorance and prejudice - eg on fiscal policy and immigration - and an unwillingness to engage in proper debate, as I argued here:.
This paper discusses a common way in which economics is misperceived:
There is, though, more reasonable engagement. Eg a layman might ask: "why do you say immigration doesn't hurt low-wage workers when it looks to me as if it does?"
I'd hope that economists could and should engage on those terms. Sadly, though, the media and BBC deny us platforms for such rational debate.

Steven Clarke

"why do you say immigration doesn't hurt low-wage workers when it looks to me as if it does?"

Where economics is closer to literature than physics is in that it deals with psychology.

There are often conflicts between economic efficiency and psychology.

For example:

- Economics would say let markets determine incomes, then redistribute. But psychology may prefer pre-distribution, intervention in markets, as people are offended by pre-tax income inequality and dislike handouts.

- Economics supports higher taxes on property, land and inheritances rather than income, but psychology dislikes it as you notice when you pay it.

- Economics supports free trade (for labour as well as capital), but psychology dislikes the economic and cultural discombobulation.

In all these cases, the standard of economic efficiency (which is a hugely valuable tool) has to be supplemented by knowledge of psychology, politics and other diciplines.

I don't know whether economics deserves to "enjoy superior authority over other modes of discourse", but it shouldn't have sole authority.

Luis Enrique


also a role for exploring theoretical territory, seeing what results rest on etc. Akerlof introduced one change, blew everything apart. Could say econ also like philosophy. Some of the internet's leading heterodox critics seem puzzling opposed to this aspect of econ.*

you could say that we evolved trust to overcome the problem that Akerlof demonstrated would otherwise exist?

* well, it's not that puzzling: they are the equal and opposite theological sect to the one Romer depicts


Surprised Mirowski's name isn't on here, since he has a lot to say about economics as metaphor (in fact, it's his whole schtick) AND physics envy (I think it was his 1989 More Heat Than Light that really pushed this thesis into methodological discussions)


"Likewise, whilst there might be disagreement in economics, there can also be unity or at least general consensus about what constitutes rank bad economics."

I think that's absurd.

Do you think Keynes would have said such a thing?

Do you think mainstream and heterodox would say such a thing about each other?

The literature connection is important.

Brad Culkin

This is why I have long believed we need a Nobel prize for epistemology.

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