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Fri Nov 30, 2012, 04:46 PM

Economics is a soft science, but still a science

And the democratic (small d) "let's vote on science" impulse is as dangerous with economics as with epidemiology.

(In 1980 we had a de facto referendum on the proposition that cutting taxes increases revenues, which is about the same as a referendum on whether vaccines work, how old the earth is, etc.. It was an economic claim of fact that was rejected by almost 100% of economists, but was embraced by voters and politicians. It turned out to be false... big surprise.)

There are at least 500 people in Congress who could not offer any explanation of why we have record low interest rates despite having a high federal budget deficit.

And if you cannot explain that then what use is your opinion on the deficit?

This does not mean they are "dumb." It means that their opinion on the deficit is without value. If congress is choosing one of two bridge designs it would be extraordinary for them to invoke 'common sense' that cantilevers don't work, or that the solid road-bed on a suspension bridge can't be flexible because roads are supposed to be hard.

There is one glaring, central phenomenon related to the deficit question. Why do we have very low interest rates despite having a very high deficit? If one cannot explain that undeniable fact then one has no valid theory of deficits and interest rates.

And how can someone with no valid theory of what the deficit even does have a worthwhile opinion about what to do about the deficit?

We all have a human right to believe the world is flat. We have a right to teach and promote that idea.

But the fact that our human dignity demands that we be allowed to hold erroneous ideas does not mean that erroneous ideas deserve respect as ideas.

There is no economic reason, in 2012-2013, to be doing anything about the deficit except expanding it.

The counter to that would be an economic reason--a prediction of real world quantifiable effect--that is bad enough to offset the bad that we know exists on the deficit-cutting side of the scale.

The closest we get to that is senile fiscal pervert Alan Simpson talking about how interest rates will go up any day now... which he has been saying every day since the 1980s.

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Arrow 47 replies Author Time Post
Reply Economics is a soft science, but still a science (Original post)
cthulu2016 Nov 2012 OP
NoOneMan Nov 2012 #1
a geek named Bob Nov 2012 #2
NoOneMan Nov 2012 #4
cthulu2016 Nov 2012 #7
NoOneMan Nov 2012 #17
a geek named Bob Nov 2012 #13
NoOneMan Nov 2012 #20
a geek named Bob Nov 2012 #24
NoOneMan Nov 2012 #25
a geek named Bob Nov 2012 #26
tama Nov 2012 #35
tama Nov 2012 #36
NoOneMan Dec 2012 #38
tama Dec 2012 #40
a geek named Bob Dec 2012 #45
NoOneMan Dec 2012 #46
a geek named Bob Dec 2012 #47
tama Nov 2012 #34
cthulu2016 Nov 2012 #3
NoOneMan Nov 2012 #5
caraher Nov 2012 #15
Shivering Jemmy Nov 2012 #16
NoOneMan Nov 2012 #18
FarCenter Nov 2012 #23
Shivering Jemmy Nov 2012 #31
unc70 Nov 2012 #32
Shivering Jemmy Dec 2012 #41
1-Old-Man Nov 2012 #11
tama Nov 2012 #28
tama Nov 2012 #27
HereSince1628 Nov 2012 #6
gravity Nov 2012 #9
laundry_queen Nov 2012 #19
tama Nov 2012 #30
gravity Nov 2012 #33
Recursion Dec 2012 #43
Recursion Dec 2012 #44
cthulu2016 Nov 2012 #10
gravity Nov 2012 #8
a geek named Bob Nov 2012 #14
1-Old-Man Nov 2012 #12
FarCenter Nov 2012 #22
FarCenter Nov 2012 #21
Capt. Obvious Nov 2012 #29
TheKentuckian Nov 2012 #37
Egalitarian Thug Dec 2012 #39
Recursion Dec 2012 #42

Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 04:57 PM

1. Yeah, its as scientific as alchemy

 

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Response to NoOneMan (Reply #1)

Fri Nov 30, 2012, 05:00 PM

2. care to elaborate on your witty comment?

 

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Response to a geek named Bob (Reply #2)

Fri Nov 30, 2012, 05:17 PM

4. Its junk science

 

Please read:
The Cult of the Market

The practitioners bastardize real scientific formulas to explain--or dictate--isolated social phenomena according to bias.

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Response to NoOneMan (Reply #4)

Fri Nov 30, 2012, 05:27 PM

7. That book is about pathological fundamentalism within economics.

I think most people, including many economists, agree that pathological fundamentalism is not a good thing.

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Response to cthulu2016 (Reply #7)

Fri Nov 30, 2012, 06:02 PM

17. Its about a good deal more than that

 

One further consequence is that generalisations in the social
disciplines are generally narrow in scope. Nagel suggests:

The conclusions reached by controlled study of sample data drawn
from one society are not likely to be valid for a sample obtained from
another society. Unlike the laws of physics and chemistry, generalisations
in the social sciences therefore have at best only a severely restricted
scope, limited to social phenomena occurring during a relatively brief
historical epoch within special institutional settings
.

Similarly, Gergen tells us that there are few patterns of human action that are
not subject to significant alteration, while cultural anthropologist Roy D’Andrade
records that the different fields of science have different canons of
generalisation. While researchers aspire to tell integrative stories, it could be
simply inappropriate for social researchers to seek to emulate the natural sciences
in an attempt to derive ‘fundamental general laws’ describing human conduct.
Cronbach argues that this particular idealisation of scientific research—the
development of general lasting laws on the model of parts of physics
—is not achievable in the social disciplines.


Economics is probably applicable in the context of our society because we are forced (by law and itself) to follow them. Its a self perpetuating system that simply defines the mechanisms that it forces people to be bound to, but that in itself doesn't make this study of economics as absolute or applicable to other societies.

Hide-and-seekenomics dictates, as an observable scientific rule, that he who does not hide will be more likely to be found. But only for those forced to play that game does that science make any real sense whatsoever. For everyone outside a game of hide-and-seek who knows how to live without it, all of its laws (similar to physical laws or not) are arbitrary, thereby suggesting they are not laws at all. Similarly, this is why I have found that economic laws (modeled from physical laws), are not laws either, but made up rationale--by the elites--for why poor people slave and still starve.

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Response to NoOneMan (Reply #4)

Fri Nov 30, 2012, 05:54 PM

13. That's a little better...

 

At least you have some sort of basis for your sneers.

Mind you, I'll give economists the benefit of the doubt... There's a lot of noise in the system.

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Response to a geek named Bob (Reply #13)

Fri Nov 30, 2012, 06:23 PM

20. See...

 

Im not just an irrational luddite. I also have a great disdain for your economic system, which has evolved to be incredibly efficient at increasing the velocity of energy. Just don't get me started on Jazz.

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Response to NoOneMan (Reply #20)

Fri Nov 30, 2012, 06:41 PM

24. I rather like jazz...

 

As I've said, repeatedly, if YOU want to do or not something... have at it.

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Response to a geek named Bob (Reply #24)

Fri Nov 30, 2012, 06:57 PM

25. Ill be shot or imprisoned for what I want to do by your beloved civilization

 

My hand has been forced since I was born by a system not of my choosing. I cannot even habitat land of my choosing naturally, and culture it, as my ancestors did.

Ironically, one of the greatest things I can do with all my "promise" and "potential"--as well as the investment in me--is to do nothing.

Frankly, it wasn't until right now that I fully realized that, and perhaps I should embrace that as my driving philosophy. In your honor, I'm going to go smoke some nice grow.

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Response to NoOneMan (Reply #25)

Fri Nov 30, 2012, 07:08 PM

26. I'll give you points for honesty...

 

If smoking is your thing... have at it.

If your actions bring the LEOs after you... that's your consequences.

In your honor, I'll go read another book.

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Response to NoOneMan (Reply #25)

Fri Nov 30, 2012, 10:26 PM

35. Welcome to the

 



And if you should get bored of the slacker strike and your heart desires you to grow some more, make a trip and visit places where people are to the best of their ability learning to live according to what you also believe in. There are many such places, this is a list of just few: http://directory.ic.org/records/ecovillages.php

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Response to NoOneMan (Reply #25)

Fri Nov 30, 2012, 10:31 PM

36. Do Nothing

 

Do Nothing Farming was great inspiration for me when I decided to learn gardening: http://en.wikipedia.org/wiki/Natural_farming

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Response to tama (Reply #36)

Sat Dec 1, 2012, 01:39 AM

38. Thanks

 

Interesting concept. I am a big fan of forest gardens/agroforestry, but this takes it a bit further. This is what I am ultimately motivated to do, though, as mentioned before, setting up shop on any ol piece of land will get me shot.

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Response to NoOneMan (Reply #38)

Sat Dec 1, 2012, 02:36 AM

40. Where I live (Finland)

 

you can get fresh clear cut rapes by forest industry pretty cheap, as with the clear cut system they make money next time after 80 years. I've learned that lots of people are doing forest gardens also in the vacant lots of rust belt cities like Detroit, where there is also significant squatter subculture (and no, they don't get shot any more than other people). But as I said, going around and looking for an established permaculture community that suites your tastes would be the easier way. Any case would not hurt to get in touch with like minded people and the larger community. But each to their tastes...

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Response to NoOneMan (Reply #38)

Sat Dec 1, 2012, 01:05 PM

45. You're being melodramatic...

 

The LEOs are unlikely to shoot you. They'll just fine or arrest you.

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Response to a geek named Bob (Reply #45)

Sat Dec 1, 2012, 01:24 PM

46. But the property "owners"?

 

Yeah, you just can't setup shop anywhere you want risk free. Its not melodramatic. Its reality.

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Response to NoOneMan (Reply #46)

Sat Dec 1, 2012, 01:39 PM

47. okay...

 

Most property owners I know, or have heard of, will tell you to leave. If you don't They'll call the cops. Admittedly, if you get pushy about it, you're dealing with the results of your actions - but then they'll likely just hit you a few times, and THEN get the cops.

If you WANT to get shot, I'm sure there are people willing to do it...

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Response to NoOneMan (Reply #20)

Fri Nov 30, 2012, 10:18 PM

34. Luddites were not irrational at all nt

 

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Response to NoOneMan (Reply #1)

Fri Nov 30, 2012, 05:09 PM

3. Economics makes many testable claims, offers many reproducible results

For practical reasons macro-economics cannot be an experimental science, but neither can cosmology or a lot of aspects of geology, paleontology, etc..

A lot of worthwhile science is done through theory and observation.

If Hershey raises the price of a Hershey bar to $5.00, all other things being equal, unit sales of Hershey bars will decrease.

What does alchemy offer us along those lines?

If economics were on par with astrology then you would have no rational basis for having any opinions on taxes and spending.

You do have such opinions, as we all do. Do you consider them irrational? Random? Are they the same as your opinion of the next number to come up on a roulette wheel?

If economics were not a science how could the CBO project anything? Are those projections exactly right? No. Are they better than a random choice?

How do they manage be better than a random choice if the science underlying them is meaningless?

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Response to cthulu2016 (Reply #3)

Fri Nov 30, 2012, 05:22 PM

5. Economics is like making up a game with rules...

 

Then forcing everyone to follow those rules and concluding that since the rules are followed the game is true.

But the game is still made up.

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Response to NoOneMan (Reply #5)


Response to NoOneMan (Reply #5)

Fri Nov 30, 2012, 05:58 PM

16. You have heard of game theory right?

Once you know a games rules you can reason about the consequences of those rules, firm theories about likely results and do experiments to test those theories.

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Response to Shivering Jemmy (Reply #16)

Fri Nov 30, 2012, 06:13 PM

18. This game governs our lives and survival...

 

...so shouldn't we ensure that it is necessary, valid, just and absolutely "true"?

Instead, we have a "science" originally developed by elites explain how a system *should* work according to their biases, which has manifested into a biased system that does work that way. Sure, you can say the study of this human-constructed system can be scientific in nature, though the "study" of it is actively involved in changing and refining it according to more human bias.

The only "science" involved here is watching what happens when humans force others to live a specific way that they change over and over. In all, its a self-perpetuating pile of cess.

While pure observation of a pile of cess is science or not, it is not applicable in any context outside of the pile of cess as most science is. So, take what you will from that.

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Response to Shivering Jemmy (Reply #16)

Fri Nov 30, 2012, 06:28 PM

23. Game theory is math.

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Response to FarCenter (Reply #23)

Fri Nov 30, 2012, 07:46 PM

31. Sometimes

But sometimes it's science. When you know a game has been constructed but the interactions are too complex to tease apart analytically you can create experiments to determine those rules. This is especially useful in situations where emergent phenomenon occur.


And even making the distinction between science and math is problematic. See Quine's argument regarding the analytic vs synthetic distinction and how artificial it can be.

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Response to Shivering Jemmy (Reply #16)

Fri Nov 30, 2012, 08:34 PM

32. Game theory is math, economics is BS

My first peer reviewed pub in the intersection of those fields was 40 years ago. We could disprove several Nobel laureates to-be at the time. Mostly Chicago-school misunderstood game theory, misapplied it to economics, and then got the math wrong. Other than that, what can I say.

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Response to unc70 (Reply #32)

Sat Dec 1, 2012, 09:17 AM

41. As I noted above

The distinction between math and experimental science gets hairy when the math gets intractable. Putting that aside though, it's a mistake to talk about economics. Whose economics is the question. The Chicago school isn't the only one out there.

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Response to cthulu2016 (Reply #3)

Fri Nov 30, 2012, 05:44 PM

11. Bravo!

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Response to cthulu2016 (Reply #3)

Fri Nov 30, 2012, 07:38 PM

28. It's a lunatic cult

 

based on totally false basic assumptions. Repost of Fudnik: http://www.democraticunderground.com/111623416#post2


http://www.scientificamerican.com/article.cfm?id=the-economist-has-no-clothes


The Economist Has No Clothes

Unscientific assumptions in economic theory are undermining efforts to solve environmental problems

By Robert Nadeau

The 19th-century creators of neoclassical economics—the theory that now serves as the basis for coordinating activities in the global market system—are credited with transforming their field into a scientific discipline. But what is not widely known is that these now legendary economists—William Stanley Jevons, Léon Walras, Maria Edgeworth and Vilfredo Pareto—developed their theories by adapting equations from 19th-century physics that eventually became obsolete. Unfortunately, it is clear that neoclassical economics has also become outdated. The theory is based on unscientific assumptions that are hindering the implementation of viable economic solutions for global warming and other menacing environmental problems.

The physical theory that the creators of neoclassical economics used as a template was conceived in response to the inability of Newtonian physics to account for the phenomena of heat, light and electricity. In 1847 German physicist Hermann von Helmholtz formulated the conservation of energy principle and postulated the existence of a field of conserved energy that fills all space and unifies these phenomena. Later in the century James Maxwell, Ludwig Boltzmann and other physicists devised better explanations for electromagnetism and thermodynamics, but in the meantime, the economists had borrowed and altered Helmholtz’s equations.

The strategy the economists used was as simple as it was absurd—they substituted economic variables for physical ones. Utility (a measure of economic well-being) took the place of energy; the sum of utility and expenditure replaced potential and kinetic energy. A number of well-known mathematicians and physicists told the economists that there was absolutely no basis for making these substitutions. But the economists ignored such criticisms and proceeded to claim that they had transformed their field of study into a rigorously mathematical scientific discipline.

Strangely enough, the origins of neoclassical economics in mid-19th century physics were forgotten. Subsequent generations of mainstream economists accepted the claim that this theory is scientific. These curious developments explain why the mathematical theories used by mainstream economists are predicated on the following unscientific assumptions.


That does not mean that economics can't be self correcting and to become part of physical world in meaningful way, based on physics and biology environmental sciences, but in it's current state its woo and worse.

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Response to NoOneMan (Reply #1)

Fri Nov 30, 2012, 07:31 PM

27. Discussed here:

 

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 05:27 PM

6. I wonder about that realtive to national science ed standards.

I think economics certainly CAN be empirially based

I'm pretty sure that economics sometimes uses surveillence and theoretical methods.

But I'm not at all sure that it uses either natural or manipulated experiments.

Setting aside the strawman type alternative hypothesis testing of statistics, I'm not sure there is any hypothesis testing.

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Response to HereSince1628 (Reply #6)

Fri Nov 30, 2012, 05:33 PM

9. A lot of economics is empirically based

then conservatives stopped liking the findings, so they invented their own economics.

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Response to gravity (Reply #9)

Fri Nov 30, 2012, 06:17 PM

19. That's exactly what happened.

Also, like how cancer cures may work in a petri dish, it's no guarantee the same substance will work on a large scale for the general public. In a vacuum, a lot of the economic laws make sense. We don't live in a vacuum - there are far too many uncontrollable variables in the economy for the laws to work on a consistent basis.

Keynesian economics has been proven again and again to work well much of the time (barring bad timing for stimulus/austerity and missing the right point in the business cycle) and the conservatives hate that and like all of their lies, they claim Friedman and the monetarist theory are better, despite zero evidence to support that, yet they keep saying it's better. Like everything else, they think if they can yell louder and repeat it as many times as possible, somehow that will MAKE it true.

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Response to laundry_queen (Reply #19)

Fri Nov 30, 2012, 07:43 PM

30. Aggregate demand of Keynesian economics

 

is idiotic notion of actively forgetting and denying the material limits of growth.

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Response to laundry_queen (Reply #19)

Fri Nov 30, 2012, 08:48 PM

33. Keynesian and monetarist theories are compatable

Both theories have evidence to empirical evidence to back them up. Keynesians adapted their models to incorporate monetary policy as a tool to help the economy.

Not every conservative economic idea is wrong. Cap and trade was originally a conservative idea for example.

The problem is the neo-classical and supply-side economics which are complete voodoo.

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Response to gravity (Reply #33)

Sat Dec 1, 2012, 09:21 AM

43. Even Marxists believe in the price signal nowadays

Yeah, we don't want to throw the baby out with the bathwater. Friedman himself (not Friedman's followers, though) had some good ideas about money supply.

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Response to laundry_queen (Reply #19)

Sat Dec 1, 2012, 09:29 AM

44. Keynes wrote in the context of commodity standard

Pure fiat currency was not something he contemplated, and we don't actually know what his suggestions would have been in a situation like this.

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Response to HereSince1628 (Reply #6)

Fri Nov 30, 2012, 05:36 PM

10. Macro is like cosmology

Certain types of experiment that would be useful are impossible, but that doesn't mean it isn't scientific.

99% of what we know about evolution comes from (non-experimental) observation of nature and testing theory against observation.

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 05:31 PM

8. The conservative movement corrupted the soft science with politics.

Especially when it comes to macroeconomics.

The good ideas get buried behind people with political agendas.

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Response to gravity (Reply #8)

Fri Nov 30, 2012, 05:56 PM

14. I'd broaden that one...

 

I think that pretty much each and every political and social movement has tried to corrupt the soft sciences.

Remember... Weber and Horkheimer - pioneers in social sciences - were NOT conservatives.

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 05:45 PM

12. Sheeeet, most people don't know the difference between finance and economics.

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Response to 1-Old-Man (Reply #12)

Fri Nov 30, 2012, 06:27 PM

22. Finance is a multiplayer, networked, electronic game

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 06:24 PM

21. It is not because much of economics depends on artificial laws, regulations, tax codes, accounting

standards and other things that codify the whimsies of the powers that be.

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 07:40 PM

29. Oh yeah? Well what does the bible say?

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Response to cthulu2016 (Original post)

Fri Nov 30, 2012, 11:08 PM

37. Our economics are a lot more religion than anything else.

It isn't surprising that the believers in the gotcha man, fire and brimstone, authoritarian flavor of deity also buy in lock, stock, and barrel on do anything for that dollar, you are on your own, fuck you, I got mine, social Darwinist Voodoo Economics.

Mammon is a fucking intergalactic scale dumpsterfuck.

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Response to cthulu2016 (Original post)

Sat Dec 1, 2012, 02:11 AM

39. sci·ence (sahy-uh ns) noun

 

1. a branch of knowledge or study dealing with a body of facts or truths systematically arranged and showing the operation of general laws: the mathematical sciences.

Nope, not here; There is not even consensus as to what constitutes the facts, and demonstrably significant influences are simply disregarded because they are not easily quantified.

2. systematic knowledge of the physical or material world gained through observation and experimentation.

You yourself state that "macro-economics cannot be an experimental science". Observed economic phenomenon are inconsistent and dependent on a myriad of cultural, geographical, monetary, and even sexual variables which the practitioners of this mysticism regularly disregard.

3. any of the branches of natural or physical science.

This obviously doesn't apply.

4. systematized knowledge in general.
&
5. knowledge, as of facts or principles; knowledge gained by systematic study.

One of these seems your best hope. There are several dozen systems built around theories based on partial knowledge of select facts. But again, we come back to that one nasty fact that both the good (predictions of behavior appear to conform more or less with reality much of the time) and bad (wrong almost all the time) practitioners can't agree on much of anything except that if we stick with it long enough and provide enough grants they're going to figure it out. Someday. Maybe.

Perhaps 21st century economics is like 18th century medicine and, given enough time, they might someday figure out how not to kill most of their patients.

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Response to cthulu2016 (Original post)

Sat Dec 1, 2012, 09:20 AM

42. It *can be* a science if its claims are validated by observation

Some of my economist friends seem to think it's the math they do that makes it a "science". This troubles me.

Hypothesize and validate with observation. The rest is just bookkeeping, as Feynman said.

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