Jan 9, 2014

The 10 Biggest Myths In Economics - №10 - Economics is a Science

Business Insider has a worth-reading article today - The 10 Biggest Myths in Economics. There are some good points and myths-busting. Number 10 is Economics is a Science. It goes :

"Economics is often thought of as a science when the reality is that most of economics is just politics masquerading as operational facts.  Keynesians will tell you that the government needs to spend more to generate better outcomes.  Monetarists will tell you the Fed needs to execute a more independent and laissez-fairre policy approach through its various policies.  Austrians will tell you that the government is bad and needs to be eliminated or reduced.   All of these “schools” derive many of their understandings by constructing a political perspective and then adhering a world view around these biased perspectives.  This leads to a huge amount of misconception which has led to the reason why I am even writing a post like this in the first place.  Economics is indeed the dismal science.  Dismal mainly because it’s dominated by policy analysts who are pitching political views as operational realities."

After so many books on economics and history and I would probably be first to smile at these lines. But neither I nor the article is entirely right about that. The economics as we know it probably partially fits this description. However, society and its expectations from governments are changing the game. Economists and policy makers balance among many shareholders and development goal and need solid grounds for their decision more than ever. They are among the first to adopt the approaches of decision sciences, data science, data analytics and other. It is entirely different discussion how successful they are at this but we cannot deny the effort. 

On the other hand, economics as part of the knowledge covers much more than described macro-economic theories mentioned in the article. The other parts more or less are about being successful on the market, managing companies and so on - this is not the most accurate definition but it is correct in most general terms. These "other parts" do not obey that much the big theories and in their search of better ways to understand markets they employ the best any science could offer. An army of analysts, data scientist, coders, data analyst and other are making their living with applying scientific methods to give companies advantage on the market. It is not a big surprise that many of Nobel prize winners are mathematicians who applied their knowledge to a specific problem.

The measure if something is science or not is the application of the scientific approach. As far as I am concerned it is applied so we could safely assume it is a science. Again, there are plenty of misuses, but let stick to the definitions. I guess Mr Taleb would throw me out of his cohort after these words. Nevertheless, the article is a good read.

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