My transition from graduate astronomy to economics was baffling. Economists, I found, thought they could not be scientific because they couldn’t do experiments. Did they think Astronomers were busy experimenting on stars? (Alan Blinder was still using this excuse in 2014.) Of course, parts of economics were scientific even back then. But times have changed and economics is now progressing toward a scientific perspective thanks to behavioral economics and people like Esther Duflo.

On this site, I will discuss problems caused by the unscientific nature of economics, and attempt to make some progress toward a more scientific theory of cooperation.

What is science?

Math is not science. Or as the great physicist Richard Feynman put it, “Physics is to math as sex is to masturbation.” I mention this only because I was told, not long ago, by a noted French economist that math definitely was science—and there was no talking him out of it. But math, like English, is just a descriptive tool. Yes, it’s an extremely powerful tool in many cases, but it’s a tool that can just as easily describe the unreal as the real. Science is the process of telling those two apart and math doesn’t help make that distinction.

Several popular misconceptions about science have long confused the discussion of whether economics can be a science. The two most common misconceptions are:

1. All scientific hypotheses must be validated by controlled experiments.
2. Scientific theories must yield numerically precise predictions.

A moment’s reflection on actual science reveals these to be poppycock. First, there are few theories in astronomy have ever been checked experimentally. For example, the theory of planetary formation was not tested by forming planets in the laboratory.

Similarly, the theory of evolution does not allow us to predict, even roughly, what new species will evolve in any particular ecosystem. But that does not make the theory of evolution unscientific.

The heart of the scientific method is actually quite simple:

1. Form a hypothesis about what causes something to happen in the real world.
2. Check that hypothesis by observing the real world.
3. If it can’t be checked or if it fails the check, it’s not accepted as science.

This is completely different from mathematics:

1. Make any set of logically consistent assumptions you like.
2. Use them to prove something you find pleasing.

Neoclassical economics seems to mistake math for science, apparently due to physics envy and the fact the physics uses hard math. The difference is that physicists just use math as a tool to do science.

To check a hypothesis, ask what it predicts, and then check the prediction. For example, the hypothesis that a market is wobbling around a competitive equilibrium (the realistic version of perfect competition) makes a clear prediction: About half the firms would like to be larger and about half would like to be smaller. Although that’s the most obvious simple prediction, I’ve never heard it mentioned, probably because it is unlikely to prove true.

Scientific Assumptions

Scientific assumptions are basic facts that can be used to logically deduce more complex results. The assumption that gravity weakens with the square of the distance is crucial for explaining planetary orbits. When an assumption has not been scientifically checked or has been disproven, results based on it can’t be considered scientific. Economics’ most famous result, the first welfare theorem, is such a result. It’s based on a disproven assumption, and so it is not a scientific result. It just a pleasing mathematical theorem.

Alan Blinder Footnote:

In Blinder’s review (NYRB, 12/18/2014) of Seven Bad Ideas by J. Madrick, he agrees with Madrick’s bad idea #7 that “economics is a true science,” but claims “hardly anyone ever believed it.” Well, yes, but why isn’t it? And should it be a true science? It’s rather like geology, and that’s a true science.

Straight away Blinder admits that he has “long been distressed by the high correlation between economists’ political views and their allegedly objective research findings.” So that’s one reason it’s not a true science. But Blinder “pleads for a lenient sentence because we economists rarely can conduct controlled experiments.”

For his field, macroeconomics, that’s certainly true. But what he does not say is most telling. Doing experiments is not necessary for true science. Discovering the distance to the moon (Aristarchus, 270 BC), the radius of the earth (Eratosthenes, 194 BC) and that the earth goes around the sun and not vice versa, were all brilliant, truly scientific discoveries. So was evolution. So is most geology, and most contemporary astronomy.

What’s clear is that a second reason (besides politics) that economics is not a true science is that even the best economists (Blinder is among them) have not given five minutes of thought to what science is or how economics could become a science. In my four years as a graduate student at UC Berkeley, I did not hear the subject of science or the scientific method raised once by anyone but myself. Conversely, physicists and astronomers, who do understand science, discuss it fairly frequently.

You can’t expect a field to be scientific when most of its practitioners have never given any serious thought to what science is, nor studied any field that is scientific.