August 20, 2009

Economics is not science

I had two survey courses in Economics, maybe not enough to make this statement, but I have been immersed in math at times and feel that economics is more closely related; a cross between math and psychology. I had never been able to argue why it is not science. I cannot say that he thinks as I, but a fellow blogger, Emil Jung has wrote a post which perfectly describe my thoughts. I can not adequately paraphrase his post, Proof, not truth . It is written so that I would have to quote the whole post. Follow the link.

There are those that follow a specific theory of economics as if it is the absolute truth and think that the unfettered free market will solve all problems of society. It is interesting that when the markets failed recently there was never a question that somehow they could not rely on their economic theory, only that there were variables that kept it from being a true market. Okay lets look at the variable, a mathematical term. They can prove a specific outcome if every variable is known and when it applies to science, experiment has to define these variables. In a sentient world where there is consciousness outside of the natural world, those variables can change in an instant following no particular pattern. Human behavior is not like Quantum Physics. The best predictor of human behavior is another human not mathematics. In the PBS series,
The Ascent of Money, Niall Ferguson interviews a top hedge fund CEO Ken Griffin. He describes how mathematics and intuition plays a role in assessing risk. Here is the interview, it is within the first three minutes of this video.

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