I get very different results using the same heuristics. They may be overly vague, or too open to interpretation. It’s not clear that they’re useful for much other than rationalization.
Here, I’ll apply it point by point to microeconomics.
1: For example, microecon explains prices, essentially correctly, as arising out of supply and demand.
2: Adam Smith and many other economists have offered valuable and true advice about how to fix the economy, advice which worked repeatedly. Advice such as opening foreign trade.
3: Isn’t this just a variation on “fix”? See 2.
4: Economists can easily predict the results of various policies, such as, to give one instance, price controls. To give another, the establishment of monopolies.
5: Microecon has been put to the empirical test repeatedly—see 4. A satisfied prediction is a passed empirical test.
Are these points, any or all, debatable? I don’t think so. But the fact is you got 0⁄5 and I got 5⁄5. Makes me wonder about the real value of the heuristics as something other than rationalization.
It makes sense to consider microeconomics separately from macroeconomics, as the results are quite different. Maybe the heuristics are OK; you just need to clearly identify the field of study.
I was thinking mostly of macro-economics, but here goes:
1: For example, microecon explains prices, essentially correctly, as arising out of supply and demand.
Actually only in certain quite limited contexts. For example it has very little success in explaining prices in asset markets. In situations of monopoly or oligopoly it has little explanatory power—game theory is more relevant.
The situations of perfect competition, and perfect free knowledge of price and quality it does work but such situations are rarer than most economists seem to think.
Any even worse, blindness to the limitations of their theories leads to an inability to see the facts eg the unwillingness to notice market bubbles.
[good] Advice such as opening foreign trade.
The theory behind this basically assumes a static form of comparative advantage, that all players are time discounting profit maximizers, etc. Again economists are blind to the failure of free trade when its consequences are adverse eg the deskilling of the US workforce and the jobs that are never coming back, and when the assumptions are not met eg when countries employ protectionist policies strategically in support of objectives that go beyond time-discounting profit maximization.
4: Economists can easily predict the results of various policies, such as, to give one instance, price controls.
Economic theory would have us believe that price controls cause a mismatch between supply and demand and the development of shortages. This is often not the case eg when suppliers are making profits in excess of their costs.
More generally economics as it is practised is generally blind to unmet assumptions, distributional effects, institutional effects and irrational behavior.
One set of heuristics I use...
“You claim to be an expert. Can you
Explain things that are not explicable in other ways (where the explanation is simpler than the result)?
Fix broken things so they work again?
Design and/or build things or perform procedures that have unusually useful results?
Predict the future (with predictions documented in advance)?
Do you test your theories empirically (-1 if the standard of truth is simple ‘consensus’)?”
As a case study, consider economics. I would give economists 0⁄5 on this test. Freudian psychoanalysis would also get minus 1 out of 5.
On global warming, on my reading I would give the received wisdom 4⁄5 and the sceptics 0⁄5.
I get very different results using the same heuristics. They may be overly vague, or too open to interpretation. It’s not clear that they’re useful for much other than rationalization.
Here, I’ll apply it point by point to microeconomics.
1: For example, microecon explains prices, essentially correctly, as arising out of supply and demand.
2: Adam Smith and many other economists have offered valuable and true advice about how to fix the economy, advice which worked repeatedly. Advice such as opening foreign trade.
3: Isn’t this just a variation on “fix”? See 2.
4: Economists can easily predict the results of various policies, such as, to give one instance, price controls. To give another, the establishment of monopolies.
5: Microecon has been put to the empirical test repeatedly—see 4. A satisfied prediction is a passed empirical test.
Are these points, any or all, debatable? I don’t think so. But the fact is you got 0⁄5 and I got 5⁄5. Makes me wonder about the real value of the heuristics as something other than rationalization.
It makes sense to consider microeconomics separately from macroeconomics, as the results are quite different. Maybe the heuristics are OK; you just need to clearly identify the field of study.
I was thinking mostly of macro-economics, but here goes:
Actually only in certain quite limited contexts. For example it has very little success in explaining prices in asset markets. In situations of monopoly or oligopoly it has little explanatory power—game theory is more relevant.
The situations of perfect competition, and perfect free knowledge of price and quality it does work but such situations are rarer than most economists seem to think.
Any even worse, blindness to the limitations of their theories leads to an inability to see the facts eg the unwillingness to notice market bubbles.
The theory behind this basically assumes a static form of comparative advantage, that all players are time discounting profit maximizers, etc. Again economists are blind to the failure of free trade when its consequences are adverse eg the deskilling of the US workforce and the jobs that are never coming back, and when the assumptions are not met eg when countries employ protectionist policies strategically in support of objectives that go beyond time-discounting profit maximization.
Economic theory would have us believe that price controls cause a mismatch between supply and demand and the development of shortages. This is often not the case eg when suppliers are making profits in excess of their costs.
More generally economics as it is practised is generally blind to unmet assumptions, distributional effects, institutional effects and irrational behavior.