Indonesia | Economics

Wednesday, October 01, 2008

The utility of math

David Colander, reviewing this book, observes:
Economists have a tendency to obfuscate and lose themselves in a maze of equations and statistical tests that often have little intuitive meaning to the researcher, let alone to policymakers. My quest in economics has been to fight against those tendencies in applied policy work. But despite econommists' faults, I have to admit that their medium -- equations and statistical tests -- places a limit on the obfuscation that occurs. Ultimately the equations have to parse. Language -- the medium of sociologists and science scholars -- imposes fewer limits, which makes it easier for them to obfuscate. (JEL, XLVI/3, 78)

...which, I think, explains why it's much easier to do good economics than other social sciences.

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  • there is certainly more rigor in economics compared to other social sciences. but rigor has nothing to do with substance, only consistency. syntax, not semantics. i'm not sure how easy it is to do good economics, when the main problems, in my view, are problems of substance and semantics.

    By Anonymous tirta, at 10/13/2008 02:59:00 am  

  • Tirta:
    Can you elaborate what you mean by problems of substance and semantics? Are these problems unique to economics?

    By Blogger Arya Gaduh, at 10/13/2008 12:02:00 pm  

  • by substance i mean asking the right questions and making the right assumptions. doing social sciences, not just economics, is hard because we're still not sure where to effectively *carve* the joints.

    i agree with you that it is harder to obfuscate the workings behind any economic problem. but this is no guarantee that you are tapping reality as it is. financial engineering is surely very rigorous and logically consistent -- but look where it has gotten us today.

    By Anonymous tirta, at 10/13/2008 01:44:00 pm  

  • Tirta:
    I agree, but the problem of figuring out the right questions, and making the right assumptions is the same everywhere, even in the so-called "hard" sciences (eg., theoretical physics).

    The reason it's harder for social sciences, I think, is because:

    (a) we are very limited in terms of the kind of social experiments that we are allowed to do (hence, empirical verifications of theories are harder to come by); and

    (b) humans are reflective, and can use knowledge from social science to change behaviour.

    As per financial engineering, I don't know much about it -- other than that it's a technique to exploit probabilities to make lots of money for firms on average -- but I don't think it's meant to protect the financial system from a crisis.

    By Blogger Arya Gaduh, at 10/13/2008 02:02:00 pm  

  • There's very little economics in financial engineering. It's a combination of mathematical finance, numerical methods and stochastic processes.

    By Blogger Puspini, at 10/29/2008 09:27:00 am  

  • are these problems unique to economics?

    By Anonymous duniaku, at 2/22/2015 10:09:00 pm  

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