Comment by JumpCrisscross

Comment by JumpCrisscross 5 hours ago

> Physics can test those hypotheses under controlled conditions

I genuinely have no idea why so many commenters on HN will spout nonsense based on high school curriculum with the confidence of a PhD when it comes to economics, but won’t embarrass themselves in other fields.

Yes, economics—particularly microeconomics—is constantly subject to experimentation. Macroeconomics is closer to astronomy, in that models are developed, novel data sources sought, old models tested and then validated or rejected. Also like astronomy, or perhaps more accurately fundamental physics, it’s currently off in a loop of DSGE optimizations which are mathematically pretty for the field but not super interesting outside it. (This work is not in that category.)

belter 3 hours ago

That comparison collapses instantly. Physics has invariants...Economics does not. You can’t rerun the economy under controlled conditions, so “experiments” are mostly natural or quasi experiments...statistical patchwork with fragile assumptions.

Macroeconomics isn’t like astronomy :-) Stars don’t change behavior when you model them. Economies do. There are no stable primitives, no conservation laws, just shifting behavior and feedback loops.

DSGE models are equilibrium sandcastles calibrated to past data. In physics that’s failure while in macro it’s tenure.

Economics is interesting and sometimes useful but calling it an experimental science is self-flattery.

  “One thing we are not going to have, now or ever, is a set  of models that forecasts sudden falls in the value of financial assets.”

   -- Robert E. Lucas

 "As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools."

   -- Jean-Claude Trichet - https://www.ecb.europa.eu/press/key/date/2010/html/sp101118.en.html

 "How Conventional Wisdom Failed Us" - https://youtu.be/c8LMWCko4d0?t=138

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JumpCrisscross 2 hours ago

> You can’t rerun the economy under controlled conditions, so “experiments” are mostly natural or quasi experiments
...you can't rerun the universe under controlled experiments. That's the whole point of the "controlled" part. It's an artificially isolated environment designed to model a specific phenomenon.
If you want examples of thoroughly experimental economic disciplines, look to auction, bargaining and game theory.
> Macroeconomics isn’t like astronomy :-) Stars don’t change behavior when you model them. Economies do
Stars don't change, but the ways we look at them do. This sort of endogeneity in data collection and research methods is a constant source of noise and errors in the physical sciences.
You're correct in that it's much more pronounced in economics, since humans are agents. That puts boundaries on how much one can predict. But that doesn't make it unknowable through the scientific method.
> DSGE models are equilibrium sandcastles calibrated to past data. In physics that’s failure while in macro it’s tenure
I'm not going to defend DSGE any more than I will string theory. (I know a lot more about the former to be able to properly critique it than I do the latter.)
> Economics is interesting and sometimes useful but calling it an experimental science is self-flattery
I'm not an economist. But I apparently know more economics than a lot of people who make confident statements on this board about the field.
Several fields of economics are rigorously empirical. Others are strictly observational. And others are total nonsense. The fill of nonsense is higher than other fields, but that's mostly due to the relevance of the work. If the rise and fall of nations rode on the spectral pattern of Sagittarius A*, you'd probably have a lot of nonsense work around that, too.

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