The Book of Arnold on the Economics Profession

I am adding a new section, which includes the following:

In general, I shy away from using the term “social science,” because I do not think that economists can aspire to the same level of falsifiability as physicists. I believe that the difference between social science and natural science boils down to this:

In natural science, there are relatively many falsifiable propositions and relatively few attractive interpretive frameworks. In the social sciences, there are relatively many attractive interpretive frameworks and relatively few falsifiable propositions.

The reason that there are relatively few falsifiable propositions in the context of social phenomena is that there are many causal factors, and decisive experiments are rarely possible. Social phenomena are characterized by high causal density, to borrow a term from James Manzi.

As a result, economics is closer to history than to physics. If a historian wants to examine the causes of the decline of Rome, or the decline of empires in general, he or she will provide an interpretive framework. That framework cannot be falsified, but readers can compare it to other frameworks and make judgments about its plausibility.

For example, consider the phenomenon of the comparative salaries of men and women. Economists interpret salaries using the framework of human capital. That is, workers bring to the market different levels of ability, training, and experience, and this determines what they are able to earn. Sociologists use a framework that emphasizes group identity, status, and power, with men the more dominant group and women the more oppressed group.

If a study suggests that women earn less than men, even when controlling for years of education and other indicators of human capital, then this is anomalous for the economists. If a study suggests that most of the lowest-paying occupations are predominantly occupied by men, then this is anomalous for the sociologists. However, such observations will not prove decisive. By invoking other factors to explain anomalous results, each side can remain unmoved. Economists will not abandon their human capital framework, nor will sociologists abandon their group status framework.

. . .Economists who employ models think of themselves as “doing science,” meaning that they are generating falsifiable propositions. However, in practice, they rarely reject their preferred models. Instead, they explain away anomalous observations. In that sense, they are really using their preferred models as interpretive frameworks.

The Book of Arnold contains sections like this one, which argue in general terms against MIT economics. It also contains sections about practical issues, such as environmental sustainability and housing policy. The methodological sections are intended to mean something to Ph.D economists. The practical sections are intended to resonate with students and others who have much less economic background. It could be that there are diseconomies associated with trying to reach both audiences.

9 thoughts on “The Book of Arnold on the Economics Profession

  1. Writes Arnold,

    “In natural science, there are relatively many falsifiable propositions and relatively few attractive interpretive frameworks. In the social sciences, there are relatively many attractive interpretive frameworks and relatively few falsifiable propositions.”

    This and the entire post is absolutely brilliant.

    However, I fail to see a coherent application of Arnold’s social-scientific agnosticism in his writing in so far as he maintains, it appears to me, a rather rigid or conventional commitment toward libertarian preconceptions or preferences for selective perception (e.g. a penchant for the public choice perspective, which is at best a segment in a far larger agnostic spectrum).

    Another implication of his agnosticism would seem to strongly suggest that politics, a politicised society should be regarded a normal condition, rather than a wicked outgrowth of leftist activism/preponderance and/or the result of dissenters being social-scientifically less educated than the likes of him are.

    On reading brilliant scholars (recent reads of mine, which is why I mention them specifically) like Geoffrey Hodgson

    http://www.geoffrey-hodgson.info/webnotes.htm

    or Warren Samuels, I never cease to be taken aback by the utter crudeness of the leftist arguments they revert to when it comes to run-of-the-mill political issues – there is a complete disconnect between the sophistication of their minds and the triteness of their political affiliation, as if one did not have anything to do with the other.

    Excuse my being rather cheeky here, but dare I say, I seem to detect a certain political stubbornness, an ideological inertia in Arnold that does not always square with his own writing.

    • Public choice, for example, is not “libertarian.” It is more “duh.” The libertarian part comes in when asking why something so obvious would be ignored and denied for so long.

      • I have difficulties grasping your logic. Consulting the Urban Dictionary, I understand the term “duh” is “a word people use when the obvious is stated.”

        In the first sentence you contrast “libertarian” and “duh”, only to explain in the second sentence that it is the specifically “libertarian part” to complain/declare “duh” with respect to Public Choice, i.e. protesting its obviousness.

        If Public Choice is not “libertarian,” how can it be pronounced “duh” by libertarians?

        • As in the liberal-biased academia is really stupid. They continue to focus on market failure. It wad libertarians who point out that government failure is far more fundamental, but it is really just common sense available to anyone who isn’t hopelessly biased.

          • Or more simply, markets fail. No duh. Democracy is at best just a more flawed market. No duh.

  2. Theories usually have sufficient degrees of freedom to adapt to new findings, but that they need to adapt is evidence they are falsifiable, when they fail to adapt that they are likely false, and when they never adapt they likely aren’t science at all, but this is all relative. Simple models are generally easily refuted, complex ones with much more difficulty.

  3. “If a study suggests that women earn less than men, even when controlling for years of education and other indicators of human capital,”

    Why are there even studies to show this (we know why of course)? Such studies are bass ackwards. The studies should all be focused on what effects should be controlled for. If you still didn’t find parity all that means us you are missing an effect or that your bins are not labeled correctly (“males” and “females” are not homogeneous).

  4. Will people who enthuse over your debunking efforts still back them when you point out this also applies to the socialist calculation?

  5. I love this and will be buying the Book of Arnold when it becomes available.

    Climate change strikes me as another candidate for your category of “not science.” There are science-y things about it, like measuring temperatures and looking at carbon densities. But when confronted with anomalies, the model-builders (it seems to me) modify their models to incorporate the anomalies without changing the final prediction.

Comments are closed.