Foundation for European Economic Development
 

 

 Economist Abducted by Aliens

 

Economics and Mathematics

Mathematics and statistics are valuable tools. But mainstream economists have transformed these into ends in themselves.

Consider the warnings of four Nobel Laureates in Economics:

 

Milton Friedman

"economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems."

 

Ronald Coase

"Existing economics is a theoretical system which floats in the air and which bears little relation to what happens in the real world."

Wassily Leontief

"Page after page of professional economic journals are filled with mathematical formulas … Year after year economic theorists continue to produce scores of mathematical models and to explore in great detail their formal properties; and the econometricians fit algebraic functions of all possible shapes to essentially the same sets of data."

 

Paul Krugman

"the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth"

 

 

Other leading economists have written:

 

Mark Blaug

"Modern economics is sick. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing."

 

Deirde McCloskey

"To put it rigorously, the procedure of modern economics is too much a search through the hyperspace of conceivable assumptions. ... One economics department after another has been seized by the formalists and marched off to the Gulag of hyperspace searching. Few graduate programs in economics teach economics, especially to first-year students. They teach 'tools,' tools which become obsolete every five years or so."

 

 

In 1988 the American Economic Association set up a Commission on the state of graduate education in economics in the USA. In a crushing indictment, the Commission expressed its fear that "graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues". Alan Blinder, a member of the Commission, commented:

"Both students and faculty find economics obsessed with technique over substance . . . the many macro and micro theory exams the Commission examined . . . tested mathematical puzzle-solving ability, not substantive knowledge about economics  . . . Only 14 percent of the students report that their core courses put substantial emphasis on 'applying economic theory to real-world problems'."

Unfortunately, several years later, economists are still concerned more with mathematical technique than explanatory substance. FEED is one of several organizations and individuals that aim to change this.


References

Blaug, Mark (1997) ‘Ugly Currents in Modern Economics’, Options Politiques, 18(17), September, pp. 3-8. Reprinted in Mäki, Uskali (ed.) (2002) Fact and Fiction in Economics: Models, Realism and Social Construction (Cambridge and New York: Cambridge University Press).

Blinder, Alan (1990) ‘Discussion’, American Economic Review, 80, May, pp. 445-7.

Coase, Ronald H. (1997) ‘Interview with Ronald Coase’, 17 September 1997, http://www.coase.org/coaseinterview.htm (accessed 16 Nov 2008.)

Friedman, Milton (1999) ‘Conversation with Milton Friedman’, in Brian Snowdon and Howard Vane (eds), Conversations with Leading Economists: Interpreting Modern Macroeconomists (Cheltenham: Edward Elgar), pp. 122-44.

Krueger, Anne O. et al. (1991) ‘Report on the Commission on Graduate Education in Economics’, Journal of Economic Literature, 29(3), September, pp. 1035-53.

Krugman, Paul (2009) 'How Did Economists Get it So Wrong?', New York Times, 2 September.

Leontief, Wassily W. (1982) Letter in Science, No. 217, 9 July, pp. 104, 107.

McCloskey, Donald N. (1991) ‘Economic Science: A Search Through the Hyperspace of Assumptions?’, Methodus, 3(1), June, pp. 6-16.