When 'Theologians' Criticize 'Mathematical Economists' - By kevin vallier
- Accusa. Economists who rationalise their discipline’s value can be convincing...
- ‘rational’, a word that confuses truth with mathematical reasoning....Yet when mathematical theory is the ultimate arbiter of truth, it becomes difficult to see the difference between science and pseudoscience.... There is no longer any excuse for making the same mistake with economic theory....It’s time to stop wasting our money and recognise the high priests for what they really are: gifted social scientists who excel at producing mathematical explanations of economies, but who fail, like astrologers before them,
- Levinovitz refers smoothly to 'economists' without distinguishing the many varieties of economists and economics;
- he talks of 'mathematical theory,' 'mathiness,' and 'mathematical reasoning' without distinguishing the many different kinds of mathematical theories
- and he talks of 'performance' without bothering to explore the particular ends that different kinds of economists set for their particular theories and models. And he conflates different kinds of non-performance: for example, within a single paragraph, he moves from (a) failed predictions of interest rate movements, (b) to failures to foresee economic crises,
- shortly--these are both failures of "prophecy," they need not involve failures of explanation or understanding (or abuses of mathematics).
- Levinovitz re-activates a familiar Meme: the hyper-mathematization of economics (recall this piece in the New York Times by Tyler Curtain and Alex Rosenberg; also recall my response). The modern version of the Meme goes back to Boulding's response to Samuelson Foundations [recall my treatment]... But by now the Meme gets recycled without distinctions that may make the conversation illuminating.
- there is a huge difference among (d) so-called, ‘Technical analysts at big banks... trying to find patterns," in stock-market movements, which is thoroughly discredited by professional economics (already since the 1960s), and, say, (e) portfolio allocation models, (f) rational pricing techniques (like Black-Scholes), and (g) bankers' risk-models (even though some of the same underlying principles are used in e-g).
- For example, I have studied the failure to forecast the economic crisis of 2009 by the Dutch planning agency. And the explanation for it is fairly simple: they did not (and perhaps could not) foresee the collapse in world trade (as a consequence of a liquidity crisis post Lehman).... To solve this problem, they do not need to abolish the use of mathematics, but they need to get much more creative in having access to relevant trade-data in real time.
- Levinovitz's underlying point that 'mathematics' is excessive status enhancing is a familiar one. For, as I have noted, Mandeville already made the point about the social, non-epistemic role of mathematics in eighteenth century medicine... the utility of math in eighteenth century medicine is a signaling device that makes mathematical medical doctors more attractive
- the use of mathematics (now quoting Levinovitz) "creates a high barrier to entry for those who want to participate in the professional dialogue."
- But it is by no means obvious why the use of mathematics "makes checking someone’s work excessively laborious.".....lack of incentives to check each other's results and publish dis-confirmations
- Levinovitz's point. He claims that that economists have become modern high priests, which because they do so bad at predicting future events," fail at prophecy." Surely, I cannot object to his position? But I do because it also misunderstands the nature of prophecy. Prophecy is not prediction (recall this post). Here's an argument from authority... social prophecy is only tangentially related to prediction.
- Hobbes notes, the Hebrew Bible recognizes false prophets are also capable of accurate prediction-- Balaam is the exemplar in this category.