Sunday, January 13, 2013

Are Mathematical Economists Just an Intimidated Bunch Who Have an Inferiority Complex?

There is no place for math in the science of economics, in the manner it is used in the physical sciences, since there are no numerical constants in the science of economics. Economics, thus, is a different science from that of the physical sciences. We know, for example, that water freezes at 32 degrees. No such numerical constants exist in the field of human action. But, that doesn't mean that  many economists don't try to force mathematical equations into the science in ways that are incorrect, or at best add a level of complexity that is not necessary.

Friedrich Hayek in his important book, The Counter Revolution of Science, argued that social scientists, who employed empirical mathematical techniques, suffered from an inferiority complex by attempting to mimic the physical sciences, when the social sciences are of a different nature.

In a new paper,  Kimmo Eriksson, reports on a fascinating test he conducted using nonsense mathematical equations that apparently impressed everyone, except hardcore mathematicians and scientists using hardcore math. Note in the bar chart below, that appears in Eriksson's paper, social scientists fall into the group that reviewed positively the paper with the nonsense math.  In the abstract to his paper he writes (my highlight)
In those disciplines where most researchers do not master mathematics, the use of mathematics may be held in too much awe. To demonstrate this I conducted an online experiment with 200 participants, all of which had experience of reading research reports and a postgraduate degree (in any subject). Participants were presented with the abstracts from two published papers (one in evolutionary anthropology and one in sociology). Based on these abstracts, participants were asked to judge the quality of the research. Either one or the other of the two abstracts was manipulated through the inclusion of an extra sentence taken from a completely unrelated paper and presenting an equation that made no sense in the context. The abstract that included the meaningless mathematics tended to be judged of higher quality. However, this "nonsense math effect" was not found among participants with degrees in mathematics, science, technology[...]
 In the his conclusion Eriksson writes:
Specifically, the experimental results suggest a bias for nonsense math in judgments of quality of research. Further, this bias was only found among people with degrees from areas outside mathematics, science and technology[...]It may be that[...]mathematics [is] held in undeserved awe among nonexperts. It may also be that people always tend to become impressed by what they do not understand, irrespective of what field it represents—much in line with the "Guru effect" discussed by Sperber (2010).

Bottom line: Don't get caught up in mathematical mumbo jumbo, always understand the logic of an argument. Just because an equation is thrown in doesn't mean an argument is any stronger. Most of the math employed in journal articles, and elsewhere, by economists is of the worthless variety. If you see a mathematical equation as part of an economic argument, your guard should go up.


  1. In 40 years, I've never met anyone not already an Austrian who understood Austrian economics. No one was ever impressed by what they did not and refused to understand, even when I carried around a big fat book by Von Mises.

  2. Totally agree, and Bob Murphy's experience relayed in your interview with some of the wizened econ professors admission is telling.

    However I would nitpick on two things: differentiating between micro and macro; and that logic is still part of mathematics, like for example ordinal relationships of utility (instead of cardinal calculations of utility used in non-Austrian econ). It may not look like the mathematics most people think of, and indeed it's almost never ever used in the physical sciences, but you'll encounter it in discrete/foundational/formal meta mathematics, in computer science theory, and shared by a branch of philosophy.

    Technically, the math in macro econ is correct, it's just that the model is wrong and will never be right given the realities of human action.

  3. "Refused to understand" is the perfect choice of wording. You can explain AuEcon in 5 minutes, and show the axiomatic truth of it and how it comes from the simple "Man Acts" principle, but most people are too tied up in their POV to accept it.

  4. It's smoke and mirrors to hide their appalling ignorance of basic questions like asset bubbles, inflation, etc that most mainstream econ guys have zero grasp of but can always write out long complex bullshit equations to explain situations.