Friday, June 29, 2012

"Science" without falsification is no science


Simon Wren-Lewis notes that although plenty of new macroeconomics has been added in response to the recent crisis/depression, nothing has been thrown out:
Because although the crisis has added material, nothing has really been thrown away as a consequence of what has happened. We have not, either individually or collectively, decided that the Great Recession implies that some chunk of what we used to teach is clearly wrong and should be jettisoned as a result.
He goes on to say that this is a good thing, because undergrad macro is all Keynesian, and the crisis has proved Keynesianism right. But - setting aside the debate over whether Keynesianism is right or not - undergrad macro is really beside the point when it comes to the state of economics as a science. The frontier of economic research and thought is the academic journals.

And I'm pretty sure that Wren-Lewis' statement that "nothing has really been thrown away" applies to the journals too. Four years after a huge deflationary shock with no apparent shock to technology, asset-pricing papers and labor search papers and international finance papers and even some business-cycle papers continue to use models in which business cycles are driven by technology shocks. No theory seems to have been thrown out. And these are young economists writing these papers, so it's not a generational effect.

The rest of the profession seems to be aware of this fact. Diane Coyle writes:
[M]acroeconomists simply do not realise how low their stock has sunk in the eyes of their microeconomist colleagues. When popular critics attack ‘economics’, they mean macro. It’s bringing us into disrepute, we fear. Although macroeconomists will insist that there are known scientific facts, they do not appear to agree on what these are.
If smart people don't agree, it may because they are waiting for new evidence or because they don't understand each other's math. But if enough time passes and people are still having the same arguments they had a hundred years ago - as is exactly the case in macro today - then we have to conclude that very little is being accomplished in the field. The creation of new theories does not represent scientific progress until it is matched by the rejection of failed alternative theories.

The root problem here is that macroeconomics seems to have no commonly agreed-upon criteria for falsification of hypotheses. Time-series data - in other words, watching history go by and trying to pick out recurring patterns - does not seem to be persuasive enough to kill any existing theory. Nobody seems to believe in cross-country regressions. And there are basically no macro experiments.

I can think of two exceptions to this. Both involve central bank policy. The first is Paul Samuelson's claim that a Phillips Curve represents a static menu of policy options for the Fed. The second is Milton Friedman's claim that the Fed could control the growth rate of M1. Most or all macroeconomists seem to regard these two claims as having been proven false. What happened in both cases was that a famous economist recommended a policy and gave specific predictions for the outcome, the policy was then explicitly tried by the Fed, and the outcome wasn't what was predicted. In other words, the Fed helped the field by carrying out an experiment on the whole economy. Obviously we can't do that sort of thing for every macro paper that comes out in the AER.

So as things stand, macro is mostly a "science" without falsification. In other words, it is barely a science at all. Microeconomists know this. The educated public knows this. And that is why the prestige of the macro field is falling. The solution is for macroeconomists to A) admit their ignorance more often (see this Mankiw article and this Cochrane article for good examples of how to do this), and B) search for better ways to falsify macro theories in a convincing way.

64 comments:

  1. Anonymous2:25 AM

    Darwinian science and global brain theory are sciences without falsification -- as Hayek pointed out to Popper.

    Popper acknowledged Hayek's point, and conceded that his falsificationist criterion of science had been falsified.

    And, of course, Kuhn showed that theory choice never turns on 'falsification'.

    Even Popper didn't believe the economist's 2nd graders version of science.

    Economists almost always make fools of themselves when they lay down stipulations of what 'science' is.

    Their work & studies show us well enough that they have no idea.

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    1. You know, I've never read Popper?

      "Falsification" is shorthand. A term of convenience because it's too annoying to write something longer every time. What it really means is just "deciding that some ideas don't work by comparing them with reality." If you can't do that you've got nothing. One doesn't Popper to see the truth in that.

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    2. 80% of the time someone invokes Kuhn, they're full of it.

      Evolution fits falsificationism awkwardly, and initially Popper argued it wasn't falsifiable, but later changed his mind. I have no idea what global brain theory is. Is that a real thing?

      Kuhn argued that there were two distinct phases to science -- "normal science", where existing theories are elaborated, and "revolutionary science", where new theories are proposed. A new theory, before it's completely worked out, will be in some respects worse than the existing theory. This is incompatible with falsificationism if science were practiced by robots, but fortunately it's practiced by human beings.

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    3. "Darwinian science and global brain theory are sciences without falsification -- as Hayek pointed out to Popper."

      Fromm http://www.talkorigins.org/faqs/evolphil/falsify.html

      (after pointing out that Popper's view of science was shown by Kuhn to simply be not the way that science was done, and a couple of other paragraphs on the philosophy of science)

      "However, on the ordinary understanding of falsification, Darwinian evolution can be falsified. What's more, it can be verified in a non-deductive sort of way. Whewell was right in the sense that you can show the relative validity of a theory if it pans out enough, and Popper had a similar notion, called 'verisimilitude'. What scientists do, or even what they say they do, is in the end very little affected by a priori philosophical prescriptions. Darwin was right to take the approach he did.

      It is significant that, although it is often claimed that Darwinism is unfalsifiable, many of the things Darwin said have in fact been falsified. Many of his assertions of fact have been revised or denied, many of his mechanisms rejected or modified even by his strongest supporters (e.g., by Mayr, Gould, Lewontin, and Dawkins), and he would find it hard to recognise some versions of modern selection theory as his natural selection theory. This is exactly what a student of the history of science would expect. Science moves on, and if a theory doesn't, that is strong prima facie evidence it actually is a metaphysical belief. [note 4]"

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    4. Darwinian science and global brain theory are sciences without falsification

      "Fossil rabbits in the Precambrian"

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  2. A third example is Friedman's view that exchange rates would be relatively stable in a flexible regime. Disproved after the end of Bretton Woods.

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  3. Anonymous3:20 AM

    Paul Samuelson never claimed that the Phillips Curve represents a static menu of policy options for the Fed. He always qualified this claim, see e.g. http://economistsview.typepad.com/economistsview/2012/05/did-samuelson-and-solow-really-claim-that-the-phillips-curve-was-a-structural-relationship.html, http://www.cep.ccer.edu.cn/cn/userfiles/Other/2010-05/2010051110440438644377.pdf or the original article of Solow and Samuelson.

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  4. Anonymous4:13 AM

    "When popular critics attack ‘economics’, they mean macro"

    Well, when normal people speak about 'economics', they mean macro. When student say they want to study 'economics', the mean macro. In fact, every time anyone outside of academia mention 'economics', they mean macro.

    Without macro, to be honest, economics departments would be empty decision science offsprings. And some freakonomics guys.

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    1. Without macro, to be honest, economics departments would be empty decision science offsprings.

      Really? Sure, there's decision science in micro (though I wouldn't call it "empty", I don't get that). But there's also lots of game theory, which nobody else has. There's financial econ, which is so huge it often has its own department. There's a huge vast body of empirical knowledge in industrial organization, labor economics, tax economics, etc. And there are lots of econometric techniques that statisticians in other disciplines don't know about much.

      So there's lots of econ besides macro.

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    2. Mr. Smith, as much as I enjoyed your blog, I'm afraid that I can't agree with your notion that "nobody else has" game theory. Plenty of pure mathematics departments teach and conduct extensive research in game theory. Indeed, Robert Aumann, whose work in game theory merited the Nobel Prize in Economics has never been an economist at all, holding neither a degree in economics nor a faculty position in an economics department. Rather, his PhD and his faculty position are in mathematics. John Nash, also a Nobel winner, likewise never held a degree or faculty position in economics - his academic background was also in pure mathematics. John von Neumann, the father of mathematical game theory, was also a mathematician who almost certainly would have won the Nobel if he hadn't died a decade before the launch of the Economics Nobel.

      Pure mathematicians are not the only non-economists who have contributed heavily towards game theory. Biologist John Maynard Smith has contributed the notion of the Evolutionarily Stable Strategy and the classic hawk-dove (a.k.a. chicken) game. Computer scientist Andrew Yao has contributed Yao's Principle. An increasing number of political scientists and even philosophers have recently made important contributions to game theory.

      So while I agree that economists currently are responsible for much - probably even the majority - of the advances in game theory, it's simply not correct to assert that "nobody else has" game theory.

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  5. what you are trying to say - economics is a religion not a science. This is the power of economics not weakness. A lay person trusts words more than numbers. macro will only get strength with objective criticism from the scientific point of view. And , as a religion, economics cannot be falsified because it is based on trust and a positive feedback between the people who trust. The best way to fight against economics (as a science) would be to forget about it or to involve irrelevant scandals.

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  6. Anonymous6:29 AM

    All science has elements that refuse to reject discredited models. For example, global warming deniers who champion the idea that human activity is not affecting climate. Rejection of ideas only slowly moves to 100 percent.

    In the case of global warming, many of the deniers are paid or have their discredited ideas promoted by wealthy special interests to wage a disinformation campaign. This is also a problem for macro. Wealthy special interests pursue policies that benefit them personally, but may be bad for society as a whole. Wealthy special interests promote ideas that support their preferred policy whether or not those ideas are discredited. While most economists may accept the failure of models, their existences and promotion by wealthy special interests amounts to a campaign of disinformation. Disinformation disrupts the communication of reputable ideas to the public and places discredited ideas on equal footing.

    In spite of the overwhelming evidence supporting evolution, biologists in the US are making little progress against a massive disinformation campaign that has half the population believing that there is little evidence for evolution. Economics suffers from the same disinformation tactics.

    Scientific and economic illiteracy are huge problems that make room for effective disinformation campaigns.

    jonny bakho

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    1. "All science has elements that refuse to reject discredited models. For example, global warming deniers who champion the idea that human activity is not affecting climate. Rejection of ideas only slowly moves to 100 percent.

      In the case of global warming, many of the deniers are paid or have their discredited ideas promoted by wealthy special interests to wage a disinformation campaign."

      This is true, but I think that what Noah is pointing out that if one wants to find people who are full of it and either not correcting or actively doubling down, one doesn't have to go into Crankland; Crankland is in elite econ departments.

      The equivalent here would be to find out that the hotbeds of global warming - well, fraud - were actually the top departments of climatology. There are two well-known climatologists who are denialists, but not large groups.

      Or, as another blogger put it: if you were searching for 'scientific advisors' for a GOP presidential candidate, for most fields you'd be well-off staying away from the top 10 academic departments. You'd want to go to the backwaters, the 'think tanks', the 'Christian' colleges, etc.

      Until it came time for economics.

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    2. Yep. This was described by Brad DeLong as "the economics credentialing system is broken".

      The credentialing system has broken in other fields in the past; it's irreparably broken in philosophy and has been for years (with the result that most interesting philosophy happens outside philosophy departments).

      Both linguistics (with the idiot computational linguists driving out historical linguists) and physics (with the idiot string theorists driving out experimental physicists) were at risk of system breakdown, but both seem to be slowly self-correcting.

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  7. JustBob818:17 AM

    When people claim things are or are not science it is usually a safe bet that they've only minimally dipped their toes in the long and tortured attempts to clearly define science. To whatever extent you'd like to criticize the public about their scientific literacy (economic or otherwise) scientists tend to have only the most naive understanding of what it is that they do.

    As far as Macro vs. Micro, I don't see how having the advantage of easier targets (more amenable to experiments, etc.) makes Micro the more noble calling. Moreover, hasn't Krugman's argument been that ECON 101 has done well in the crisis. If there are political problems with the discipline, isn't that different than a problem of science? Max Planck said that science changes because the older generation dies out and that was before string theory gave physics its own falsification problems.

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  8. @Anonymous Things have moved on since Popper -- biologists will now make a reasonable empirical case for evolution. Further, the point is to assess competing models. Darwinian evolution beats Lamarckian evolution on empirical evidence (some people think the old teleological argument, under new names, is an alternative model, but it is not in fact a model).

    @Anonymous (jonny bakho) That is exactly the point. The lack of clear falsification criteria means that economists who cling to old theories cannot be pushed aside. This does happen in other sciences -- think of Hoyle and the steady state theory -- but eventually the facts win out. In economics, the dinosaurs are never wiped out and keep breeding intellectual progeny.

    @Noah Smith The lack of commonly-agreed falsification criteria does not mean that there are no falsification criteria. People who start out trying to work out what it is reasonable to think can come to sensible answers (e.g. Paul Krugman?). Most people, however, either consciously or unconsciously, start from the conclusion (often a political belief) and work back to the evidence, and hence a science that requires that all its practitioners be genuine seekers-after-truth will probably not come to consistently true conclusions (science is most important not as a mind-set but as a set of institutions that weed out falsehood). I am sure you know that perfectly well. The reason I mention it is that it provides a justification for discretionary macro trading, which is what I do. People ask: how do you think you can beat the market. The answer is that the market is made up of finance people who are even more inclined then academics to work backwards from their prejudices to the evidence. People who train themselves to work forwards ought to have an edge.

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    1. "The reason I mention it is that it provides a justification for discretionary macro trading, which is what I do. People ask: how do you think you can beat the market. The answer is that the market is made up of finance people who are even more inclined then academics to work backwards from their prejudices to the evidence. People who train themselves to work forwards ought to have an edge."

      Bingo! I don't do true macro trading because I don't feel that I can predict it in a way which is distinct enough from the average trader (not well trained enough), but I do do sectoral analysis on that basis: I know that the vast majority of market participants are operating from prejudices which I do not share, and I analyze the future performance of sectors based on ecological, economic, and sociological fundamentals.

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  9. PS JustBob81 commented while I was writing. The question about the definition of a science is like the question of whether an economic model is a good one: a reasonable person can come to a reasonable view, but an unreasonable person (e.g. a follower of some pseudoscience) can usually come up with a plausible opposing argument. Please, @Noah Smith, don't get drawn into a battle on this front! The reasonable will eventually get what you're saying, the unreasonable will never move.

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  10. macroeconomists only have "stylized" facts. Sorry, but my first and continued reaction to that in grad school was "WTF is a 'stylized' fact." It seems to mean whatever we want it to mean at the time, or something i can get out of a VAR model with a sufficient number of lags. In other words, its an excuse for a lack of rigor. I could cite lots of recent examples, but i am sure you have a list of your favorites.

    And by the way, not sure i agree that "Milton Friedman's claim that the Fed could control the growth rate of M1." was proven false. what a proper modern monetarist will tell you is that velocity is unstable and we should target NGDP. ahem. the jedi mind trick. (dont misunderstand me, i support Sumner and ngdp targeting, just saying lets be fair and equally damning to all).

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    1. another problem, well, not problem per se, but feature, of macro models is that some phenomena cannot be empirically verified. Like expectations: I know people form expectations based on Fed policy and pronouncements (i've seen and participated in the process a gazillion times) but it's impossible to communicate except via anecdotes. have we really "proven" how business planners and employees form expectations? could we ever? what do i need to do to prove that, follow a Goldman Sachs Economic presentation around and see who reads it and how traders mark curves in response to information?

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    2. Anonymous12:11 PM

      See this for the origin of the term "stylized facts".

      http://en.wikipedia.org/wiki/Stylized_fact

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    3. my point was not how the term originated. my point was that stylized facts a) starts off with the conclusions; b) are typically so vague as to be unverifiable; c) need a model to even be interpreted, which begs the question in the first place.

      to give an example, noted in the wikipedia entry, "yield curves move in parallel." yes this is a statistical "fact" and one can show that over any relevant time period the first principal component of the changes in interest rates is indeed a parallel shift and explains 70% of the variance (in the changes in rates).

      that is relevant for finance, but not for macro. do rates move in parallel because the Fed behaves inertially and incrementally (thus the recent move predicts a series of future moves, moving the term structure up)? Is it because inflation is sticky? There are about 37 different theories i can write down to explain this, with disparate and contradictory implications for Fed Policy. If I start with a model where this is true, all i end up with is a tautology.

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  11. This is a really excellent post. However things are significantly worse than you think. It is clear that the really important example of falsification in macroeconomics is universally agreed to be the falsification of "Paul Samuelson's claim that a Phillips Curve represents a static menu of policy options for the Fed. " The problem is that Paul Samuelson didn't make that claim. In fact the notorious Samuelson and Solow (1960) paper included the prediction that the Phillips curve would shift up following persistent inflation due to increased expected inflation.

    Macroeconomics main claim to be science is based on completely fraudulent intellectual history. Basically, the legend of figure 2 in Samuelson and Solow was quoted out of context (context being the warning one paragraph later that this was a short term tradeoff due to shifting expected inflation and what would now be caused hysteresis).

    I mean just read the paper (as I did last month after years of assuming that what modern macroeconomists said it said must be more or less true).



    I might add that my exploration of the history of economic thought consisted of a google search. This is not an obscure fact.

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    1. Very interesting. But even if Samuelson didn't make the claim, didn't lots of people think he did?

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    2. "Very interesting. But even if Samuelson didn't make the claim, didn't lots of people think he did?"

      Yep. This is one reason it's dead easy to beat the market if you have the time and energy to invest in research -- even when accurate information is available publicly, most people never take the time to FIND the accurate information, and rely on any old third-hand rumors.

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  12. Anonymous9:53 AM

    As a Phd molecular biologist, certainly an exp scientist, I think this whole falsification thing is , in a practical sense, way, way overblown; no actual real living practicing scientist worries about this sort of stuff; only people near retirment or wierdos

    It is a sign of the dysfunction of econ that you talk about this stuff; if econ were actually producing results that were true, in the sense that gravitation is an inverse square law, or entropy increases, or DNA is replicated by template dependent polymerases in a 5' to 3' direction, then you wouldn't be worrying about this stuff.

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    1. Agreed. But only with respect to macro. Micro finds real stuff, like the Vickrey Auction.

      http://noahpinionblog.blogspot.com/2012/06/economic-theory-that-actually-works.html

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    2. "I think this whole falsification thing is , in a practical sense, way, way overblown; no actual real living practicing scientist worries about this sort of stuff"

      Come on... really? Falsification seems to me to be so ingrained in the achievements of science that you don't even notice it anymore.

      I'm not a biologist, but as far as I know, biologists don't sit around having debates about the relative merits of genetics and Lamarckism as explanations for the inheritence of acquired characteristics. And that's roughly where macroeconomics is.

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    3. Anonymus,

      As another career biologist, I hope I never have to review one of your manuscripts. Perhaps you do not notice because you do not loudly say to yourself "now I try to falsify a hypothesis" all the time, but that is actually what you do if you, well, do your job as a scientist.

      Every time a biologist looks at a gel to see if the smudge is there that will tell her that two proteins interact, she tries to falsify her own idea that those two proteins might interact. Every time I produce a phylogeny, I try to falsify the idea that the taxon I am examining is monophyletic. Every time a conservation geneticist does his thing, he tries to falsify the idea that species X is suffering from inbreeding depression caused by habitat fragmentation, or whatever.

      If you don't do falsification or at least model selection (which in effect is kind of a falsification sensu lato of the poorer models you reject in favour of the best one) then you are not a scientist, because you simply have no way of distinguishing good ideas from bad ones.

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    4. Parts of micro find real stuff.

      Classical micro (as opposed to modern experimental micro, game-theory micro, behavioral micro, etc,, all of which found useful stuff) is STILL HANGING ON. Last useful thing classical micro found was what, supply and demand?

      That says that there are some really sick cultural problems in econ deparments.

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  13. I guess you'd be better off analysing economics from Lakatosian view on methodology. Schools of Thought (or Research Programs) will try to defend their hard core - i.e. their basic principles - against charges on them by modifying their outer assumptions. I think that explains what we've ben through: inside mainstream economics, the DSGE research program is currently trying to defend itself by adapting some less important assumptions and slightly changing its research focus (like trying harder on the financial frictions border). However, from this point of view, the main question is whether the DSGE program has turned itself into a degenerative program and thus should - and eventually would - be discarded.
    And that's not to mention the charge on mainstream economics from the non-orthodox schools of thought.

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  14. Anonymous11:04 AM

    Good post.

    I wouldn't despair entirely. Eventually enough high-level macro data (on entire economies) will be collected so that the field can be scientific. It just won't happen in your lifetime.

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  15. Curve-fitting is an essential part of science. Kepler's laws amounted to curve fitting as is so much else in physics. Then a theory comes along that explains the curve and makes new predictions, as Newton's Laws did. That is, the new theory does not only explain past observations but also predicts new ones.

    If a seemingly arbitrary variable like M1 + sweeps - Industrial and Commercial Loans appears to accurately mirror the economy for the past half century as the graphs on http://www.philipji.com/busloans/M1SL+sweeps-BUSLOANS.html suggest, would you dismiss it as just a series of coincidences over the past half a century? Incidentally, in those instances where the variable falls without resulting in a recession, you can see a fall in some financial asset market e.g. the bond massacre of 1994.

    Going by the past half a century the graph predicts that we are seeing a huge monetary expansion and that it will result in a financial crash followed by a recession.

    I know the explanation behind the graphs.

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    1. Anonymous2:49 PM

      The problem is, there are a lot of curves that will fit the data, so, until you get a convincing theory, it is hard to say the fit isn't co incidence
      Second, unlike planets, whoose orbits obey laws that are, for human history, fixed, humans obey laws and behaviour that changes - often rapidly.
      3rd, I went to the link, and not understanding how the curves mirror the econ ; to me it looks like non interpretable GIGO, but I'm not an expert in this area - if it is true that there is a there there, surely there is a better way of plotting the data that makes it more obvious

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    2. Every recession is matched by a sharp fall in the variable.

      Where the sharp falls are not matched by a recession:
      1966: Credit crunch: See http://www.levyinstitute.org/pubs/wp262.pdf

      1994: Bond massacre

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  16. A good parallel (though it would horrify many economists), comes from another field. In 1950, psychology was dominated by Freudianism. It was called science because it was systematic and had experiments (methods applied to patients which led to cures). It was difficult to falsify. As the century progressed, other theories of mental disease and treatment arose and more rigorous standards (like randomized trials) became the norm. Freudianism was never clearly disproven, but it shifted from great science in the 1950's to a "great idea that needed to be taken seriously" in the 1980's to an interesting piece of intellectual history by the 2010, when psychopharmacology and brain imaging took over our understanding of mental illness. This was really a two generation shift. After one generation, there was still a lot of Freudian work published and talked about, but also some prominent and widely read critics. It was the second generation of academics that voted with their feet. In many cases the middle generation made the change happen by starting new journals and parallel organizations but they didn't come to dominate until 20 or 30 years later.

    What does this say about Macro? That standards for disproving theories can take decades to solidify and that when disproof isn't clear, the power of academic institutions (think university departments hiring more of their own, and journal editors questioning new standards of evidence) is slow to erode. So it there hope? Yes, but not necessarily before we hit retirement.

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    1. "This was really a two generation shift. After one generation, there was still a lot of Freudian work published and talked about, but also some prominent and widely read critics. It was the second generation of academics that voted with their feet. In many cases the middle generation made the change happen by starting new journals and parallel organizations but they didn't come to dominate until 20 or 30 years later."

      IOW, a generation doesn't really abandon it's beliefs; new generations of scientists arise who aren't committed.

      OTOH, we don't see massive crises like the Great Financial Crash/mini-Depression in psychology.

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  17. Actually, some macroeconomists did get it right and explained why the mainstream was getting it wrong. Notably, the late Wynne Godley. For his approach to macro using stock-flow consistent modeling and sectoral balances, see Godley and Lavoie, Monetary Economics (Elgar, 2007, 2nd ed. 2012). See James K. Galbraith for some economists who did get it right — "Who are these economists anyway?"

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  18. Anonymous12:54 AM

    "Falsification" is shorthand. A term of convenience because it's too annoying to write something longer every time.

    You will do yourself and us a favor by picking shorthand that doesn't have so much baggage attached. The association of the term "falsification" with a certain untenable* philosophical view isn't going away. How about "reject?" "Discard?" "Abandon?"

    What seems to me, a non-economist, to be going on is a shortage of ideas. People need something to do when they get to work in the morning. Unless new ideas are available to work on they will soldier on with the old ones, absurd as they might be.

    Of course, in economics there is the additional problem of ideological commitment; the committed require that ideas must imply politically acceptable policy actions. Other sciences usually don't have this problem (but sometimes they do; smoking and global warming are examples).

    Good luck on producing new approaches. Not only might you get a trip to Sweden out of it, but it might reduce the suffering inflicted by providing intellectual cover to bad or even evil policies.

    *A pretty good summary of the reasons it's untenable can be found in Redman's Economics and the Philosophy of Science, for instance.

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  19. Aren't we, in a sense, going through a massive macroeconomics experiment right now? At tne end of it I think some questions are going to be answered and some long-held views abandoned. Or is that being too hopeful?

    http://www.philipji.com/item/2012-06-30/the-great-macroeconomics-experiment

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  20. What you're really getting at, I think, is the difference between the hypothetico-deductive method and inductivism.

    The hypothetico-deductive method is essentially guessing followed by testing. If the guess (hypothesis) passes a test, we have a reason to believe it.

    Inductivism is essentially science as (16th/17th-century essayist) Francis Bacon thought it was practiced. Inductivism assumes that scientific theory consists of generalizations based on observations. Note how the role of observation is reversed: in the hypothetico-deductive method, theory implies observations that have yet to be made; in inductivism observations imply theory that has yet to be constructed.

    Almost all current philosophers of science would say that inductivism is mistaken. One doesn't have to embrace all of Popper's philosophy to reject it. You can see how wrong it is from the simple fact that scientific hypotheses purport to describe things that cannot be seen directly such as electrons, viruses and force fields. These claims cannot be "reached" simply by extrapolating from what can be seen directly.

    I cannot speak for economics, but Darwin's theory of evolution fits the hypothetico-deductive method, and most current climate science fits inductivism.

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  21. Russ Roberts (@EconTalker) and Robin Hanson have frequently cited the result that fancy econometric results don't convince anyone of anything. I believe it was Hanson's study that health economists on either side of core disputes didn't change their minds after years in the field.


    I don't know about "falsification" per se, but it seems to me the point of data is to convince people who are in the middle and convict people who are against you -- not just paint a plausible picture. Certainly if members of the general public and other professionals aren't convinced by your arguments then it would seem they've failed.


    (OTOH, Akerlof's "lemons" model was very convincing to the current POTUS and other representatives of the general non-economist public -- so that could be deemed a successful, data-less argument.)



    Regarding Popper: I think the philosophy-of-science that informs most economists is [a] a bit of Friedman on models and [b] the Popperian 'falsification' criterion. I think a more accurate conception of progress in physics

    One interesting fact I recently learned from Thonyc.wordpress.com (@rmathematicus) "An interesting question" [commenter AngerBear] is that geocentrism was not rejected because of experimental evidence (it was broadly discarded before Foucault's pendulum) -- but rather because Newton's theory of gravity was so successful that it changed everyone's conception of the universe. Whereas Earth "at the bottom of the universe" made sense and comported with sensory evidence, once the N-body gravitational theory was accepted it looked ridiculous to have negligible Earth "controlling" everything around it.

    What's the parallel to economics? I can see a few but I won't lead there...

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  22. Foucault's pendulum was proof of the earth's rotation, not of geocentrism.

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    1. The two are related. If the sun and stars do not go around the Earth, then the Earth must rotate to cause it to appear this way; this consequence and the lack of (initially) apparent effects of this rotation led to some initial skepticism of heliocentrism. Likewise if you accept that the Earth is rotating, then it becomes obvious that the Sun and the stars and Mercury and Venus do not make trips around the Earth, and the outer planets do so at slow, varying rates, and if you accept that then heliocentrism makes a lot more sense than geocentrism.

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  23. I have enjoyed reading the comments above. I thought that only I, George Soros and medical science had even heard of Karl Popper.

    I have never read any Kuhn. Popper never even mentioned Kuhn just as he never mentioned existentialism. He was into the stride that is standing on the shoulders of giants and seeing further and he was into the biggest question "how do we get knowledge/how does knowledge grow?".

    There is a little confusion above between falsification and refutation. Popper introduced the "falsification criteria" as a demarcation criteria to draw a line between a bona-fide scientific theory and quack psuedo-science. If your conjecture is untestable then it cannot enter the set that meets the falsifability criteria and makes the grade of being science.

    So out goes astrology, chartism, Freud, Young, Adler, Marx and the mass of psuedo-sciences that have erupted in the last few decades.


    I'm not saying much about economics. But it is the science created by Adam Smith, and since his drinking buddy was the greatest thinker bar Kant, I don't think there could be much wrong with it.

    With Popper we go-forward in our understanding of the world we live in by conjecture and refutation, or trial and error. We have a problem, we trial a tenative solution, if it fails (and it can only fail if it is testable, ie. meets the falsifiability criterion) we modify the solution and retest. We repeat and repeat until we have a tentative solution than passes the test and goes forward to earn a place on the shelf marked "objective knowledge". It has verisimiltude but not absolute truth attached to it. It may be refuted and replaced by a better theory having greater verisimiltude in the future but it is the best we have at the moment.

    Popper determined that evolution was not a scientific theory because, come on, its only history. As history it is a good theory, beating its competition, but it cannot predict. We can see the fittest in retrospect but we cannot say which of today's crop will succeed and which will fail. We cannot decide which are today's fittest.

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  24. Major_Freedom11:10 AM

    Empiricist-positivism (hereafter referred to as EP) is a self-contradictory epistemology.

    The EP position holds that there is no such thing as synthetic a priori true statements, and, as a corollary, it holds that all declarative statements can only be either empirical and hence hypothetical, or analytic and hence stipulative.

    Empirical and hence hypothetical statements are presented as being in principle falsifiable, and cannot be claimed as incontrovertibly true. Analytic and hence stipulative statements are presented as being merely definitions whose meanings consist of how we use certain terms by convention, and cannot be claimed as incontrovertably true either. Our knowledge is supposedly extended by falsifying and confirming hypotheses.

    ------

    It is rather straightforward to learn the self-contradictory nature of this. We can just take the above as a given truth, for argument's sake, and just ask "OK, then what kind of a statement is the EP statement: "All statements are either empirical or analytic"?

    If EP is valid, then the statement "All statements are either empirical or analytic" must itself be either an empirical statement, or an analytic statement:

    1. If it is an empirical statement, then it is just a hypothesis that must in principle be subject to falsification. It cannot be incontrovertibly true.

    2. If it is an analytic statement, then it is just a stipulation of how we define statements. Well then so what, definitions can be what anyone wants them to be. I am entitled to define statements differently.

    Neither of these available options can qualify EP as an epistemology. They can only make it either a hypothesis that could be wrong, or merely a definition. But then how can we even know what hypotheses and definitions are, if we are only told in EP that all statements are either hypotheses or definitions? Clearly something is missing.

    Is there a third possibility for what kind of a statement it is? How about neither empirical NOR analytic, yet still says something true about reality? If this the case, and I submit this is the one being practically and theoretically advanced, then EPs must admit that their own doctrine is wrong, for they are advancing a statement that is not of a type that they believe all statements must be!

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    1. Oh, that's just Russell's Paradox. Does the set of all sets that do not contain themselves contain itself? Does the rule that every rule has an exception have an exception? If a web page consists entirely of links to every web page that doesn't link to itself, does it link to itself?

      A great many disciplines with useful results are vulnerable to this when naïvely formulated. For example, mathematics. Qualifying the definition of X so that this can't happen is the correct solution; again, see mathematics. Of course not every proposition about "all statements" can be a "statement" encompassing itself, or you'll get a paradox. So, why is it a statement at all? Do the people you’re criticizing define statement that way?

      Beyond that, why would option 2 even be a problem? Sure, you can always say you prefer a word to mean something else. So what? Where can't you do this? How does that constitute a counterargument?

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  25. Major_Freedom11:11 AM

    2/3

    There is a further major problem with EP, and it has to do with an implicit assumption being made in the process of falsification and confirmation, an assumption that cannot possibly be correct when applied to economics.

    The implicit assumption being made in the process of falsification and confirmation in EP is one of constancy of laws in nature; that the truth of what is being studied does not change over time. For consider. First we make a hypothesis. Then, after some time, we perform a test. Then, after some more time, we learn if the results of the test are consistent/inconsistent with our initial theory proposed in the past. In order for us to say the results "falsify" our past theory, or in order for us to say the results "confirm" our past theory, we have to presuppose that the truths of reality did not change from the time we proposed the theory, to the time we determined that a theory has been falsified or confirmed.

    For if the truths of reality did change over time, then we cannot say the results of a test "falsified" or "confirmed" a past test. All we could say is that we made observations in the past, and then we made observations in the present, that they look different, or they look the same, but nothing follows from this. Only if we presuppose constancy in nature, can "falsification" and "confirmation" become coherent and meaningful.

    Now, why is this a problem for economics? Well, first we have to realize that economics is the study of human action. It is not a study of atoms, molecules, or the physics of stars. Economics deals with what people do. I buy a hamburger for $5.00. I sell a hamburger for $5.00. I invest in a restaurant. I disinvest from the restaurant. I exchange Dollars for Francs. I work for a wage. I research for a profit. And so on.

    The next thing to realize is the reality of what is happening to the EPs themselves who conduct the falsification/confirmation experiments and tests. Well, what is happening to them? Is an EP the same person after an experiment as he was before the experiment? Of course not! For the whole purpose of engaging in the EP methodology in the first place is for the experimenter to LEARN something that he did not know before! So we must admit that the experimenter has changed over time. We cannot even conceive of an experimenter who remains the same person throughout his life as an experimenter. And not only that, but we must also admit that the experimenter is changing in ways that not even the experimenter himself can know beforehand, for the whole purpose of research and experimentation would otherwise be a giant waste of time, as no experiments would be needed due to the experimenter knowing the results of all possible experiments beforehand.

    So EPs are compelled to admit that the constancy assumption they believe applies to what they are studying when they engage in falsification and confirmation, is not applicable to themselves as actors, as learners, who change over the process of EP methodology itself.

    This can be difficult to fully grasp, so let me state it another way. In order for the EP experimenter (imagine an econometrician who collects data and tests his hypothesized model) to even engage in his own methodology, he MUST presuppose a non-constancy in his own self, for that is the only way that learning is even possible. Learning presupposes change, not constancy. And more importantly, to the extent that our acquired knowledge influences what we do as actors, no scientific predictions based on constancy of causal relations are possible.

    Constant causal relations, in other words, cannot coherently be regarded as inherent in human action, and hence economics in general.

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  26. Major_Freedom11:11 AM

    3/3

    The above may turn you off, since for decades macro-economists, and economists in general, have been assuming constancy in their models, and as a result, we would be compelled to conclude that governments and universities around the world have wasted billions of dollars and hundreds of thousands of man-hours engaging in a self-contradictory methodology. However, nobody ever said the enlightenment was a smooth transition that didn't embarrass anyone.

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  27. Dear Major_Freedom,

    Wow.

    You post EP and shoot it down. But there isn't any EP to be seen.

    We have not mentioned the positivitists for some fifty years. Nor the linguists.

    Laws of nature such as "to every action there is an equal and opposite reaction" are not here one minute and gone the next. They are here to stay. And the problem solvers do not change from one minute to the next. They are searchers for the truth. And even if they did change as time went by we don't rely on them. We rely on corroboration by independent third parties.

    We don't falsify or confirm our theories. We test them. If they pass the tests they increase their verisimitute (their truth-like-ness) but may still fail tomorrow's test. They always remain tentative but increase their truthlikeness as they pass more independent testing.

    When, and only when, they are as sound as a bell (corroborated by independent testers) they become "objective knowledge". But they still only hang on their truthlikeness (verisimiltude) and may be shot down tomorrow by a better theory that has greater verisimitude.

    We never confirm a theory. Every theory remains tentative and hangs on its verisimitude and may be junked tomorrow by a better explanation with greater virisimitude.

    Your therories about epistomolology cannot be exempted from scrutiny and the acid test of "independent testing". They fail the corroboration test, the one and only test.

    Jump ahead of the only game in town, "my theory is falsifiable and has survived independent testing determined to wreck my theory" and we will listen to you.

    There are three kinds of knowledge and two are rubbish. There is objective kmowledge that passes the test and has verisimitude. There is subjectice knowledge that is nothing more than your idiosincratic opionion and there is belief.

    Who gives a monkies about your opinion or belief. Give us something that passes the test and we are all ears.

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  28. Major_Freedom12:46 PM

    David Lilley:

    Wow.

    You post EP and shoot it down. But there isn't any EP to be seen.

    Of course there is. Are you reading the same blog post as I am? The one titled "Science without falsification is no science"?

    Falsification is the heart of EP.

    We have not mentioned the positivitists for some fifty years. Nor the linguists.

    I was talking about the article posted here. I don't know what you mean by "we have not mentioned the positivists." In this article, I read:

    "The root problem here is that macroeconomics seems to have no commonly agreed-upon criteria for falsification of hypotheses."

    and

    "So as things stand, macro is mostly a "science" without falsification. In other words, it is barely a science at all. Microeconomists know this. The educated public knows this. And that is why the prestige of the macro field is falling. The solution is for macroeconomists to A) admit their ignorance more often (see this Mankiw article and this Cochrane article for good examples of how to do this), and B) search for better ways to falsify macro theories in a convincing way."

    Those are very clear statements. N. Smith is clearly advocating for "better" positivism in macro-economics.

    Apparently you missed the last 50 years where the economics profession has almost universally adopted EP. What are you talking about "we have not mentioned the positivists for some fifty years"? Virtually every economics practitioner is a positivist. This article is calling for better falsification in macro-economics. That is positivism.

    Laws of nature such as "to every action there is an equal and opposite reaction" are not here one minute and gone the next. They are here to stay. And the problem solvers do not change from one minute to the next. They are searchers for the truth. And even if they did change as time went by we don't rely on them. We rely on corroboration by independent third parties.

    Where to begin with this one.

    First, I actually didn't say the problem solvers changed "one minute to the next." Did you mean to attribute that to me? I said the problem solvers change over time. This is incontrovertible. The very process of positivism, of falsification, presupposes that change is taking place, specifically in the problem solver's knowledge, and hence those actions that are influenced by such knowledge.

    Second, relying on independent third parties doesn't overcome the fact of change, for the third parties are people too, and they also learn over time. They change as well. For economics, third parties are other economists, who are, presumably, learning as well, or else they would not even be viewed as credible third parties. I am quite honestly baffled how you can believe that "independent third parties" somehow transcends the "issue" of problem solvers changing over time in their knowledge and their actions to the extent they are influenced by their knowledge. Third parties are actors as well! Unless you're talking about God or robot third parties, which I am assuming you weren't.

    We don't falsify or confirm our theories. We test them.

    That means the same thing. Testing a theory is a process of falsifying/confirming that theory.

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  29. Major_Freedom12:47 PM

    2/3

    David Lilley:

    If they pass the tests they increase their verisimitute (their truth-like-ness) but may still fail tomorrow's test. They always remain tentative but increase their truthlikeness as they pass more independent testing.

    Passing the test is a confirmation. Failing the test is a falsification.

    When, and only when, they are as sound as a bell (corroborated by independent testers) they become "objective knowledge". But they still only hang on their truthlikeness (verisimiltude) and may be shot down tomorrow by a better theory that has greater verisimitude.

    You're talking about positivism, and you don't even know it.

    We never confirm a theory. Every theory remains tentative and hangs on its verisimitude and may be junked tomorrow by a better explanation with greater virisimitude.

    Confirmation doesn't mean verification. I think you are conflating the two. You thought by confirmation I meant verification. No, by confirmation I simply mean a tentative acceptance of a theory that of course can itself be falsified or re-confirmed at a later date.

    Your therories about epistomolology cannot be exempted from scrutiny and the acid test of "independent testing". They fail the corroboration test, the one and only test.

    The "corroboration test" is actually the fallacy of authority, or ad populum, depending on who you are referring to.

    Truth is not determined by vote. Truth is determined by reason. By logic and evidence depending on the type of proposition. Einstein was not wrong or right depending on how many others had the same thoughts as he at the time he thought those thoughts. Even if no other scientist "corroborated" his thoughts, they wouldn't become any more or less right or wrong that it always was.

    More importantly however, "independent testing" is just failing to see outside the positivist box. If the argument I am making is AGAINST positivism, then you cannot possibly demand that I prove it to you by way of...positivist methodology.

    It would be like a theist demanding that an atheist prove the universe contains no God, by relying on a method that presupposes God exists.

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  30. Major_Freedom12:48 PM

    3/3

    David Lilley:

    Jump ahead of the only game in town, "my theory is falsifiable and has survived independent testing determined to wreck my theory" and we will listen to you.

    Then you won't listen to me, because my argument is a criticism of the notion that the only valid economic propositions are ones that are "falsifiable."

    Let me turn this around. Suppose I held that valid economic propositions are not falsifiable, but a priori true. Suppose I then demanded that you prove your falsifiable theories as true, but only if you present them as a priori arguments. Would that be fair to you? It won't, correct? So how can you demand that I play by your rules, when my argument is precisely a criticism of those very rules?!

    There are three kinds of knowledge and two are rubbish. There is objective kmowledge that passes the test and has verisimitude. There is subjectice knowledge that is nothing more than your idiosincratic opionion and there is belief.

    OK, then what of that very statement itself? Is that statement you just made an objective knowledge that passes the test? Or is it subjective knowledge that is nothing more than your idiosyncratic opinion? Or is it a belief?

    If it is objective knowledge, then from whence did it arise? What is the grounding for its validity?

    Clearly it cannot arise from "testing" itself, since any proposition cannot be considered valid on the basis of presupposing itself as its own premise, for that would be begging the question.

    Is it a subjective opinion then? Or a belief? If so, then by your own logic, it's rubbish.

    So here you are telling me the proposition that there are only three forms of knowledge, two of which are rubbish. And yet, that very statement itself requires a priori knowledge that is grounded in something external to the very proposition itself.

    Who gives a monkies about your opinion or belief. Give us something that passes the test and we are all ears.

    My argument is a criticism of the very "testing" criterion you're demanding is the only valid one. You can't possibly demand that I prove myself BY WAY OF USING the very method I am arguing against!

    How about instead of demanding that I adopt your method, why don't you actually understand what I am saying? It should have been obvious to you that what you're demanding is impossible for anyone to do.

    Please note that I am not trying to slip in religion through the back door. I am simply reasserting rationalism as the only valid epistemology for human actors, and that empiricist-positivism contradicts itself.

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  31. Major_Freedom10:57 AM

    David:

    A shorter version of what I am saying:

    Ask yourself this:

    Is your belief that falsification is the only valid method of acquiring knowledge about reality, itself a falsifiable belief? In other words, can your belief in principle be falsified? Will you be consistent enough to say that your belief might be wrong? That it is possible that there exists another valid method of acquiring knowledge about reality, that will falsify your belief?

    If you answered no any of these questions, then you must admit your belief is an a priori true nonfalsifiable proposition, and thus you make room for a discipline such as economics claiming to produce a priori valid empirical knowledge.

    If you answered yes to all of these questions, then you must admit that your belief is itself only a hypothesis, i.e. a hypothetically true proposition regarding hypothetically true propositions, which of course cannot qualify as an epistemological pronouncement. For it would not provide any justification that propositions are not, and cannot be, categorically, or a priori true.

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    1. Major_Freedom,

      I agree that we should remain on subject and the subject/post was economics.

      I and others were sucked into commenting by the words "falsication" and "science". Your comments too were in the vain of epistimology rather than economics and it is to this thread that I responded.

      Some commenters mentioned Khun and one mentioned Whewell. You mentioned "a priori", which to me means Kant, and "positivism" which to me means the positivists and the lingists.

      It is to these concepts that I responded. Kant's a priori (I would have to refresh my memory on what a priori is) and posivitism are not in the modern epistomological lexicon just as we no longer debate push and pull.

      We go forward standing on the shoulders of Popper. In 1934 he gave us the "falsification criteria" to demarcate between that which we should bother to think about and that which was not worth thinking about because it couldn't be tested anyway.

      Some 50 years later, after being introduced to Tarski, he concluded that knowledge that had passed the falsifiablity criteria and met every test thrown at it met the Tarski truth standard of "correspondance with the facts". Every judge, jurer and solicitor would have recognised this long before the great logician Tarski formalised it in logic. Popper then claimed that such knowledge was "objective knowledge" and the best of our knowledge of the world we live in and dwarfed subjecive knowledge (opinion) and dogmatic knowledge (belief) which didn't even enter the frame.

      I do bow however to your critisism. Popper pointed out in volume 2 of "The Open society and its Enemies" that to choose to be a critical rationalist was an emotive decision.

      I may be wrong. I read Popper some 40 years ago whilst studying mechanical engineering and have never revisited it. In my engineering career I never used the words proof, verify, confirm or falsify but consistently used the term corroboration which was entirely consistent with an industry where every design had to meet third party certification by DNV or similar.

      Just looking at your last paragraph above. "I don't believe." I never use the word. It belongs to Soren Kirtegarde and to me represents the final apology. "No we are not saying six days, everything revolves around the earth, Adan and Eve etc. We are saying nothing, we have no cosmology, Gallelo, Newton and Darwin are cool. We are in the faith/belief game. No more putting holes in our cosmological blanket, no more apologists. We have a new clean skin. Its a belief system, a faith. He is there for you if, and only if, you junk reason and take the Abramic hook."

      You have all the prose of an epistemologist but use terms like belief which is foriengn to us and accuse me of having hypothesis's. Hypothesis's are only guesses. We don't have "true hypothetical propositions/pronouncements" We only have guesses and we put them to the test and immediately junk them if they fail the test. If they fail to honour their predictions, if they fail to be coroborated by the evidence, they are simply junk and we move on. But we move on thanks to knowing what is junk knowledge.

      Delete
    2. Major_Freedom3:49 PM

      David Lilley:

      I agree that we should remain on subject and the subject/post was economics.

      No, the subject was the philosophy of science. How it pertains to economics is interesting, and what I brought up, but it is actually subsidiary.

      I and others were sucked into commenting by the words "falsication" and "science". Your comments too were in the vain of epistimology rather than economics and it is to this thread that I responded.

      Some commenters mentioned Khun and one mentioned Whewell. You mentioned "a priori", which to me means Kant, and "positivism" which to me means the positivists and the lingists.

      Positivism is characterized by the following two major ideas:

      1. All valid propositions that say something true about the real world must be verifiable, or at least falsifiable by experience, where experience is only empirical observations.

      2. Related to the first, there is no distinction between theoretical explanations and historical explanations.

      It is to these concepts that I responded. Kant's a priori (I would have to refresh my memory on what a priori is) and posivitism are not in the modern epistomological lexicon just as we no longer debate push and pull.

      The "modern lexicon" is diverse and very rich. Please don't pretend that there is a monopoly ideology.

      We go forward standing on the shoulders of Popper. In 1934 he gave us the "falsification criteria" to demarcate between that which we should bother to think about and that which was not worth thinking about because it couldn't be tested anyway.

      It is precisely Popper's epistemology that I hold as self-contradictory, which was the motivation for my initial series of posts

      Some 50 years later, after being introduced to Tarski, he concluded that knowledge that had passed the falsifiablity criteria and met every test thrown at it met the Tarski truth standard of "correspondance with the facts". Every judge, jurer and solicitor would have recognised this long before the great logician Tarski formalised it in logic. Popper then claimed that such knowledge was "objective knowledge" and the best of our knowledge of the world we live in and dwarfed subjecive knowledge (opinion) and dogmatic knowledge (belief) which didn't even enter the frame.

      Popper failed to refute rationalism. I mean REAL rationalism, not his misnamed "critical rationalism."

      I do bow however to your critisism. Popper pointed out in volume 2 of "The Open society and its Enemies" that to choose to be a critical rationalist was an emotive decision.

      I may be wrong. I read Popper some 40 years ago whilst studying mechanical engineering and have never revisited it. In my engineering career I never used the words proof, verify, confirm or falsify but consistently used the term corroboration which was entirely consistent with an industry where every design had to meet third party certification by DNV or similar.

      Corroboration is another word for peer review, and peer review is the result of a democratic influence into science, where not only should politicians be elected by majority vote, but valid theories must pass this voting test as well. It does a fairly decent job, but there are some problems with it, the most obvious being when an eccentric, ahead of their time thinkers and scientists fail to gain deserved recognition for their discoveries because the majority of scientists' careers and incomes would be threatened if the new ideas became dominant. It is not common, but it does happen, and because of that, I reject the absolutist position that corroboration is necessary. I choose to reserve to myself the final judgment, rather than depending on committees, which MAY be wrong.

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    3. Major_Freedom3:50 PM

      2/3

      David Lilley:

      Just looking at your last paragraph above. "I don't believe." I never use the word. It belongs to Soren Kirtegarde and to me represents the final apology. "No we are not saying six days, everything revolves around the earth, Adan and Eve etc. We are saying nothing, we have no cosmology, Gallelo, Newton and Darwin are cool. We are in the faith/belief game. No more putting holes in our cosmological blanket, no more apologists. We have a new clean skin. Its a belief system, a faith. He is there for you if, and only if, you junk reason and take the Abramic hook."

      I call all convinctions I hold as incorrect: "beliefs." Please understand that I did not intend to convey the impression that you are a dogmatist who wants to put forward "belief" as a valid foundation. I am just saying that the notion that the only valid knowledge is through EP, is a "belief". It cannot be a knowledge in my view, because my view is that it is wrong.

      You have all the prose of an epistemologist but use terms like belief which is foriengn to us and accuse me of having hypothesis's. Hypothesis's are only guesses. We don't have "true hypothetical propositions/pronouncements" We only have guesses and we put them to the test and immediately junk them if they fail the test.

      Perhaps I need to go deeper to show you what I mean:

      When you say that hypotheses and theories and guesses have to be "put to the test", when you say we should "junk them" if they fail the test, and so on, I would like to address your attention to a tacit presumption that is being made when you do that. The tacit presumption is the a priori proposition that the truth of things does not change over the course of time. That if you propose a hypothesis, then it is assumed that no matter when in the future the hypothesis is tested, the same criteria applies, namely, whatever the results of this test happen to be, you say the result either "junks" the hypothesis (I use the phrase "falsify" to describe what you are doing), or "passes the test" (I use the phrase "confirm" to describe what you are doing).

      The ONLY way that "junks the hypothesis" or "passes the test" can be meaningful conclusions to make concerning a hypothesis proposed in the past, is if all that is true back when the hypothesis is made, is still true when the conclusion is made to junk or pass the hypothesis.

      In other words, in the course of engaging in the "testing" methodology you are talking about, the a priori proposition: "The truth of reality that we are trying to discover today, is the same as it was in the past, and is the same as it always will be in the future."

      For if the truth of things did change over time, like for example if the physical laws of the universe changed over time, then you could not possibly say that a past hypothesis or past set of observations contradicted a current hypothesis or current set of observations, or "falsified" them, or "refuted" them, or in your parlance "junks" them.

      This a priori proposition, that truths are constant over time, is, I must implore you, not a part of the "testing" methodology itself. It is an assumption that is appended to the "testing" method from without.

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    4. Major_Freedom3:50 PM

      3/3

      David Lilley:


      If they fail to honour their predictions, if they fail to be coroborated by the evidence, they are simply junk and we move on. But we move on thanks to knowing what is junk knowledge.

      Do all economic theories have to be of the form of a prediction? Suppose I said the following:

      "Whenever the supply of a good increases by one additional unit, provided each unit is regarded as of equal serviceability by a person, the value attached to this unit must decrease. For this additional unit can only be employed as a means for the attainment of a goal that is considered less valuable than the least valued goal satisfied by a unit of such good if the supply were one unit shorter."

      Is this proposition a proposition that COULD be wrong, in which case it is not an apodictically true statement, but only a hypothesis that needs to be tested before we can know?

      Or how about this proposition:

      "Whenever two parties engage in a voluntary trade, both parties expect to benefit from the trade ex ante, or else they would not trade."

      Is this proposition a proposition that COULD be wrong, in which case it is not an apodictically true statement, but only a hypothesis that needs to be tested before we can know?

      Or one final proposition:

      "Whenever the quantity of money is increased while the demand for money to be held as cash reserve on hand is unchanged, the purchasing power of money will fall."

      Is this proposition a proposition that COULD be wrong, in which case it is not an apodictically true statement, but only a hypothesis that needs to be tested before we can know?

      ---------

      Considering the above three propositions, would you say that the validation method is the same as it is in the natural sciences? Are they only hypotheses in the same sense as propositions concerning the outcome of mixing two natural materials? Do we have to test these propositions continuously against observations?

      I submit that anyone who says the above three propositions are only hypothetical, which could be wrong, and need to be tested empirically before we can be sure, is simply not grasping the meaning of the propositions. It would be like someone being taught the Pythagorean theorem, and then demanding that the educator show example after example of empirical right triangles to "prove" the educator isn't just spewing a dogmatic belief or baseless conjecture. That the Pythagorean theorem is only valid once it is established empirically by observing datasets of right triangles and making sure each one does abide by the relation claimed by the educator.

      Economic principles are like the Pythagorean theorem in this respect. They are propositions of the form that although they may have been awakened by observation, nevertheless the validation process, the way we know they're true, is not grounded in empirical observation the way the outcome of mixing two chemicals is grounded in observation, but rather is grounded in the logic of right triangles. Economic principles are grounded in the logic of individual human action.

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    5. Major_Freedom:

      I am pleased that you take such time and effort to respond to me.

      I am also pleased that you have studied Popper.

      I don't know if any have stood on Popper's shoulders and seen further. I last read some epistimology 40 years ago. I concluded that I didn't need to read more as the two biggest problems in philosphy had been solved, there would be no more philosophers but instead an army of scientific disciplines advancing our understanding of the world and contributing to "World 4". The question "how does knowledge grow?" has been solved by Popper and the question "which behaviour is right and which wrong?" by Kant.

      I think you are making some mistakes, as follows:

      1. Laws of nature do not change with time. For example, Newton's third law tells us something about everything that has moved, is moving and will move and contact another object.

      2. All science is done for the benefit of "one person", the critical rationalist, who can take it and use it and hopefully take it further. The prefix "critical" was applied to distance the concept from the rationalists like Descartes.

      3. Kant, but this is going back a bit, had the notion of a priori truths. But the fact is that once any conjecture is put on the table before our "one person" it is there to be tested. It isn't in a different set.

      4. I thought that the logical posivitist/linguistic school was dead and that is why I have been so negative about your use of the term posivitism. I thought that we both agreed that logical posivitism had been replaced by the "falsifiability criterion".

      5. You keep displaying propositions/statements but Popper is adamant that cosmologists should talk about the world and not words.

      6. The critical rationalist doesn't change with time. Have you read Popper's "elimination of psychologism".

      7. Pythagoras' theorem is maths and maths is a place where there is the concept of proof. Pythagoras proved his maths theory and we don't need to use scientific method to test it.

      8. Economic principles are grounded in Adam Smith's work rather than sociology or psychology. Even modern Nobel prize winning economists only deal in fairy dust like the Keynsian multiplier.

      I don't think we disagree about much. We are both basically critical rationalists which is why we are having this discussion. I may be letting you down because I only konw Popper and have read nothing new in the last forty years.

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    6. Major_Freedom8:48 PM

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      David Lilley:

      1. Laws of nature do not change with time. For example, Newton's third law tells us something about everything that has moved, is moving and will move and contact another object.

      Of course. I don't see how this is an error I made, but regardless, my point is that this constancy assumption, does not, indeed cannot, apply to human knowledge and action. For the very process of studying the world, presumably makes us learn about the world in an a priori unpredictable way. To the extent that such knowledge influences our actions, then our actions also change.

      2. All science is done for the benefit of "one person", the critical rationalist, who can take it and use it and hopefully take it further. The prefix "critical" was applied to distance the concept from the rationalists like Descartes.

      And "rationalism" was applied to distance himself from the radical empiricists Hume and Locke.

      He ended up with something that was still self-defeating.

      3. Kant, but this is going back a bit, had the notion of a priori truths. But the fact is that once any conjecture is put on the table before our "one person" it is there to be tested. It isn't in a different set.

      Is that assertion an a priori truth, or an empirical hyppthesis, or something else?

      Tested how exactly? What if the proposition is true, but not observable, like the concept of observation itself, which must be understood? I can never observe anyone making an observation. I can observe them moving, and behaving, and putting various tools to their eyes and whatnot, but in order for me to conclude that observations are taking place, I have to understand it by knowing that I make observations (which is also unobservable to others and also must be understood).

      4. I thought that the logical posivitist/linguistic school was dead and that is why I have been so negative about your use of the term posivitism. I thought that we both agreed that logical posivitism had been replaced by the "falsifiability criterion".

      The core problem hasn't gone away, namely, the issue of the logical status of the "falsifiability criterion" itself.

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    7. Major_Freedom8:48 PM

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      David Lilley:


      5. You keep displaying propositions/statements but Popper is adamant that cosmologists should talk about the world and not words.

      Propositions are statements concerning the world. Propositions can be either true or false, depending on their fidelity with reality.

      6. The critical rationalist doesn't change with time.

      Yes, he in fact does. He LEARNS. Or else why engage in critical rationalism in the first place? Learning over time changes a person over time.

      Have you read Popper's "elimination of psychologism".

      Yes.

      7. Pythagoras' theorem is maths and maths is a place where there is the concept of proof. Pythagoras proved his maths theory and we don't need to use scientific method to test it.

      The same thing is true for the logic of action. It cannot be tested, because the very testing would itself be an action, and subject to the same logical constraints in the propositions you think have to be "tested" before we can know they're true.

      8. Economic principles are grounded in Adam Smith's work rather than sociology or psychology. Even modern Nobel prize winning economists only deal in fairy dust like the Keynsian multiplier.

      Economic principles can only be principles if they are grounded in logical constraints of action.

      I don't think we disagree about much. We are both basically critical rationalists which is why we are having this discussion.

      I'm actually not a critical rationalist. It presumes constancy in the operation of causes. I reject that when it comes to knowledge. I do not think there are any scientific constants that can enable me to predict my own future knowledge path, before I go out and learn it. I also cannot coherently regard myself as past causally determined. I also reject the skepticism that Popperism invariably leads to. I also reject the social engineering implications of Popperism. I'm really not a Popperist in any sense.

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    8. Dear Major_Freedom,

      I have just read your response and I am delighted that you have responded. I thought that you were not going to respond.

      It is late, 1am in the UK. I will come back to you another day.

      Thank you,

      David Lilley

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    9. Rationalism (in the ordinary sense) is a necessary adjunct to empiricism, but rationalism doesn't work without starting assumptions.

      And the *only possible way* to select *most* of your "starting assumptions" is with empirical testing.

      There are also certain very basic starting assumptions which are questioned mainly by idiotic post-modernists. The basis of these assumptions -- logic works, there is continuity except when there is change, etc. -- is that it is impossible to live without making these assumptions. Perhaps I will wake up tomorrow and the sun will be made of green cheese, but it is *impossible to live that way*. Perhaps logic will suddenly fail, but it is *impossible to live that way*. Literally everyone makes these very minimal assumptions all the time even if they claim that they don't. They are therefore not really arguable.

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  32. Microeconoimcs is sick too, and in the same way -- failure to take out the trash.

    Consider this line from Wikipedia: "It is assumed that all firms are following rational decision-making, and will produce at the profit-maximizing output."

    ....this assumption is so bogus I shouldn't need to explain why it's bogus. Yet it has not been abolished from the teaching of microeconomics 101, and microeconomists allow it to fester on Wikipedia.

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