Maybe sexism really is worse than racism. This ad doesn't even look like it's that old. Too late now... I already voted for Obama.

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David Brooks is a guilty pleasure of mine. Why guilty you say? Because I get the impression that he doesn't really have an opinion on anything and simply writes whatever seems hip. Take, for example, his wild love/hate swings on Obama, or his defense wayback when of big government conservatism.

Still, given that he's often taken as the metric of moderate conservatism, neoclassics may have reason to be worried:

The nation had essentially bet its future on economic models with primitive views of human behavior. The government had tried to change social psychology using the equivalent of leeches and bleeding. Rather than blame themselves, Americans directed their anger toward policy makers and experts who based estimates of human psychology on mathematical equations.

I never know what Brooks believes because he often cages his statements in elaborate rhetorical devices. Here's one possible reading:

The government shouldn't intervene because it doesn't know what it's doing and will just make things worse. Economics isn't a science; it's just abstract mathematics.

If so, it's a pretty cunning about turn from someone who would have a few years ago turned to economists as a justification for the same end: don't intervene because markets are efficient (economists agree!).

It's certainly a better argument than the efficient markets hypothesis, but still seems flawed:

1) Not intervening is what got us here in the first place
2) The models may be flawed, but not all policy needs models. In fact, I'd argue the best policy is driven by common sense. The best thing Milton Friedman did was point out the obvious: there can't be a permanent trade-off between unemployment and inflation because people will eventually catch on and develop inflation expectations. No shit. I don't understand how anyone could have thought otherwise. Then again, looking at academia in general, there seems to be a huge incentive to argue for conclusions that defy logic; it's a lot more interesting than being told what you already know.
3) Economists do spend a lot of time thinking about the economy so they must know something. Just ignore their models, listen to their common sense arguments, and check up on their statistics. It won't be perfect but its better than nothing... I hope.

I'll leave you with this entertaining snip-it from an old Brooks piece that reminds me why I continue to read him:

When Democrats open their mouths, they try to say something interesting. If the true thing is obvious and boring, the liberal person will go off and say something original, even if it is completely idiotic. This is how deconstructionism got started.

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I always heard that Fidel Castro loved to give four hour long speeches, but I never really stopped to think what he actually talked about. Is this what it's like? It's worse than the Film Noir professor I had in college whose lectures were a hopeless mash of: recollections about his battle with alcoholism ("alcoholics like to think they can get better just by switching from hard liquor to beer, but believe me it doesn't work") , speculations on the sexuality of actors in the 1940s, and panegyrics to his dog (who was admittedly very cute).

Here are some of Castro's thoughts on Rham Emanuel's name:

What a strange surname! It appears Spanish, easy to pronounce, but it’s not. Never in my life have I heard or read about any student or compatriot with that name, among tens of thousands.

Where does it come from? I wondered. Over and over, the name came to mind of the brilliant German thinker, Immanuel Kant, who together with Aristotle and Plato, formed a trio of philosophers that have most influenced human thinking. Doubtless he was not very far, as I discovered later, from the philosophy of the man closest to the current president of the United States, Barack Obama.

Another recent possibility led me to reflect on the strange surname, the book of Germán Sánchez, the Cuban ambassador in Bolivarian Venezuela: The transparence of Enmanuel, this time without the “I” with which the German philosopher’s name begins.

Enmanuel is the name of the child conceived and born in the dense guerrilla jungle, where his extremely honorable mother, Colombian vice presidential candidate Clara Rojas González, was taken prisoner on February 23, 2002, together with Ingrid Betancourt, who was a presidential candidate in that sister country’s elections that year...

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Is this clip racist or has it gone so far overboard that it's broken through the space-racist continuum and is now lost somewhere in the uncanny valley.

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I have my first irate comment. This is a good start, the sparing use of caps is a nice touch, as is the confusing grammar (what does "their" refer to in the second paragraph?). However, it would be nice if there was a bit more swearing and such. Could I suggest this as a template?

Anyway, onto the comment:

You're all over the place, Gimpei! You just repeated all the points i was making with my comment, and then claiming them as your own, at length.

The fact that your vaunted lab experiments FALSIFY their assumptions suggests they are FALSIFIABLE, no? So just say that their assumptions have been shown to be wrong. Otherwise you're like the Derridean who uses ersatz logical reasoning to proudly prove that there can be no such thing as logical reasoning.

There's seems to be some confusion here. My argument was that assumptions about consumer behavior have been disproved, and yet the majority of macroeconomists have ignored this result and continue to use these assumptions as if nothing had happened. This suggests that these assumptions are insulated from empirical testing, i.e. they are not falsifiable.

For a science to be falsifiable in the Popperian sense, the scientists who are actually using these assumptions need to accept that they can be disproved, and need to agree on the manner in which they can be disproved. There doesn't seem to be a way to disprove neoclassical assumptions in economics, thus by Popper's criteria, economics is a pseudoscience. Is this clear?

This is my interpretation of Popper, not my own opinion. I'm a big fan of Daniel Hausman and highly recommend his book The Inexact and Separate Science of Economics.

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Five responses to a single post, it's a Gimpei record! I have challenged you reader. Do you feel your mind expanding? It's because I'm blowing it! Hmm... that didn't come across right. Anyway, the debate seems to have progressed. Take the latest response:

We can predict the economy with much better precision than we can the weather: ie. I can tell you roughly what the economy in China will look in 6 months far more accurately than I could the weather -- even taking into account seasonal variations! So there goes meteorology.

There are two fundamental problems with this comment:

1. I never said that predictive power is necessary for something to be a science.

2. Meteorology is a terrible example.


Let's start with problem number one. In the previous post I was giving reasons for why according to Popper economics is a pseudoscience.

In fact, I disagree with Popper on most points and think he's a terrible model for all sciences. Late Popper lets up a bit on the strict falsification criteria. However, he never managed to get around Kuhn's critique: if Popper's methodology had actually been followed, many of the our greatest scientific discoveries would never have been made. Popper's disciple, Lakatos, tried to deal with this problem; unsuccessfully in my opinion, but that's another story.

As for the content of the comment, predictive power is obviously not a prerequisite for a science. If it were, evolutionary theory, geology, etc wouldn't be sciences. Not even Popper would go that far. He just really disliked Freudianism and Marxism.

My point was that, from the point of view of Popper, for economics to be a science, it has to be possible to falsify any assumption. I argued in the previous post that there were certain privileged assumptions about consumer behavior that are immune to falsification: they aren't questioned when macro models fail and they aren't questioned when lab and field experiments suggest that people actually behave completely differently. There's actually a paper written by Popper where he tries analyze economics and its pretty entertaining to see him dance around the obvious conclusion that, by his criteria, it is a pseudoscience.

On to part 2: Meteorology is a stupid example.

You can predict the weather in six months with greater confidence than the state of the Chinese economy. In six months time, we have a pretty good idea that the temperature will be in a certain narrow band in China.

If only business cycles were as easy to predict as seasonal changes. China just posted a 20 million drop in employment! In six months, they could be sitting pretty or tanking. Are you clarevoyant or just exhibiting an overconfidence bias?

More fundamentally, Meteorologists aren't in the same position as macroeconomists since the science of meteorology on the micro-level is pretty sound. Last time I checked, we didn't have 30 years of experiments undermining the laws of thermodynamics!

Game, set, and match. Keep the comments comming; they grow more sophisticated by the minute. If you're lucky I may even tell you where Milton Friedman got it the most wrong (hint: it has nothing to do with free markets).

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Romoney raised an interesting point in response to the previous post:

But aren't economic theories at least theoretically falsifiable? The problem is that they are so very hard to falsify.

My answer is that by Popper's criteria, neoclassical economic theory is not falsifiable. I disagree with Popper fundamentally, and my memory is somewhat hazy, so let me apologize ahead of time for what is surely a crude bastardization of Popper's theory of falsifiability (at least early Popper).

There's an idea in the philosophy of science that comes out of logic called the Duhem-Quine problem. It basically says that certain scientific hypotheses cannot be disproved because in order to test them empirically you need to add extra auxiliary assumptions, and if the test fails you can simply reject the auxiliary assumptions rather than the original hypothesis.

Popper was well aware of this logical difficulty and argued that a discipline could only be considered a science insofar as it structured its tests in a manner that all hypotheses, not only auxiliary assumptions, can be falsified.


A cursory glance at economics reveals that there are certain sacred cows, termed the "hard core", that cannot be disproved. Take general equilibrium (DSGE) models, which forms the basis for a large amount of macro work. In DSGE models, a set of "hard core" assumptions in consumer theory allow hundreds of millions of people to be aggregated into a single "representative consumer."

These assumptions are extremely restrictive. Since the late seventies, behavioral economists have found in the lab, in the field, and with people from all walks of life that these assumptions are consistently violated. People simply do not behave in the manner assumed by neoclassical theory.

There are a plethora of responses by neoclassical economists: these tests have been performed in a lab so they don't apply in the real world; they may have been applied in the real world, but only to a few hundred people etc. These responses are normally followed by the claim that, through the magic of aggregation, inconsistencies on the individual level are miraculously smoothed out.

This argument might make sense if DSGE models actually worked, but they don't. Neoclassical economists like to say that their models are true because they "fit" a set of data that has been fed into them. However, this criteria of "fitness" hardly constitutes a test of their verity. This is because the coefficients in these models are simply adjusted (the technical term is "calibrated") until the best fit is reached. So these models fit by definition!

A better test of a model is whether, once calibrated for one set of data, it works as well with a different set of data: if we feed a new set of data (for which we already know the outcomes) into the model, to what degree do the predictions of the model match the actual outcomes. Unsurprisingly most models fail miserably at this point.

The true test, of course, is whether a model can predict outcomes in the real world. Unfortunately, as we have seen over the past year, they've seriously dropped to ball on this one.

Thus not only have neo-classical macroeconomists known for the past twenty-five years that their assumptions are wrong on the micro level, but their models don't work at the macro level either. Rather than questions these assumptions, because it would involve completely refashioning macroeconomics, they have, as predicted by Quine, simply rejected the auxiliary hypotheses particular to each distinct model. At this point there isn't any evidence left that could get them to change their minds; the "hard core" assumptions of macro are unfalsifiable.

If you've managed to make it this far in my post, kudos to you. I'd like to reiterate that I disagree fundamentally with Popper, but I do think that neoclassical macro is in a precarious state. The only thing that has kept it alive for so long is the absence of a competing research program. There's something called agent based modeling that could be promising, but it has been marginalized up until now by the neoclassics who control all the major journals. Given the myriad shortcomings of neoclassical macro, it seems worthwhile to at least give these guys a shot. If some major breakthrough were to come out of agent based modeling, it could reinvent macroeconomics on a far stronger microfoundation.

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