I suspect people just get caught up about the maths and state that it is the problem – when what they mean is that they have an issue with some underlying assumptions of some economic analysis. After all using mathematics as a language is hardly contentious 😛

If people just said what assumptions they disagreed with we could have a useful discussion – instead all we get is vitriol 😛

“I think I was confused by “QUOTE””

Good point. I will change that sentence actually, thanks for the pointer!!

The “grain of truth” is that maths can be used poorly – to hide ceteris paribus assumptions, either on purpose or accidentally.

For example, this is one of my concerns with “agent based” economic modeling (the numerical kind, not the standard intertemporal stuff). I think it is more realistic and can provide a lot of useful analysis – but it is so complex that it is hard for people to truly “understand” what the model, and the model results, are saying. In this case there is a lot of room for spurious results – which could translate into poor policy decision making.

However, theoretical economists are generally aware of this – they tend to be more methodologically sound then alot of people give them credit for. As a result, I think the “grain of truth” provides an important lesson, which economists already know 🙂

it sets the context at the start. I haven’t read the arguments just yet (will take a look when I have more time) but if I found only a “grain of truth”, I wouldn’t describe the argument as excellent. I think we’re on the same page, I just mis-understood because of the change in direction.

“theoretical economics is basically applied maths so I would give it a little more credit than you have here”

More credit? I’ve said that maths is essential as a language for describing social situations. I don’t know how I could have been “more” supportive of the use of maths in economics.

Yes, theoretical economics is applied maths – applied maths is the application of maths – “Mathematics is the study of quantity, structure, space, and change” (http://en.wikipedia.org/wiki/Mathematics).

So theoretical economics applies knowledge of how we study “quantity, structure, space, and change” to issues related to economics/society. In other words it uses the structure and language associated with mathematics to clearly study questions about economics/society.

The post said that applying the language and methods of mathematics to economics was appropriate – therefore it was stating that theoretical economics effectively being applied maths was appropriate. As a result, I do not believe it was physically possible for me to be more supportive of the role of maths in economics 😛

“Biggest issue from experience is not the maths – its normally the assumptions and this tend to occur because the model works backward”

Definitely. It isn’t the maths that is the problem, its how were using it 😛

(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life (5) Burn the mathematics. (6) If you can’t succeed in 4, burn 3. This I do often.”

Point Three on translating into English I think is important – its not sufficient that just quants understand. I also find point 4 as a good proxy for suggesting that something is wrong with the model/maths (normally the assumptions) if the result cannot be illustrated by examples from real life – does not mean always wrong – just more likely to be wrong.

Biggest issue from experience is not the maths – its normally the assumptions and this tend to occur because the model works backward, i.e. the result a person wants and then fitting the maths and assumptions to create this. Recent examples of using scarey social cost numbers spring to mind 🙂