Maths and economics … again

Not PC has a critique of the use of mathmatics in economics.  Critising the discipline of economics has been especially popular lately.  I have had engineers (and some physicists) call me up to tell me that we do economics wrong and we need more maths (to which my reply would be to look more closely at the methodology of your own discipline before even trying to apply it to our one).  I have had business people (and my dear mother) call me up and say that there is too much “voodoo maths” and economists need to work in real jobs first.

What I have found in common with all these criticisms is that their implicit view of what an economist does, and the point of economics, differs remarkably from my own.  The scope, methods, and reasoning behind economic analysis which we are imbued with at university most definitely differ from the scope, methods, and reasoning which I often hear people accuse economists of using/making.

Now I don’t agree with either side except my own here, as I think the current implementation of maths in the study of economics makes sense.  In fact, I don’t believe the level of maths is a fixed thing – it merely depends on what “language” people who use economics are willing to use.  This is because maths is merely a language.  Using mathematical form, economists are able to place down ideas and clarify thinking, as long as economists understand the implicit assumptions they make when writing out a mathematical model then this is a valuable way of doing things.

Rather than reiterating my defense of economics, I will link to things.  Here is where I last discuss math and economics, here I mention “Marshal’s view” of maths, which is close to the way economists still function.  Here is a set of links where I build up an idea of “what is economics“.  And before anyone says that predictive failure indicates that maths is an issue, I say that the purpose of economic language and discussion is trying to build a case for description and explanation.  There are a myriad of links saying this (*, *, *,*).

So the typical conclusion from this is that maths is useful in economics as it provides a powerful tool/language that allows us to set issues down – in the hope of being able to describe/explain relationships in reality.

Not PC adds another element though.  Specifically he counters by calling on the lack of causal inference available from pure mathmatics – however, when this is the case we have to rely on explicit judgments and theory.  In this situation we can DEBATE causality when we set up the mathmatical model – but it does not make the use of such models invalid.

That is why I always say – use the theory as much as possible before you get onto using the data.  Now I have no doubt that the data may then impact on the way you view the theory, there is a significant circularity problem here, but that is part of the reason why economists are so determined to formalise and set down in mathmatical stone the theoretical roots of their analysis.  And this is, of course, the main area where economics is trying to improve itself and evolve at the moment – hence why I don’t think there is an issue with training and research in the discipline per see.

6 replies
  1. Kimble
    Kimble says:

    Goddamn I am sick of engineers.

    You always see people criticising economics in finance and investing forums. Often they will say that they started to study economics, but when they saw that it was so “flawed”, impractical, and wishy-washy they went into something with credibility, usually engineering or computer science etc.

    These are the people that claim economics is a joke because it all hinges on homo economicus / EMH / gaussian distribution / etc, which is obviously not true. If half a semester of Econ101 taught them anything, it was that economics has no practical use in the real world.

    They were frustrated that economics didnt have nice and correct answers to the questions posed. Or rather, that the nice and correct answers required unpractical assumptions and only worked in a strictly restricted world.

    They went into econ 101 with a preconceived notion of what the field was. When the reality didnt match up with that notion they called the reality flawed! The irony is that this is exactly what they complain economists are doing!

  2. Matt Nolan
    Matt Nolan says:


    Agreed. Although I am sure that there are many lovely engineers out there.

    However, if I have to hear someone tell me I should use brownian motion one more time, I’ll probably start laughing at them. Brownian motion is a useful thing, but I swear it is the only answer some people give to a question 😀

    Ultimately, I think the people that start criticising economics from the direction we are discussing here probably don’t understand the methodological issues in their own discipline – or else they wouldn’t be quite so cocky 😉

    I have always found it interesting how many of the “strict laws of physics” still rely on wavy probability concepts (even excluding the pure randomness of quantum mechanics) … tbh on can understand probabilities more as a choice concept with imperfect information/ignorance, and so I always found the heavy use of them in classical physics an amusing result.

  3. Kimble
    Kimble says:

    Brownian motion is a useful thing to drop into a coversation when you are quite sure you are being eavesdropped upon by that cute blonde-who-is-known-to-be-attracted-to-guys-who-are-like-really-REALLY-smart-like-those-cute-guys-from-Big-Bang-Theory-and-yes-she-does-think-she-is-just-like-Penny-from-that-show-because-she’s-totally-smarter-than-people-give-her-credit-for-and-she-also-works-as-a-waitress-and-is-going-to-be-an-actress-too.

    Other than that? Meh.

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