Thursday, September 17, 2009

Mathematical elegance and empirical relevance

Economicst have been accused of confusing mathematical elegance with empirical relevance. I have tended to agree, but then it struck me: What is the basis for the belief? Is it just my accumulated subjective impressions or is it something that could be objectively quantified so as to convince someone who does not agree with me?

In short: How could you convince a fellow die-hard-formalistic-member-of-the-economics-tribe that the profession has gone wrong because it fell in love with mathematical formalism? And is it true?

One could, or course, give examples. Rational addiction theory, real business cycles, rational expectations, the emphasis on microfoundations in New Keynesian economics. In addition to the problem that the die-hard-formalist will not agree with you on the particulars, there are two problems. First, picking examples do not give the whole picture. Second, it seems difficult to prove that the cause of the problem was an excessive love for formal models. It is certainly easy to get the impression that this is the case when reading these paper, but it is just an impression. I really do not know whether the author/editor was too much in love with formal models. All I can and should do with a paper - formal or not - is to point out what I think is right and wrong in it and perhaps I should just quit speculating about why they were wrong as long as it is impossible to test it more objectively?

Note the "perhaps." It may be possible to link the problems in a paper to its love for formalism, or more generally the problems of a profession, but I think we should dig deeper and not just accept that argument because we agree with it based on our own impressions. We need reasons and arguments that can convince the opposition as well!

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