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Comment by IAmBroom

10 hours ago

> When models fail, economists adjust assumptions ...

When models fail, physicist adjust hypotheses ...

11 comments

IAmBroom

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belter  9 hours ago

Physics can test those hypotheses under controlled conditions...

  • RandomLensman  9 hours ago

    Not always/limited in some areas (astrophysics come to mind where we, e.g., cannot (yet) create a star under controlled conditions). Testing hypotheses or predictions vs observations is also a valid method.

    • belter  6 hours ago

      Science is not about where you test hypotheses, but how. Astrophysics builds falsifiable models and checks them against reality like spectra, gravitational waves, etc... When predictions fail, theories change.

      If these were economists, they would check if their equations match the economic universe they live in. :-) Instead, they conclude the agents just “did not behave rationally enough”.

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  • JumpCrisscross  4 hours ago

    > Physics can test those hypotheses under controlled conditions

    I genuinely have no idea why so many commenters on HN will spout nonsense based on high school curriculum with the confidence of a PhD when it comes to economics, but won’t embarrass themselves in other fields.

    Yes, economics—particularly microeconomics—is constantly subject to experimentation. Macroeconomics is closer to astronomy, in that models are developed, novel data sources sought, old models tested and then validated or rejected. Also like astronomy, or perhaps more accurately fundamental physics, it’s currently off in a loop of DSGE optimizations which are mathematically pretty for the field but not super interesting outside it. (This work is not in that category.)

    • belter  2 hours ago

      That comparison collapses instantly. Physics has invariants...Economics does not. You can’t rerun the economy under controlled conditions, so “experiments” are mostly natural or quasi experiments...statistical patchwork with fragile assumptions.

      Macroeconomics isn’t like astronomy :-) Stars don’t change behavior when you model them. Economies do. There are no stable primitives, no conservation laws, just shifting behavior and feedback loops.

      DSGE models are equilibrium sandcastles calibrated to past data. In physics that’s failure while in macro it’s tenure.

      Economics is interesting and sometimes useful but calling it an experimental science is self-flattery.

        “One thing we are not going to have, now or ever, is a set  of models that forecasts sudden falls in the value of financial assets.”

   -- Robert E. Lucas

 "As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools."

   -- Jean-Claude Trichet - https://www.ecb.europa.eu/press/key/date/2010/html/sp101118.en.html

 "How Conventional Wisdom Failed Us" - https://youtu.be/c8LMWCko4d0?t=138

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