Is economics a legitimate science? Or is most of it made up bullshit with no basis in reality?
>>16897559it's applied math
>>16897560Yeah. But many of the economic models only work under certain circumstances. Are these models actually applicable to the real world?
eco is mostly prescriptive when it should be descriptive, the controversy is that they are mapping perfect assumptions unto real world messy manifolds, it's not "bullshit" but it's not entirely predictive either
>>16897640no mathematical model can apply in general, and the physics are to blame
Not Science & Math
>>16897559It's as legitimate a scientific field as psychology
>>16897559Most of it is retarded and descended from Vienna Circle Positivism. Austrians are pretty much the only major school with any kind of epistemological rigour.
>>16897885>Austrians are pretty much the only major school with any kind of epistemological rigour.Austrians explicitly reject the scientific method
>>16897559It's called the "dismal science" for a reason.
>>16897900>Austrians explicitly reject the scientific methodWhat do you mean?
>>16897559No, it's like law
>>16897559Some things like the law of supply and demand are basic logic and work. Many other things like that too but then there are other more complicated things that are not so grounded in reality. But if you think about it that happens in many other scientific fields too.
>>16898056I'm mostly a humanities fag, so I don't really have a clue about other sciences. I'm a business major and I have to take basic micro and macro courses. Stuff like utility theory, the derivation of demand and supply curves, perfect and imperfect competition etc. One thing I've noticed is that most of these models work only under certain circumstances that don't really exist irl. So I've been wondering how similar are economics to stem. I've seen some people treating economics as a hard science. They're basically saying that some of the economic models work in the real world exactly the same as they work in theory. But that seems kinda dumb
>>16898133>One thing I've noticed is that most of these models work only under certain circumstances that don't really exist irl.Give me an example of that.
>>16898133I don't know, the only thing they taught us in macroeconomics was control models like the Ramsey model. Even then, it's about maximizing the utility you get from consumption and leisure time in every period from t = 0 to infinity.It's a dynamic model, and if you want, you can choose prices and salaries as random variables and do stochastic control.We always choose the agent's response optimally, so we're just using a bit of analytical mechanics, which physics students learn in their second year.Ultimately, what they all give is the evolution of total consumption and leisure time.From there, assuming that the agents behave identically and optimally according to microfoundations, you can examine their effects on inflation and unemployment, etc.Econometrics also tries to ground the theory in real-world data.If we didn't use micro foundations or utility maximization, there would not be any optimization. And our models would remain lame as fuck.
>>16898174The assumption that the consumers act rationally. Maybe the axioms of utility theory. And also the axioms of perfect and imperfect competition. I'm really just wondering how accurate these models are to real world scenarious. To me it seems that maybe not so much, but it's just my feeling. I'm a bit retarded (that's why I'm a business major) so keep that in mind.
>>16898182>The assumption that the consumers act rationally.Develop that a little more so I can know what you mean exactly.
>>16898032Look up praxeology.
>>16897559It's legitimate. The illegitimate part is economists pretending their field is like a natural science such as physics when it's really in the same area as fields such as psychology and sociology
>>16897559Its a social science
>>16897559This really depends what you mean. Economics is a broad field, some of which is definitely applied scientifically, and most of which is definitely based in reality. The branch of economics typically employed within the US falls into the non-scientific category, relatively speaking. It employs scientific methods, but diverged from the scientific method a long time ago when actual material analysis revealed some very... inconvenient things about privately-owned production and how it relates to the stability of a capitalist system. Everything after that has had to deviate from material analysis in some way to avoid this discussion, e.g. with theories of marginal value.
>>16898184The axiom of reflexivity comes to mindIf a>b and b>c then a>c. Does this really apply to the real world? Then the assumption that the consumer will always choose the product with higher utility because he's able to compare various products and decide which of the products provides him with more utility. Isn't real world filled with scenarios in which the consumer doesn't bother with comparing the products and he ends up choosing products with lower utility?
>>16898388So if I understand it correctly, austrians base their theory on logical deductions and largely ignore empirical data?
>>16898449The economy doesn't need intelligent consumers, it only needs consumers and production. It doesn't matter if people spend all their money in stupid products. If you look around that's how the economy already works, we spend our money mostly in worthless things like entertainment (movies, music, sports), tattoos, clothes to draw attention, etc. Only a minority saves money to then invest it to generate more money or to buy only useful products. Spending is mostly driven by basic human instincts, not rationality.
>>16897559Economics is essentially math at the service of an ideology.It's a very dishonest field, IMO
>>16898527But doesn't the conomic theory stand on the assumption that the consumer is rational?
>>16897559>economicsdunno, maybe a confluence of randoms with obfuscatory spins. i.e. the house always wins
>>16898896I don't know about that. I only know basic things about Economics. Explain me what does exactly mean that the consumers have to be rational.
>>16897559a necessary distraction from the man behind the curtain
>>16897877Psychology exceeded the epistemological rigor of the economics that get 'taught' to people 'studying' economics outside the bits of economics academia that actually do science years ago. Sociology in turn started to get dragged kicking and screaming by psychology through the "yeah so these foundational studies aren't worth the paper they were printed on" ride. Economics is still being stubborn about it.The part of the field most people interact with (and that most affects their lives directly) is basically extra narcissistic astrology for MBAs, the wealthy, and politicians, with an "orthodoxy" that boils down to "this status quo is fine forever because I'm enjoying it (or the people paying me to say this sort of thing are), and accounting for thermodynamics is heterodox, actually." It's mostly a vessel for sanitizing and pseudoscientifically reinforcing an incumbent political ideology in the face of repeated failures.I wonder if people have studied 'the market' as a pseudo-deity to these demographics. It behaves in a very similar way, culturally.>>16898182>>16898175I've always found rational choice modeling really funny.In the real world, it is often optimal (i.e. rational) for a given agent to deliberately induce deviations from rational behavior via false or incomplete information. Thus, any agent cannot reliably remain rational to their real micro foundations (because they are subject to non-real perturbations even in a fully rational market) without knowing the truth of each other agent's statements. They must independently know the agent's mental state beforehand - e.g. predict it a la game theory.Because each agent action confers information that may be fully or partially false, each agent must predict all external actions and mental states to remain rational.The only way to keep agents rational is to conclude that the market contributes nothing and each single rational agent has an identical complete simulation of it in their head.
>>16897559More a sport than a science, like someone thinks they figured out the economy only to have another twat figure out another way to fuck everyone over and collapse society.
>>16899176In economics rational behaviour means completeness and transitivity. If you have products A and B. You're able to determine if your preferences areA>B, A<B or A=BTransitivity means that when A>B, B>C then A>CWhich imo isn't always true irlLike if you have apples, pears and oranges your preferences can beApples>pearsPears>orangesBut Oranges>applesWithout transitivity most of the economic models fall apart. IIRC the argument is that transitivity is true in most cases, which is enough.
>>16899314What is that needed for exactly?, to know what people like?
>>16897559Of course it’s bullshit.
>>16899531What he means is : most economical theories are based on the assumption that the agents mostly choose the wisest option. (Example : If a product is cheaper and has a better quality, more people will buy it, but it's not always true)In real life it's not the case a d the crowd often makzs suboptimal chokces...
>>16897640Yes, they are. Many of them assume all things are equal, which is a bit like an engineer assuming something is in a vacuum. Of course in application it will never be perfectly accurate, but many of the things you learn in economics are nevertheless applicable in the real world.
>>16899857This varies wildly based on what you are categorizing as “rational.” There are two separate approaches to your post. Furst, though some consumers WILL act irrationally as it relates to their purchasing something of equal quality at lower prices, as a group they average out. In other words while there ARE some that will buy substandard products at higher prices, in general that is not the case. Secondly, and more importantly here, there may be a deviation from what YOU consider rational and what the CONSUMER views as rational. It all depends on the model and the data. It could be that one product is cheaper, but from the perspective of the consumer they are making a perfectly rational choice. Any effective modeling of these behaviors, then, have to accurately reflect what is rational.
>>16899857IIRC the rationality of the consumer only refers to completeness and transitivity as I said here >>16899314
If rational behaviors motivate consumers, why is Edward Bernays the founding father of advertisement?
>>16899531>>16899531If I understand it correctly the transitivity axiom is required for the math to work.In ordinal utility theory, the utility from a combination of good is expressed through indiference curves. The further the indifference curve is from the origin, the higher the utility. Transitivity ensures that the indifference curves don't intersect like in picrel. Utility theory is important because the demand curve for good x is derived from the differences in utility at different price levels of good x. If transitivity is violated, you can't really construct the demand curve. Some studies show that irl, consumers sometimes violate transitivity.
I'd say things are going well enough in SEA that a lot of the core theories hold true.Value chains, demand vs supply, etc. A lot of the academic work was funded by larger banks, as a means and as a tool to get control over inflation and loaning risk. So by this point anybody who can do basic math and a bachelor in economics will have a solid understanding of how inflation works in all its form, including how the Spanish gold rush impacted European gold prices, or how Rome without understanding inflated its coinage and trade vouchers. So economics is a traditional form of trying to validate how wealth is actually created, and the supply chain it entails. But its also a validation of fiat money, and a lot of rather questionable practices that can only work due banking secrecy laws(which is again validated by the various forms of state monopoly daylight robberies). This is contrasted by things like World Bank and Austerity, or how non local ownership works vs Private Equity. At every stage there is also a rational actor who could decide "fuck you, I got mine" and then try to poison the well as a exit position. Similarly countries has a problem where the idea is that the service economy scales better, but the truth is that it only scales on existing resource extraction(primary and secondary), meaning India is still dependent as a outsource target to have a functional economy due a lack of internal economy.
I would be more satisfied with my life if it was.t. Econ
>>16897559good luck predicting when Mr. Money bags feel like taking all the investors in a wild ride
>>16897559It is a real science, but some parts of it are the equivalent of building an entire science out of trying to model and predict the turbulent flow behavior of specific ocean currents that are affected by other turbulent currents. Those parts of economics are inherently a nearly-futile effort, but economics is just so important on everyone's lives that we dedicate a ton of effort towards it anyways cause any progress has huge repercussions.Also, other parts of economics depend on psychology, so that gets fucky too.Economics can basically be described as the study of the largest clusterfuck humanity has ever created.
>>16897559it's closer to pseudoscience than science.some of the researchers are alright epistemologically but they're the minority and usually dismissed by establishment.most of the models are based on ideology-affirming assumptions from the jump. unironically more of an "activist" """science""" than sociology; the only difference is there's a lot more money in getting economists to tell politicians what you want them to hear (namely that "private markets will solve all problems so please give corporations all the material assets of the state for basically free, also don't make laws preventing abusive and excessive exploitation of your citizens pretty please").>>16900235demand curves are kind of silly as a concept. even in the simplest models it was a foundational mistake to act like price was the dependent variable and not demand - "price discovery" requires either the nonexistence of time or literal retrocausality, because you cannot mathematically use an optimization function on a target that constantly changes. the only thing actually discovered is demand at a given price, because realized demand is the material result of exchanges.but if you want to pretend that markets are efficient and that "free" market competition is optimal (ignoring for the moment the need for a stable state to facilitate a market, since outright theft always has higher ROI AND provides a greater competitive advantage, making it optimal at all times), you need SOMETHING to look like it limits the ability for price gouging without direct regulation to that effect. otherwise the optimization function drives price to infinity by cornering supply, completely irrespective of realized or even hypothetically realizable demand.ergo, price had to look "optimized," actual mathematics be damned.
