ECONOMICS AS A SCIENCE?
Illustration by Heske van Doornen.
Is economics a science? Could it be? Should it be? The debate is as alive today as it was in the early 20th century. This article reviews some of the key arguments in the discussion and provides a helpful backdrop against which to rethink the purpose of economics today.
In 1906, the influential American Irving Fisher argued that economics is no less scientific than physics or biology—all three aim to discover “scientific laws.” While they may not always be represented in reality, Fisher argued that scientific laws are fundamental truths in nature. Newton’s first law of motion, for instance, cannot be observed. Only if certain circumstances were met, a body would move uniformly in a straight line. Fisher concluded that the same holds true for economics.
But not everyone agreed. The discipline of economics was charged with unsound methods. Specifically, economists were accused of using the deductive method without the necessary level of precision. Jacob Hollander addressed the charges in a 1916 essay, arguing that scientific inquiry involves uniformity and sequence. Progression in science relies on the formation of hypotheses, which may at some point become ‘laws.’ Observation and inference are the first steps toward the creation hypotheses. The final step in the scientific process is verification, which is required before we move from theory to law. Without verification, he argued, “speculation is an intellectual gymnastic, not a scientific process.”
Hollander’s work reveals one of the questions at the heart of this debate: Is verification required, and even possible, given the complexities of economic phenomena? Scholars have a disposition to rely on the works of previous thinkers, Hollander argued, without endeavoring to move beyond familiar perspectives.
This question lives on today. In a 2013 opinion piece for the New York Times, Stanford economist Raj Chetty argues that science is no more than testing hypotheses with precision. Large macroeconomic questions such as the cause of recessions or the origin of economic growth “remain elusive,” Chetty writes. This is no different than large questions faced by the medical field, such as the pursuit to cure cancer. The primary limitation of economics, Chetty argues, is that economists have a limited ability to run controlled experiments for theoretical macroeconomic conclusions. The high monetary cost and ethical standards make these types of controlled experiments impractical. And even if we could run a controlled experiment, it may not matter in the long run, for society changes.
In a 2016 essay, economist Duncan Foley added to the discussion. He argued that the distinctions between the social and natural sciences are not clear. Both come from the same scientific revolution, and both are influenced by values. The notion that scholars in the natural sciences “pursue truth” is a flawed assumption. Foley argues that scholars in the natural and social sciences choose which problems to solve and the methodology they use. This choice involves values, since a scholar must value one research project more than another.
Examining the scientific nature of economics, John F. Henry, an economist at the Levy Economics Institute, explains that neoclassical economics holds a position of influence in society because of its universal and abstract nature. Henry maintains that we should reexamine this assumption of universality. If economics is based on subjective values, how can it be considered universal? Should economists continue making ‘progress’ toward a more scientific structure of knowledge? This leads us to ask how we define progress. There is no end to this debate.
It seems unproductive to continue asking such questions. Rather than debating whether economics is or is not a science, perhaps we should shift the discussion toward questions that ask why economics needs to be a science in the first place. Where does this desire to be ‘scientific’ come from, and why is it so important for economics to be considered scientific? Perhaps the real issue is the determination to make economics a science.
This article was originally published on Economic Questions (formerly The Minskys).