Economics is definitely a social science. Even the most business-bro economist would agree.
But I would actually argue it is closer to physics than philosophy*. At the macroeconomics scale, there are very solid trends and predictions to be made with very solid hypotheses as to why they occur. And in a small town, you can generally get away with a lot of the higher level aspects of microeconomics and make solid predictions. Gas stations thrive on this shit. But high frequency trading, as well as sites that let individuals buy whatever stocks they want, really do narrow the region that can actually be considered either one and instead we are looking at having to apply “micro” concepts across entire countries worth of people.
Which… is physics. Drop a ball from a platform? You can math out when it will hit the ground to the nearest second pretty easily. Want to go milliseconds? Now you probably need to take into account air resistance, but you can probably do that with some not overly complex simulations and wind tunnel experiments. But as the height increases and you start putting a rocket engine on the back of that device, just doing a fluid mechanics simulation in your CAD program of choice stops being viable and you start needing to consider the underlying material properties and possibly even doing molecular dynamics simulations under the hood.
And… that is kind of where we are with economics. We have the high level math and simulations. Newton’s Three Laws have been discovered and people can get a long way. But nobody really understands the underlying causes well enough to find the economic equivalent of the Theory of Relativity. And nobody has figured out how to run simulations that can take into account… still only a subset of the variables at play.
Personally? I supported a decent number of simulations of population movement and the like as part of the covid efforts. I strongly suspect there is some underlying “science of why humans do the shit we do” that nobody has properly codified yet, and Economics is a subset of that. Because the more you look beyond ECON 101 level concepts, the more it is clear that there IS strong logic underneath and that a lot of “predictions based on trends” are very much “I predict that if we kick the ball at this angle with this much force, it will go that distance” levels of science. But there are so many factors involved that nobody understand how to account for.
*: Going by the modern definition rather than the historic one where most hard sciences were wrapped up in philosophy. One of the reasons we have “Doctorate of Philosophy” for physics and the like. … Which also speaks to how naive this post is
We’ve had 3 “once in a lifetime” financial meltdowns in like 25 years now.
Our banks need bailing out like every 10 years.
The arrogance of thinking that we’ve figured out the economy even in the Newtonian sense is part of why, I think.
Like, I hear you, but at the same time it just doesn’t align with even the broadest observations.
And when a theory doesn’t align with observed data, I have to be critical of the theory…
I’m interested in if you can expand your explanation to account for it, though. It’s super low stakes and I don’t think it’s really possible to prove any of it so I think it’s a great subject for thought experiments.
You’re making the mistake of thinking of this from the perspective of an end user. By the time you or I see anything, we have already done all economically viable simulations and are using the only approximations that “make sense” to use.
That does not at all mean that the people running those sims even think it will work. That means that the same report saying “Look, this might work if we get really lucky and none of these four hundred events that we can’t account for occurs” that execs then ignored because they either don’t understand or, understand well enough to know there is nothing that can be done.
Which is the other side of this. So much of modern physics and engineering is proprietary for corporate reasons. If Hyundai suddenly were to gain some new understanding of material science, they are going to exploit that. And the same is true where fundamental flaws in car/whatever designs are often treated as “How can people be so stupid and irresponsible as to do this” rather than… pretty much anyone with an understanding of the underlying math saying “So glad we didn’t try and do that”.
As for Newton’s Laws: Understand that, even though we call them “laws”, they are still theories. It is incredibly unlikely that we discover some new concept that flips our understanding of the world on its head and we discover that an object in motion will actually accelerate on its own if you get it to the exact right speed and THEN paint it red, but there are enough unknowns that we STILL can’t rule that out entirely. We can rule it out to the point that we would laugh at anyone suggesting otherwise… but would probably check their math if they suddenly had a proof.
Like, let’s look at one of those laws: The simplified verison is that an object in motion will stay in motion unless acted upon by an outside force. Now, we are all smart enough to understand that those outside forces include things like gravity, friction on the ground, and even friction from the air. But as you increase the speeds at which objects are moving, you suddenly have a LOT more factors to take into account where, depending on the math, even radiation can become an “outside force” to slowly (over millenia, if memory serves) slow down an object (take that one with a grain of salt as I forget if that has been “proven” yet or if the argument is that it is still just the particles themselves causing the deceleration or not).
I STRONGLY encourage people go out for drinks with scientists if you ever have the chance. Not grad students and professors (although, many do think of the same problems) but the engineers who work for companies and think tanks and government labs. You will RAPIDLY reach the point of “I have no fucking idea why it does that but the database says I substitute a ‘4’ for this property and stuff mostly works.”. You might even get lucky and someone will go on a rant about how the entire field are idiots for not listening to them because approximation X is actually a fundamentally flawed one and under very specific circumstances it will fail so that dipshit in management better give them a raise".
But yeah. People very much overestimate how much “science” has its shit together. We are mostly bouncing around and making informed hypotheses on what would and would not work. We just have the advantage of most of what we do costing so much money and requiring so many people that it is “safe but slow” to advance. Although… read some stories about the early atomic weapons programs around the world if you want to have trouble sleeping. And some of that is very much because: Good science reporting ignores that. It presents “theories” as “fact”. Because people are stupid. And saying “We believe your car will not spontaneously melt” is actively harmful. Whereas “Your car won’t melt and the battery is contained to the point that the passenger cabin is safe to the extent of all of our testing”
Whereas economics? They don’t have the luxury to not do something. People are going to buy and sell widgets regardless and you either get in on the widget trading or you might as well not exist. So you work to the extent you can and cross your fingers it works out. Which… is a lot like the early pioneers of flight. We love the Wright Brothers but a LOT of people died because their math was wrong or they didn’t understand a concept and the Wrights very much benefited from past experiments.
Ignoring the shitty history of that meme:
Economics is definitely a social science. Even the most business-bro economist would agree.
But I would actually argue it is closer to physics than philosophy*. At the macroeconomics scale, there are very solid trends and predictions to be made with very solid hypotheses as to why they occur. And in a small town, you can generally get away with a lot of the higher level aspects of microeconomics and make solid predictions. Gas stations thrive on this shit. But high frequency trading, as well as sites that let individuals buy whatever stocks they want, really do narrow the region that can actually be considered either one and instead we are looking at having to apply “micro” concepts across entire countries worth of people.
Which… is physics. Drop a ball from a platform? You can math out when it will hit the ground to the nearest second pretty easily. Want to go milliseconds? Now you probably need to take into account air resistance, but you can probably do that with some not overly complex simulations and wind tunnel experiments. But as the height increases and you start putting a rocket engine on the back of that device, just doing a fluid mechanics simulation in your CAD program of choice stops being viable and you start needing to consider the underlying material properties and possibly even doing molecular dynamics simulations under the hood.
And… that is kind of where we are with economics. We have the high level math and simulations. Newton’s Three Laws have been discovered and people can get a long way. But nobody really understands the underlying causes well enough to find the economic equivalent of the Theory of Relativity. And nobody has figured out how to run simulations that can take into account… still only a subset of the variables at play.
Personally? I supported a decent number of simulations of population movement and the like as part of the covid efforts. I strongly suspect there is some underlying “science of why humans do the shit we do” that nobody has properly codified yet, and Economics is a subset of that. Because the more you look beyond ECON 101 level concepts, the more it is clear that there IS strong logic underneath and that a lot of “predictions based on trends” are very much “I predict that if we kick the ball at this angle with this much force, it will go that distance” levels of science. But there are so many factors involved that nobody understand how to account for.
*: Going by the modern definition rather than the historic one where most hard sciences were wrapped up in philosophy. One of the reasons we have “Doctorate of Philosophy” for physics and the like. … Which also speaks to how naive this post is
We’ve had 3 “once in a lifetime” financial meltdowns in like 25 years now.
Our banks need bailing out like every 10 years.
The arrogance of thinking that we’ve figured out the economy even in the Newtonian sense is part of why, I think.
Like, I hear you, but at the same time it just doesn’t align with even the broadest observations.
And when a theory doesn’t align with observed data, I have to be critical of the theory…
I’m interested in if you can expand your explanation to account for it, though. It’s super low stakes and I don’t think it’s really possible to prove any of it so I think it’s a great subject for thought experiments.
You’re making the mistake of thinking of this from the perspective of an end user. By the time you or I see anything, we have already done all economically viable simulations and are using the only approximations that “make sense” to use.
That does not at all mean that the people running those sims even think it will work. That means that the same report saying “Look, this might work if we get really lucky and none of these four hundred events that we can’t account for occurs” that execs then ignored because they either don’t understand or, understand well enough to know there is nothing that can be done.
Which is the other side of this. So much of modern physics and engineering is proprietary for corporate reasons. If Hyundai suddenly were to gain some new understanding of material science, they are going to exploit that. And the same is true where fundamental flaws in car/whatever designs are often treated as “How can people be so stupid and irresponsible as to do this” rather than… pretty much anyone with an understanding of the underlying math saying “So glad we didn’t try and do that”.
As for Newton’s Laws: Understand that, even though we call them “laws”, they are still theories. It is incredibly unlikely that we discover some new concept that flips our understanding of the world on its head and we discover that an object in motion will actually accelerate on its own if you get it to the exact right speed and THEN paint it red, but there are enough unknowns that we STILL can’t rule that out entirely. We can rule it out to the point that we would laugh at anyone suggesting otherwise… but would probably check their math if they suddenly had a proof.
Like, let’s look at one of those laws: The simplified verison is that an object in motion will stay in motion unless acted upon by an outside force. Now, we are all smart enough to understand that those outside forces include things like gravity, friction on the ground, and even friction from the air. But as you increase the speeds at which objects are moving, you suddenly have a LOT more factors to take into account where, depending on the math, even radiation can become an “outside force” to slowly (over millenia, if memory serves) slow down an object (take that one with a grain of salt as I forget if that has been “proven” yet or if the argument is that it is still just the particles themselves causing the deceleration or not).
I STRONGLY encourage people go out for drinks with scientists if you ever have the chance. Not grad students and professors (although, many do think of the same problems) but the engineers who work for companies and think tanks and government labs. You will RAPIDLY reach the point of “I have no fucking idea why it does that but the database says I substitute a ‘4’ for this property and stuff mostly works.”. You might even get lucky and someone will go on a rant about how the entire field are idiots for not listening to them because approximation X is actually a fundamentally flawed one and under very specific circumstances it will fail so that dipshit in management better give them a raise".
But yeah. People very much overestimate how much “science” has its shit together. We are mostly bouncing around and making informed hypotheses on what would and would not work. We just have the advantage of most of what we do costing so much money and requiring so many people that it is “safe but slow” to advance. Although… read some stories about the early atomic weapons programs around the world if you want to have trouble sleeping. And some of that is very much because: Good science reporting ignores that. It presents “theories” as “fact”. Because people are stupid. And saying “We believe your car will not spontaneously melt” is actively harmful. Whereas “Your car won’t melt and the battery is contained to the point that the passenger cabin is safe to the extent of all of our testing”
Whereas economics? They don’t have the luxury to not do something. People are going to buy and sell widgets regardless and you either get in on the widget trading or you might as well not exist. So you work to the extent you can and cross your fingers it works out. Which… is a lot like the early pioneers of flight. We love the Wright Brothers but a LOT of people died because their math was wrong or they didn’t understand a concept and the Wrights very much benefited from past experiments.