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Re:What Economists Still Don’t Get About the 2008 Crisis by JumpCrisscross on Monday July 30, 2018 @03:25PM (#17647215)
> economics was a science built upon the assumption that people are rational actors

You may have taken a statement made in jest literally. Homo economicus is a known fiction. Just as frictionless, airless physics are a known fiction. They're useful, however, for (a) defining a limit or ideal, (b) pedagogical purposes and (c) starting to think about a problem.

Microeconomics makes falsifiable predictions which can be repeated in experiment. (I'll go ahead and quibble over whether macroeconomics is a science. It's closer to an art, like politics. A field with its own rules and lessons worth learning, but without the capacity to experiment and make falsifiable predictions.)

Re:What Economists Still Don’t Get About the 2008 Crisis by dv_dt on Monday July 30, 2018 @03:37PM (#17647305)
Physics was able to go on from the simplistic models, refine and extend them to both a wide scale and very high quality of theoretical and empirical concurrence in exquisite detail and generality.

On the other hand, economics goes on from Homo economicus into a mass of mathiness with very poor empirical correlation except perhaps in very very narrow circumstances.

Re:What Economists Still Don’t Get About the 2008 Crisis by JumpCrisscross on Monday July 30, 2018 @03:52PM (#17647430)
> economics goes on from Homo economicus into a mass of mathiness with very poor empirical correlation except perhaps in very very narrow circumstances

If by "very narrow circumstances" you mean setting pricing, organizing distribution, predicting the effects of price increases and decreases, determining capital costs, making portfolios, and a whole bunch of other stuff that microeconomics makes precise and in a wide variety of circumstances predictably-correct predictions, sure. There is no economics on the Sun's surface.

Re:What Economists Still Don’t Get About the 2008 Crisis by ghein on Monday July 30, 2018 @09:04PM (#17649731)
The second part of your analogy is off.

It's not billiard physics to general relativity, it's billiard physics to fluid dynamics and predicting the exact route of a stick through a set of rapids.

In economics our biggest complaints are around failure to determine that we're near a singularity and failure to predict behaviour through singularities (in a signal processing sense). It's understandable, as we all strongly care about the path of the stick, yet still unreasonable.

Macro is a decent enough tool most of the time, as are traditional fluid mechanics approaches. What we don't have are ultra precise CFD tools but in our arguments we act like we should/do. Sometimes traders think that they do have a great CFD solution and that's how we get LTCM crashes!

Re:What Economists Still Don’t Get About the 2008 Crisis by dv_dt on Tuesday July 31, 2018 @07:45PM (#17658347)
Fluids is a pretty good metaphor, but I would say that today we have sufficiently good reproducible physical understanding of fluids that we can generally fly airplanes at a high level of certainty (e.g. turbulence on the wings is both predictable and controlled in the correct ways that the plane does not crash). In comparison we crash the economy and even sub portions of markets periodically (and the last general crash was worse than many previous recessions) - we don't even have a complete picture of which turbulent areas to be wary of economically.

Or to maybe to a more human point, we can carry humans around on airplanes just fine, but don't know how to carry a payload of a nation of humans on a stable and healthy economic vehicle.

Re:What Economists Still Don’t Get About the 2008 Crisis by zwaps on Monday July 30, 2018 @04:55PM (#17647931)
Physics deals with relatively simple things compared to economics, because nature is inherently rational once one discovers the rules. Humans, on the other hand, can not be grasped so easily because they change the rules. Even if you "discover" a working theory of human behavior, people may just react by not doing that thing anymore to spite you.

So if you want to have some sort of basic theory, any theory at all that really could work with such subjects, you gotta step waaaay back. The rational actor that actually "works" to build a scientific theory is such a general concept that it has literally zero predictive value. It states that actors make consistent choices, but only for identical choice situations. Thus, even if a microsecond passes, we are not in the same choice situation and all sort of rationality is out of the window.

An actor who chooses chocolate first, and then chooses something else the next second while throwing away the chocolate is can still be rational, it's only about the counterfactual of the first choice situation. Yet, one was able to show that this sort of very general rationality is a necessary condition to writing a formal model of human behavior, in other words the homo economicus is just answering the question as to what ground rules we need to model human behavior in the first place. It is truly an immaterial, philosophical object that is used in all science dealing with human behavior.

It's more to the credit of economists that they actually wrote this out axiomatically instead of hiding it in implicit discussion.

Then, economists went and tried to write falsifyable theories based on data and observation. This has been done with more or less success, but let's not forget that economic science still replicates much, much better than something like Psychology or Sociology, also concerned with human behavior.

By the way, applying physical approaches to economics is called econophysics and is a thing that exists. It's not really a thing that is successful, cause if you treat humans as mindless particles who are just behaving according to some ruleset, you are working with hyper-hyper rational actors. But it exists.

Re:What Economists Still Don’t Get About the 2008 Crisis by throwawaymath on Monday July 30, 2018 @04:04PM (#17647522)
> On the other hand, economics goes on from Homo economicus into a mass of mathiness with very poor empirical correlation except perhaps in very very narrow circumstances.

Can you give an example?

Re:What Economists Still Don’t Get About the 2008 Crisis by dv_dt on Monday July 30, 2018 @04:32PM (#17647759)
Can the field of economics give some rationale as to why the dynamics of money has any sort of stable foundation upon which to reason? Physics has at great pains established that indeed god does not play dice with the rules of the universe, but is mass human behavior that consistent? Is there a unified theory of money that predicts economic cycles from the 16th century as well as the 21st?
Re:What Economists Still Don’t Get About the 2008 Crisis by zwaps on Monday July 30, 2018 @06:00PM (#17648518)
Depends on what you mean by dynamics of money. Social science usually features two approaches, one micro approach based on individual decisionmaking, and one macro approach trying to find general rules to aggregates (so mass behavior).

In terms of micro, yes there are pretty consistent theories as to why and how people use money. Probably the most relevant application thereof are in the microeconomics of banking and in so called microstructure models in finance.

In terms of macro, there is of course also a lot of monetary theory as to why people use money in a certain way.

What does not yet exist is a unified theory linking micro behavior to all aggregates. Such models typically rely on some sort of representative agent, which is known and recognized to be deeply problematic in scientific terms of aggregation. Other approaches exist, of course, such as agent based models. But there is no "theory of everything" yet.

Can economics give rationales? Yes. Peek into any course on the theory of money.

But reasoning from micro behavior to aggregates is difficult in social science. We are currently in the process of figuring out better theories of aggregation, but doing so requires using game theory and decision theory in fully interdependent (so for example networked) contexts trough dynamics, so this as of yet also requires a lot of methodological (read: mathematical) machinery that is not yet developed.

Re:What Economists Still Don’t Get About the 2008 Crisis by throwawaymath on Monday July 30, 2018 @06:21PM (#17648682)
That's a dodge. The point in my asking that question is to see if you're sufficiently well acquainted with any meaningful literature to actually provide an example substantiating your claim.

Inverting the question does not obviate the answer to what I asked you. Moreover, as stated your rebuttal question is underspecified: what do you mean by the "dynamics of money" and "stable foundation"? Can I trivially answer this by talking about the relationship between credit and debts, or are you looking for something more specific? You responded to my (very precise and specific) question with a vague, orthogonal dismissal of the entire field.

Why don't you tell me about the "mathiness" in some peer-reviewed economic paper (preferably in a tier 1 journal) that you perceive to only be correlated with real world conditions in "very narrow circumstances"?