A physicists once remarked that his job would been much harder if particles had free will. But that is exact economists have to do: predict what humans will do. There is an entire sub-field of study on the non-rationality of people and how it feeds into how that effects money, finance, and economies:
* https://en.wikipedia.org/wiki/Behavioral_economics
But there have been instances of models working. When QE started a group of folks made predictions:
> We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.
* https://www.hoover.org/research/open-letter-ben-bernanke
Another group of folks (often called "Keynesian") made different predictions based on their model(s) / understanding of how things work.. One turned out correct and other incorrect in their predictions.
See also predictions about "tax cuts pay for themselves":
* https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act
* https://en.wikipedia.org/wiki/Kansas_experiment
The fact that people ignore the results of the experiments is not a failing of the academic field.
Economists have agency. They don't have to predict what humans will do. They believe they can predict it, attempt to make their predictions, then claim that's what will happen.
That works in reverse as well, attempting to predict why humans did what they did in the past and then attempt to attribute those predictions as an explanation of quantified economic indicators.
In both case, past behavior and future behavior, their predictions are untestable. How is that scientific?
Economists study the economy which is made of… a bunch of humans doing stuff with money.
> In both case, past behavior and future behavior, their predictions are untestable. How is that scientific?
What is this not testable about:
> The planned asset purchases risk currency debasement and inflation […]
* https://blogs.wsj.com/economics/2010/11/15/open-letter-to-be...
* https://www.hoover.org/research/open-letter-ben-bernanke
Was there (USD) currency debasement? Was there US inflation? No? The predictions were wrong. The same day it was published (in the WSJ) there were critiques about it, e.g.:
* https://archive.nytimes.com/krugman.blogs.nytimes.com/2010/1...
When QE2 went forward and was about to stop there were many predictions (generally involving piles of money), some of which were accurate and others less so:
* https://archive.nytimes.com/krugman.blogs.nytimes.com/2011/0...
* https://archive.nytimes.com/krugman.blogs.nytimes.com/2011/0...
* https://equitablegrowth.org/pimco-lose-lots-money-influence-...
How are / were these "untestable"?
People in finance make predictions about what policies will do and where they will take the economy on a daily basis:
* https://en.wikipedia.org/wiki/Futures_exchange
* https://en.wikipedia.org/wiki/Option_(finance)
Do you have a model that tries to explain what tariffs with do to the USD? You can make a prediction and win/lose a lot of money buy shorting/longing the dollar.
That's simple, QE wasn't tested in any scientifically valid study. They made predictions of what QE may do, they enacted QE policies in an uncontrolled economy with no control group, and stuff happened. Afterwards they attempted to read the tea leaves and claim what precisely causes economic changes.
That isn't scientific at all. That also doesn't mean they were wrong, you can absolutely be right when you go off educated guesses or plain old intuition. My claim is that how economics is studied is not scientific in that it never has, and never can, follow the scientific method.
Economics is a science of human behaviour, which is not exact. Economic models are like weather models. They cannot be exact because what they are modelling (weather, human behaviour) is incredibly complicated with millions of parameters.
Science is about observing something, forming a hypothesis about why it is that way, and then testing the hypothesis to determine whether it is correct.
Many Economics researchers do all of the above, so they are scientists.
I agree that this doesn't match the definition of a scientific experiment, in that there is no control group within the bloc to which the higher interest levels were not applied. Nonetheless, it seems to be a textbook example of an economy proving to be manipulable in exactly the way that economic theory suggests it will be.
Its too easy with economics to look backwards and retroactively attribute what happened to a cause that would have made sense. It seems likely that Covid and the Russian war were causes of inflation, but we don't really know even that. For one thing, during the pandemic in the EU most stores and restaurants were closed. One could look at the economic relief (money printing) and expect inflation, but one could also look at the massive drop in spending and expect deflation instead. Had we seen deflation I fully expect today's economic analysis would be that lockdowns and business closures were clearly going to lead to deflation.
In that case, is geology a science?
I too am sceptical about economics (mostly macro, the micro stuff is fine) but there are lots of places where you can't run experiments and some of them are science.
Even in physics, Einstein's theories had to be supported by things like astronomical observations.
We will never know if quantum state exists or if probability clouds collapse upon observation because by that very principle we will never know the state prior to observing it.
Calling it "wholely unscientific" makes you seem like a crank.
How would you propose we could test quantum state and collapse to validate that the concept is actually correct?
Like (I grumble about this approach a lot) observational studies at a population level are certainly science, even though there's no experiments. Granted, in medicine at least they end up feeding into RCTs and controlled studies which is good, but in a lot of cases (child development is a big one) lots of hypotheses can't ethically be tested using experimental designs.
We can't get sets of identical twins and raise one in a rich home and another in a poor home, holding everything else constant. Does this mean twin studies aren't science?
I actually kinda agree that a lot of economics is very poor science (far too much maths on far too little data) but that's reflective of the difficulty of collecting such data rather than an indictment of the approach.
Because we do not control perception. We have to presume multiple scenarios each of have a dimension of perception. Perception always become a determinant factor.
The Fed, for example, may have modelling that indicates we have a downturn coming in 6 months. Those models aren't predictive though, and the Fed announces their economic outlook and what they may do with rates in the future they are only attempting to modify public perception and nudge behavior to make the future they actually want happen; it has nothing to do with predicting where the economy will be.
I doubt you would agree that meteorology or chemistry are "nothing scientific" despite also meeting that criteria?
Inability to predict outcomes does not mean "unscientific". It usually means it models a system with a fractal inputs and chaotic outputs.
The models follow from observation, the same as they do in chemistry or meteorology. And just like those two, the models are weak compared to actual observation.
I argue that economic research is entirely based on modelling because the research results produced always depend on modelling and either don't include any type of control group or use a controlled study so small that the odds it accurately reflects the entire economy are low.
The first I think is self explanatory, for the second I'd point to studies of UBI that are done on small populations within a larger economy that doesn't have a UBI. The results of the small group are effectively meaningless because that group has a comparative advantage against the rest of the economy, and those studies are never able to create a bubble in which the UBI population is entirely cut off from the real economy while still mimicking well enough all other systems, industries, and motivations of the real economy.
I'm sure you would agree that climate change is pretty hard science (it is) so you must have a misconception or confusion about economics, because really they are the same kind of science at heart.
Models based on observation are used to predict future behavior, and while often wrong, it's critical to understand why they are wrong so you can understand where they are right.
Weather predictions are made and shared out only at the level of what will happen over the next few days. Weather predictions aren't used to predict exactly why it rained, only that it did rain (though surely the why is used as feedback for modelling).
Economists take a different tact, they attempt to claim why GDP, CPI, wages, etc changed. With predictions they look much further out than weather and attempt to not only claim what economic indicators will do, they attempt to claim precisely why it will have happened.
Economics modeling is the same way. From how to price your lemonade at your kids stand to how to size government stimulus.
Regardless, modelling can be interesting to use as an indicator for future research but modelling is never scientific, or more specifically its never scientific in a way that is in anyway meaningful in the real world. A model isn't testing against reality and only ever factors in the conditions someone though to include and deemed relevant, and those factors are only as useful as the person's ability to accurately code them in.
That's also not true. By now there are so many similar but different situations that you can look at. And there are so many massively multiplayer games which are fantastic economic worlds where again, a multitude of ideas can be tried and tested - and are.
That would really be an unfair accusation against economics.
Economics is the science of human behavior at scale, and as such, does indeed have predictive power. It is not always reliable as there are dynamic conditions and incomplete data that make the models not always fit. That doesn't disqualify it from being a science (especially the data-oriented part of it).
Economics practice falls on its face when you attempt to inject ideology, though.
It can be very useful for quantifying and comparing the past, but there's absolutely nothing scientific about the process and no matter how much modelling is done it can't reliably predict future outcomes.