Economics violates Popper demarcation criterion. Economic theories can't be falsified because you can't run controlled experiments on economies, rewind history, or isolate variables.
When models fail, economists adjust assumptions ...
Unfalsifiable = Unscientific.
When models fail, physicist adjust hypotheses ...
If these were economists, they would check if their equations match the economic universe they live in. :-) Instead, they conclude the agents just “did not behave rationally enough”.
I genuinely have no idea why so many commenters on HN will spout nonsense based on high school curriculum with the confidence of a PhD when it comes to economics, but won’t embarrass themselves in other fields.
Yes, economics—particularly microeconomics—is constantly subject to experimentation. Macroeconomics is closer to astronomy, in that models are developed, novel data sources sought, old models tested and then validated or rejected. Also like astronomy, or perhaps more accurately fundamental physics, it’s currently off in a loop of DSGE optimizations which are mathematically pretty for the field but not super interesting outside it. (This work is not in that category.)
Macroeconomics isn’t like astronomy :-) Stars don’t change behavior when you model them. Economies do. There are no stable primitives, no conservation laws, just shifting behavior and feedback loops.
DSGE models are equilibrium sandcastles calibrated to past data. In physics that’s failure while in macro it’s tenure.
Economics is interesting and sometimes useful but calling it an experimental science is self-flattery.
“One thing we are not going to have, now or ever, is a set of models that forecasts sudden falls in the value of financial assets.”
-- Robert E. Lucas
"As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools."
-- Jean-Claude Trichet - https://www.ecb.europa.eu/press/key/date/2010/html/sp101118.en.html
"How Conventional Wisdom Failed Us" - https://youtu.be/c8LMWCko4d0?t=138Rejecting Popper for that is like rejecting reasoning itself because you can’t run a control experiment on it...but then one turns into an economist...
And if the source of that framework is not (part of your definition of) science, how do we know whether that framework is true?
That was sort of my point: Poppers criterion is nice, but only works for a small subset of (natural) science - and even there has to face criticism because it is simply too naive for many edge cases.
In category theory terms, it’s a type error, applying a rule defined within a system to the meta-level that defines the system itself.
Supposing it did was fairly predictable that not setting money on fire would help recovery, what does it matter that there is no controlled scientific experiment involved? Or to put it another way, are there no facts to be gleaned from data?
You're deflecting. Curtailing inflation was an outcome of policy. The U.S. had fuck-all to do with it. Unless you're willing to acknowledge something so basic there's nothing else to say to someone disinterested in good faith discussion
Whether that's maintainable long term is probably the decisive judgement. Argentina has had many cycles of hyperinflation, reset, hyperinflation again. The current bailout is not exactly a positive indicator.
https://en.wikipedia.org/wiki/Econometrics
https://en.wikipedia.org/wiki/Credibility_revolution
Economists are practically the only social scientists capable of doing this (even if it involves a lot of rainfall IVs). Everyone else p-hacks and calls it a day.