Ignorance is indeed frustrating, but it's not a sign of failure. It's just the way it is. We're ignorant of lots of things and we'll continue to be.
But remember, the Big Bang didn't really start to get sketched out in detail until the 1920s and 1930s (hmmmm... productive years in economics too, right?), and really didn't get widely accepted and cleaned up until the 1960s. This was around the time that we really started working out the details of monetary and fiscal stimulus and cleaning up the oversights of the 1920s and 1930s ourselves.
Physics envy is a really ugly thing to see among economists. There's nothing shameful or unscientific about our uncertainty. This is how science progresses, and those physicists we often hold up as paragons of science are dealing with it just like the rest of us are.
UPDATE: Let me clarify that a little. The Big Bang Theory was "widely accepted" before the 1960s, but it was not as near universally accepted as it would be in the 60s and 70s. Steady state models still had a lot of adherents too, and that question wasn't put to rest until the 60s. But it was definitely "widely" accepted before then.
Even currently physics is struggling with accepting chaos theory and many other recent findings surrounding complexity and emergence. It's no wonder that economics has largely failed to incorporate these ideas yet either. Unfortunately, recognizing this reality doesn't alleviate frustrations regarding the ignorance.
ReplyDeleteChaos theory goes back at least to Poincare. I don't think that physics is struggling with it. Back in the 1990s it was shown that the solar system is chaotic.
ReplyDeleteIs one reason that economics has not embraced chaos theory that much of economic thought is based upon equilibria?
Min: One could make that argument.
ReplyDeleteDaniel Kuehn: Yes, it is true that physicists (and arguably virtually all specialists in any field of knowledge) do struggle with uncertainty.
Even the people involved in the econophysics project would acknowledge this - Bouchaud, McCauley, Stanley, Yakovenko, and Zhang all have made achievements in physics before they came together to form the econophysics project.
However, their research on the financial markets seems to have produced valid results: granted, they are building on Mandelbrot, but I think their insights are nevertheless important as to the nature of financial markets. Yes, the econophysicists have yet to spread out from that place, but some of them are slowly spreading out. I have e-mailed you a PDF document containing a presentation about the "Statistical Mechanics of Labor Markets" before.
So I have a question for you, Mr. Kuehn.
Suppose one day you were walking through the hallways of American University in the future, and discover a poster about a public seminar jointly hosted by the American University Department of Physics and the American University Department of Economics.
It turns out that Jean-Philippe Bouchaud (or another leading econophysicist like Joseph L. McCauley or H. Eugene Stanley or Victor Yakovenko) is doing a presentation that is related to your work in labor economics.
You check the time and date of the event on the poster, and your schedule. It turns out that you have time to go.
Do you decide to go?
Furthermore, if you decide to go, half-way through the presentation, there is a break. You get the chance to speak to the leading econophysicist delivering the presentation.
Do you take the chance?
If you do, what would you say to Jean-Philippe Bouchaud (or his leading econophysicist substitute)?
I'd definitely go... I often don't go talk to people during breaks or afterwards - probably wouldn't in this case. I had the chance to meet Joe Stiglitz once after a talk and I didn't, just because I couldn't think of anything "substantive" enough to mention... probably should have.
DeleteI'm pretty active in Q&As, though (again if something comes to mind).
I was wondering if you were in that hypothetical situation, you would ask Bouchaud (or his econophysicist colleague) about that Nature article and whether all econophysicists think the same thing about mainstream economics.
ReplyDelete(Not all of them do, but it seems that McCauley and Bouchaud are the more critical econophysicists, from what I've been able to gather from their writings.)