A Vertical Division of Economics

Alright, this book (Truth Versus Precision in Economics, Tom Mayer) is so interesting that I’ve put Shakey aside for a while (in the middle of ‘Ohio’). I’m marking pages all the time.

In chapter 2, Two Types of Mainstream Economics, Mayer suggests to divide up economics vertically:

The fields that are often loosely referred to as ‘the sciences’ divide their subject matter not only horizontally by fields, e.g. biology and geology, but also vertically by the level of abstraction, e.g. physics and engineering, and physiology and medicine. In doing so they make room for different criteria at each level. An engineering paper need not be as rigorous as a physics paper. […] In the social sciences we divide fields horizontally, but not vertically, so that economics comprises mathematical formalism, empirical science work, and applications to specific practical problems. Hence we are tempted to apply inappropriate standards of rigour [p. 24, paperback edition].

On the following pages, he discusses the difference between formalistic and empirical economics, particularly in terms of rigour. He concludes chapter 2:

Although there is no sharp line of demarcation between hypotheses that are close to the observational level and those that are at a high level of abstraction, it is useful to classify the work of economic theorists into two categories, formalist theory and empirical science theory, because economists invoke widely different criteria in evaluating theories. Much misunderstanding is caused if one type of theory is judged by the criteria applicable to the other type [p. 36].

In the next chapter, he discusses whether there is too much of one type of economics and why that might be so:

We need both formalistic theory and empirical science theory. How much of each is more difficult to decide. While there are some reasons suggesting that formalist economics currently receives too little emphasis, there are stronger reasons to think the opposite is true. Professional self-interest, a belief that formalist economisits are much abler, and certain confusions all induce our profession to over-emphasize the importance of formalist theory relative to empirical science theory [p. 52].

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One Response to “A Vertical Division of Economics”

  1. Truth Versus Precision in Economics by Thomas Mayer « Kvams Says:

    […] A Vertical Division of Economics […]

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