Mathiness in Economics

In the Papers & Proceedings section of American Economic Review, Paul Romer* describes, after revealing formal errors in a couple of recent prestigious articles, what he calls the new equilibrium in economics:

[…] empirical work is science; theory is entertainment. Presenting a model is like doing a card trick. Everybody knows that there will be some sleight of hand. There is no intent to deceive because no one takes it seriously.

At a seminar I attended recently, there was debate about the concept of rationality in economics. It was pointed out that any behavior (in the given case discussed, but the claim holds more generally, if not fully) can be rationalized if just the model is rich enough. But then rationality becomes worthless because we cannot falsify it, to use a Popperian term. This may be to take it too far; one can set up a model for rational behavior and find conflicting behavior. While we cannot conclude that behavior was irrational, we can conclude that the model we not rich enough.

Romer discusses mathiness in economics further on his blog.

*Romer, PM (2015) Mathiness in the Theory of Economic Growth, American Economic Review: Papers & Proceedings 105(5): 89-93.


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