My initial interest in Thomas Mayer’s Truth Versus Precision in Economics was spured when it was mentioned alongside McCloskey’s The Rhetoric of Economics in a footnote in a paper I read; the paper refered to it as a justification to accept unconventional p-values (probability of sampling error) in evaluating regression results.* Anyway, I picked it up at the library and was soon enthralled by Mayer’s sympathetic ideas.
The main claim in Truth Versus Precision is that economics is a victim of the principle of the strongest link, which leads to increased rigouization and decreased real-world relevance.
Mayer argues persuasively that economists has incentives to spend too much time on formalism, and that the formally explicit parts of arguments thus gets too much attention. Weaker parts of arguments are usually tended to by arm-waving. Strong, mathematically explicit arguments are subject to relatively much attention and are thus made stronger; weaker, implisit or verbal arguments receives less attention and remains weak. Further, the strength of a chain of arguments is often measured by the strength of the strongest argument, counter to the proverb that a chain is no stronger than its weakest link:
I call this procedure of focusing attention on the strongest part of an argument, and then attributing its strength to the entire argument, the ‘principle of the strongest link’ [p. 57**].
Mayer further suggests that economists preoccupation with formalism governs the prestige ranking of economics fields:
The prestige ranking of economics runs: first, formalist theory; second, empirical science theory; third, policy-advicing and data gathering, and fourth, history of economic thought and methodology [p. 46].
Mayer is a macroeconomist, and naturally parts of Truth Versus Precision discusses problems in macroeconomics. In particular, he argues that the foundations of new classical economics are questionable and concludes:
[N]ew classical theory is another example of the principle of the strongest link. Its advocates rightly take pride in the rigour of their deductive chains. But a rigorous deduction from a questionable premise, accompanied by no adequate tests of the conclusions, does not guarantee truth [p. 120].
Mayer also discusses the problems surrounding empirical testing in economics, for example that many focuses solely on Type I errors, that regressors with insignificant coefficients are excluded, problems with pre-testing of data, and confusions between statistical and substantive significance (see pp. 134 – 139). Finally, he discusses problems surrounding robustness tests (or rather, the lack thereof) (see pp. 142 – 147). He concludes the chapter on emprical testing accordingly:
[M]ost econometric testing is not rigorous. Combining such tests with formalized theoretical analysis or elaborate techniques is another instance of the principle of the strongest link. The car is sleek and elegant; too bad the wheels keep falling off [p. 149].
In the last chapter, Mayer discusses possible remedies. He calls for less abstraction and less formality; more replications and retests; proper use of statistical tests; care for data and awareness of anecdotal evidence; he wants journals to act as communication devices (not archives); critical evaluations of conflicting evidence; less focus on formal techniques in graduate training programmes; and more focus on writing skills.
All in all, I find many of Mayer’s arguments persuasive; they align with my feeling of unease when it comes to mathematical economics (note; I’m a mathematical economist myself). Some of Mayer’s critique also align with some of McCloskey’s critique. However, a professor at my school told me that Mayer was out-dated already in 1993 (the year of publication), and mentioned an article by Alexander Rosenberg from 1983 as evidence: Rosenberg discusses new classical economics. Notwithstanding, I still think there is something to Mayer’s critique, and as I said, it resonates with my own attitude towards economics. A more recent treatise discussing the very modern development of economics would be useful; have economics ridden itself of the principle of the strongest link? I need to find out.
* See p. 157; as far as I can see the only place in the text that actually argues for unconventional p-values, but not unconditionally.
** Page numbers refer to the paperback edition.