from Lars Syll — reposted from RWER blog.
Paul Samuelson once claimed that the ergodic hypothesis is essential for advancing economics from the realm of history to the realm of science.
That view on what constitutes economics doesn’t please neither yours truly nor Nassim Taleb, who writes (emphasis added):
However, if you believe in free will you can’t truly believe in social science and economic projection. You cannot predict how people will act. Except, of course, if there is a trick, and that trick is the cord on which neoclassical economics is suspended. You simply assume that individuals will be rational in the future and thus act predictably. There is a strong link between rationality, predictability, and mathematical tractability …
In orthodox economics, rationality became a straitjacket … This led to mathematical techniques such as “maximization,” or “optimization,” on which Paul Samuelson built much of his work … This optimization set back social science by reducing it from the intellectual and reflective discipline that it was becoming to an attempt at an “exact science.” By “exact science,” I mean a second-rate engineering problem for those who want to pretend that they are in the physics department— so-called physics envy. In other words, an intellectual fraud
The tragedy is that Paul Samuelson, a quick mind, is said to be one of the most intelligent scholars of his generation. This was clearly a case of very badly invested intelligence. Characteristically, Samuelson intimidated those who questioned his techniques with the statement “Those who can, do science, others do methodology.” If you knew math, you could “do science” … Alas, it turns out that it was Samuelson and most of his followers who did not know much math, or did not know how to use what math they knew, how to apply it to reality. They only knew enough math to be blinded by it.
Tragically, before the proliferation of empirically blind idiot savants, interesting work had been begun by true thinkers, the likes of J . M . Keynes, Friedrich Hayek, and the great Benoît Mandelbrot, all of whom were displaced because they moved economics away from the precision of second-rate physics. Very sad.
This may sound harsh, but in fact already back in 1991, Journal of Economic Literaturepublished a study by the Commission on Graduate Education in Economics (COGEE) of the American Economic Association (AEA) — chaired by Anne Krueger and including people like Kenneth Arrow, Edward Leamer, Robert Lucas, Joseph Stiglitz, and Lawrence Summers — focusing on “the extent to which graduate education in economics may have become too removed from real economic problems.” The COGEE members reported from own experience “that it is an underemphasis on the ‘linkages’ between tools, both theory and econometrics, and ‘real world problems’ that is the weakness of graduate education in economics,” and that both students and faculty sensed “the absence of facts, institutional information, data, real-world issues, applications, and policy problems.” And in conclusion they wrote (emphasis added):
The commission’s fear is that graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues.
Sorry to say, not much is different today. Economics education is still in dire need of a remake!