To What Extent Can Economics Be Considered a Science free essay sample

The issue of categorizing fields of academia truly â€Å"scientific† is invariably complex, leading to much debate. Matters such as defining what Science actually is, how to judge what can satisfy such a definition and the importance of beneficial discoveries all lead to further unsolved arguments which must be understood in order to make any kind of judgment. For economics, there is the argument that broad assumptions lead to imprecise data, that any tests are fundamentally flawed by their un-replicable nature, and that with so much dependant on human behavior, there can never be finite conclusions. Conversely these points are argued down, with justification of how they do indeed fulfill scientific criteria and that economics has led to many much-valued scientific discoveries. In order to better understand these arguments and judge the credibility of what is being said I will ascertain what is meant by a Science, look at how economics can be said to fulfill this, how it deviates from it and then cite important examples where further judgment can be considered. So what does â€Å"science† mean? To take what could be seen as the most widely agreed upon meaning and consider the dictionary definition it is â€Å"the intellectual and practical activity encompassing the systematic study of the structure and behaviour of the physical and natural world through observation and experiment† . The relative generalisation of this statement leads us to further interpretation. A process that appears to be key throughout any degree of scientific study is that of hypotheses validation. The idea is that through observation of a phenomenon, one can hypothesise an explanation of it and also predict other phenomena that follow as a result. Previously, before the formalisation of the social sciences throughout the 19th century, it was commonly accepted that the only approach to validate such hypothesis was through the use of Scientific Method. This process involves performing, repeatable, controlled, experimental tests on a hypothesis in an attempt to validate it (hence transforming it into a â€Å"theory†) with quantitative results. Although this serves well as a theoretical ideal, it is often the case that predictions can be verified into theories where such precise testing is simply unachievable. Take Darwins theory of natural selection; there were of course no methodological tests that could be performed to prove its legitimacy since he didn’t have millions of years to watch species evolve survival characteristics. However through dense observation of thousands of different animals he could accurately demonstrate how and why his predictions must be true. This links in with philosopher Karl Popper’s widely accepted theory of science: that any scientific statement must be open to the logical possibility of being found false by observation or experiment. For example the statement â€Å"all grass is green† is empirically verifiable because there could be grass of another colour. The same is true for more complex, detailed statements. So conclusively, to categorize academia as science, it must be formed upon the discovery of previously untested theories that have been validated to an almost perfect degree of certainty, making them widely accepted beyond question. As I will demonstrate, it is the proof with certainty that is often called into question within the economic profession. When examining the argument of economics as unscientific, I have come to see that it’s more a case of finding ways in which it doesn’t fit in with scientific reasoning. This, as opposed to one specific case being put forward to discredit it entirely, leads to much more discussion, allowing merit to be assigned to each reason individually. This evaluation will be best done once the reasoning on either side has been explained. In terms of methodology, mainstream economists operate in much the same way as practitioners of the natural sciences (biology, chemistry and physics). They look to construct models that can be used to explain and predict phenomena. However, conducting controlled experiments in economics is impossible. This is because of the often numerous assumptions that have to be considered when formulating any model of economic behaviour. Perhaps the two key assumptions are those of economic rationally and ceteris paribus. Economists assume that all people, as consumers, employees or whichever role they fulfil in a particular scenario, will always act as rational agents, seeking to maximise any potential self-gain that can be achieved. This is of course not always the case; people will consider other factors such as moral issues or long-term strategies. Consequently, models involving such an assumption will always involve a degree of error, variable in size depending on the weight the assumption carries; this could therefore strongly affect the validity of any conclusions. This then calls into question its scientific status, since the proof given to affirm the hypothesis is only true to an unknown extent. The Ceteris Paribus assumption leads to much the same sense of ambiguity. Here it is assumed that within a model, all other variables other than the one in question will remain equal throughout. 5 For the same reasons as the rationality assumption this will never always be perfectly accurate within the real world. As described by William Barnett, human beings, the subject of economics, are characterised by free will, where molecules, cells and particles, studied in the natural sciences are not. There can be no constants in the former, while the latter is replete with them. There is even a feeling from within the profession that theories are becoming handicapped by the vast quantities of mathematical formulae attributed to modelling phenomenon. The Austrian school of thought contains economists who believe Methodological Individualism (the thought that social phenomena must stem from the intentional states of individual actors, whose actions are determined by these states ) is the only accurate way to study economics. Mainstream economists do however refute the points set out above, with strong counter arguments as to how economics retains its scientific nature. The use of assumptions, they argue, is merely a tool used when an established theory has already been observed to be true; and that making such assumptions allows models to help us forecast future occurrences. Although it will be unachievable to do so with a perfect level of accuracy, it is argued that so long as economists are aware of the shortcomings of their models, no drastically imprecise conclusions will be reached. The cynics argue that any economic model is fundamentally flawed because of its reliance on assumptions. In almost all cases it is not this straight forward. Self-awareness of which assumptions can be relied upon to still give accurate data is at the forefront of any economists mind. And with the aid of modern technologies, factors that previously had to be assumed can now be broken down and modelled (eg, all the factors that determine supply). So if we were to reject the claim that assumptions and mathematical modelling can disprove economic theories, arguing that they simply expand on established knowledge, are we left with a pure science? Many would argue so, citing how the vast majority of economic theory still holds true without redictive models. Correct hypotheses validation, based upon observational analysis is irrefutably scientific. Just because economists cannot accurately model exact changes in for example, consumer demand as a reaction to a large rise in price, they can establish, though hundreds of years of statistical data, theories of how and this demand will fall. Russ Roberts, an economist specialising in international trade policy for the Hoover Institution, compares the intricate, complex human relationships found in economics to those of ecosystems studied by biologists. He argues â€Å"We do not expect a biologist to forecast how many squirrels will be alive in ten years if we increase the number of trees in the United States by 20%† questioning why, just because economics cannot produce similarly elaborate predictions around its theories, it should be brandished as unscientific. Going back to my original question, I will now try to piece together to what degree economics can be considered scientific. The very nature of human behaviour, and the sheer complexity of the economy make it intrinsically difficult to produce repeatable experiments. For example, how people will react to a specific change in interest rates can be predicted holistically, but not in the exact manner that a chemist can predict the reaction of a metal to a specified heat. This is not to say theories thus become unscientific. If they still prove hypothesis beyond any doubt (which has been proven achievable within economics) then there is no question of their scientific nature. Why then can there still be contrasting theories in economics? Mostly this only occurs when advising on the best cause of action to influence economic behaviour, when contrasting models forecast different results under different courses of action. Almost always in these cases, the underlying theory of what influences certain factors is never called into question, economists simply argue over how best to achieve the most desirable results. Such arguments will occur when models have failed and given unreliable results, due to too much weight being placed upon assumptions. This it seems is where economics is going wrong. In attempting to follow the methodology used in the natural sciences, it is distancing itself from the reality that human behaviour is what is really at the core of the profession. This can lead to ignorant overlooking of key determinants, such in the failure to foresee the credit crisis of 2008. In accepting its status as a social science, rather than constantly trying to overcomplicate itself modelling experiments that will invariably give imprecise results, economics would without doubt still be valued scientific.