Mathematics in economics is supposed to clarify and crystalize arguments, so that scientists can better understand and decide which models lie closer to the truth. But in the real world, economists with agendas may use math to stray into the unethical territory of deliberate obfuscation to achieve political ends.
We’ve known for a long time that economists decide truth from falsehood based on an intuitive “aha” that the model works and not based on Friedman’s ideal of accurate prediction. For elaboration, see the work of McCloskey, Coase and others, cited here.
Coase, for example, argues that, “Economists, or at any rate enough of them, do not wait to discover whether a theory’s predictions are accurate before making up their minds. Given that this is so, what part does testing a theory’s predictions play in economics? First of all, it very often plays either no part or a very minor part.” Rather, there is a competitive market in which economists “sell their wares” using rhetorical skills.
Paul Romer’s recent paper in the American Economic Review accuses some of his colleagues of unethical obfuscation in mathematics to win the rhetorical war of words. The issue revolves around whether monopolistic competition or perfect competition is a better platform for understanding innovation when ideas are in the public domain but also partly privatized.
Romer’s complaint is that some growth theorists are making untenable claims for the price system, backing them up with mathematics that do not bear out those assertions. Politics is intruding into what should be scientific arguments:
“The style that I am calling mathiness lets academic politics masquerade as science. Like mathematical theory, mathiness uses a mixture of words and symbols, but instead of making tight links, it leaves ample room for slippage between statements in natural versus formal language and between statements with theoretical as opposed to empirical content.”
“McGrattan and Prescott (2010) is one of several papers by traditionalists that use mathiness to campaign for price-taking models of growth. The natural inference is that their use of mathiness signals a shift from science to academic politics, presumably because they were losing the scientific debate. If so, the paralysis and polarization in the theory of growth is not sign of a problem with science. It is the expected out-come in politics.”
Romer also claims that a 2009 working paper by Nobel Prize winner Robert Lucas contained a math error that changes the conclusion of his paper. Nevertheless, Lucas went ahead and published it in the Journal of Political Economy without correction or notation. Romer’s conclusion is that, “Neither colleagues who read working papers, nor reviewers, nor journal editors, are paying attention to the math.” By implication, they are only interested in the pre-determined conclusions, regardless of the science. Ideology rules the roost.
Krugman makes the same complaint about freshwater macroeconomics, in which the rational expectations model makes predictions that are in sharp contrast with the known facts about the world. Nevertheless, freshwater macro continues to flourish within its own in-group of people reading each other’s papers and ignoring the anomalies. (This is probably true of every group that overlooks the flaws of its own tribe in an US against THEM mentality.)
Romer’s claim that the misuse of mathematics may be happening broadly in the discipline is not particularly a shock to those who do social economics; but it is a shock to see this in the AER proceedings.