Comment of the Day (January 19, 2009): Robert Waldmann: Fama's Fallacy V: Are There Ever Any Wrong Answers in Economics?: "'economic science' is a phrase like 'military intelligence.' Out of respect for my fellow economists and the DIA I won't name that class of phrases. However, 'economic theory' is a sub branch of mathematics. Within economic theory there are definitely false statements—such as those made by Mankiw and Fama. I'm not surprised that Fama is making a fool of himself. He has made similarly nonsensical arguments in his own field of expertise. He has been a tenured head of a school of thought for a long time, and has probably forgotten what it was like to make arguments which weren't accorded respect just because he made them...
...I don't know what Mankiw thinks he's doing. For one thing, he knows you and can't hope that you will let the matter drop. I can only infer that he knows much more about the sociology of economists than I do and understands that, to be a mainstream economist in good standing, he has to take a hit for the team and claim not to have noticed Fama's howler.
To me the odd thing is the extent to which the economics profession can hide our embarrassing secrets. Not wanting to get Harvard graduates in trouble, I'd be inclined to take a poll of the general public to find out how many people understand that Nobel prizes have been awarded for working out detailed implications of the efficient markets hypothesis, for stating the rational expectations hypothesis (and not to Cournot or even Nash but to Lucas and if you doubt it check the citation) or uhm to Ed Prescott. Sauce for the goose is sauce for the gander, and, I note, that you claimed on this blog to think it was reasonable to award the Noble prize to Prescott and elsewhere described an argument which basically quoted something written under his name as failing the Turing test.
I suspect that the jig is up. Some fresh water economists are feeling compelled to write or say something about the economic crisis. All of them are being pressed for their advice. If they give it, then non-economists will find out how crazy they are. If they don't, non-economists will decide that they have nothing useful to say about economics.
It's an ill wind which blows nobody any good....
Mike "There is hope. The Chicago-school types who have Nobel prizes or of otherwise great stature got their reputations by publishing research that did adhere to modern scientific principles."
I don't agree. I would consider "modern scientific principles" to include the view that something is only discovered when it has strong empirical support—when it has explained a pattern in the data which long resisted explanation and when it made a non-obvious prediction which was confirmed. This is the standard for deciding that something is a "discovery" in the natural sciences and is required for the award of a Nobel prize.
In economics, that is just not true at all. Prizes can be awarded for economic theory without any reference to data at all.
I absolutely agree with the conclusion of your comment, but I think that the Nobel prizes in question were awarded for status in the profession and perfectly decent mathematics and not for anything that a natural scientist would consider a scientific discovery.
On the origin of the modern approach to science, I object to your list. For one thing, where is Pierce? For another, and more to the point, where is Carnap?
What exactly did Popper contribute to the philosophy of science ? I think his contribution was rename "verificationism", "falsificationism", that it was purely rhetorical and based on the argument that the meaning of a word "verificationism" is determined by the etymology of its first syllable.
Did he write anything about the philosophy of science that wasn't already in the literature, nonsense or both? I am willing to be convinced, but nothing comes to my mind...
I assume that you are expecting no assistance from journalists. However, I hold to my hope. When the Bush administration made nonsensical claims, journalists covered the debate on the shape of the Earth. Bush was re-elected. Reality bit and bit hard. The public had to face facts -- and did.
I don't expect any opinion leaders to call out Fama. However, I don't think that public opinion always has to be lead...
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