Monday, August 7, 2017

What is science?


What is science? This is a very hard question. Many philosophers have tried to establish their own criteria to separate science from non-science. The problem with the word 'science' is everyone has their own internal idea of what this word should mean. Here is my definition:

S
cience is the systematic analysis of reality

This is not a precise definition because the word 'systematic' is subjective. One could even argue that all language and sentence structure is systematic therefore any statement could be considered scientific. Therefore, I believe drawing a strict boundary is impossible between science and knowledge. But I still think it's important to place meaning to the word 'science' because it articulates a particular type of knowledge. The concept of science is a real thing and deserves its own word.

Many people think that science has to do with proven facts. I disagree with this for two reasons. First, the word 'fact' creates too of high of a standard for what science is. I philosophically believe there are no proven facts (except the cogito). For example, you cannot be 100% be sure that the sun will come up tomorrow because there could be a supernova or black swan event. Second, science is more of a process than a finished product. By limiting science to only facts, a person in lab testing unproven theories is not doing science. We should think of science as trying to paint a detailed picture of reality, but never being as perfect as nature itself.

Where does astrology fit into my definition? Astrology does not qualify as science because it is incompatible with much of the existing evidence we already know about reality. As long as an endeavor is oriented toward explaining reality in a systematic manner, I believe it qualifies as a science.

The rest of this post is a collection of definitions of science from philosophers and dictionaries. I agree most with the definition provided by Larry Laudan and David Pingree.

Definitions of science from philosophers


Karl Popper (1902-1994)
1. "...statements or systems of statements, in order to be ranked as scientific, must be capable of conflicting with possible, or conceivable observations." (Conjectures and refutations. The growth of scientific knowledge, 1962)

Thomas Kuhn (1902-1996)
2. "...the role in scientific research of what I have since called 'paradigms'. These I take to be universally recognized scientific achievements that for a time provide model problems and solutions for a community of practitioners." (The Structure of Scientific Revolutions, 1962)

Paul Feyerabend (1924-1994)
3. "...the separation of science and non-science is not only artificial but also detrimental to the advancement of knowledge. If we want to understand nature, if we want to master our physical surroundings, then we must use all ideas, all methods, and not just a small selection of them." (Against method, 1975)


Larry Laudan (1941-now)
4. "...there is no demarcation line between science and non-science, or between science and pseudo-science, which would win assent from a majority of philosophers. Nor is there one which should win acceptance from philosophers or anyone else." (The Demise of the Demarcation Problem, 1983)


Paul Thagard (1950-now):
5. "A theory of disciplines which purports to be scientific is pseudoscientific if and only if it has been less progressive than alternative theories over a long period of time and faces many unsolved problems; but the community of practitioners makes little attempt to develop the theory towards solutions of the problems, shows no concern for attempts to evaluate the theory in the relation to others and is selective in considering confirmations and disconfirmations."

William Cecil Dampier (1867-1952)
6. "[Science is] ordered knowledge of phenomena and of the relations between them."

Marshall Clagett (1916-2005)
7. "[Science is] first the orderly and systematic comprehension, description and/or explanation of natural phenomena and secondly, the mathematical and logical tools necessary for the undertaking."

David Pingree (1933-2005)
8. "Science is a systematic explanation of perceived or imaginary phenomena or else is based on such an explanation mathematics finds a place in science only as one of the symbolical languages in which scientific explanations may be expressed."

Definitions of science from dictionaries


Oxford Dictionaries
1. "The intellectual and practical activity encompassing the systematic study of the structure and behaviour of the physical and natural world through observation and experiment."

Merriam Webster Dictionary
2. "the state of knowing"

3. "a department of systematized knowledge as an object of study"
4. "a knowledge or a system of knowledge covering general truths"
5. "a system or method reconciling practical ends with scientific laws"

Dictionary.com
6. "acquaintance with facts, truths, or principles as from study or investigate"

7. "familiarity or conversance, as with a particular subject or branch of learning"
8. "acquaintance or familiarity gained by sight, experience or report"
9. "the fact or state of knowing"
10. "awareness, as of a fact or circumstance"
11. "something that is or may be known"
12. "the body of truths or facts accumulated in the course of time"

TheFreeDictionary.com
13. "the observation, identification, description, experimental investigation and theoretical explanation of phenomena"

14. "a systematic method or body of knowledge in a given area"
15. "knowledge, especially that gained through experience"

Cambridge Dictionary
16. "the systematic study of the structure and behavior of the natural and physical world, or knowledge obtained about the world by watching it carefully and experimenting"

Vocabulary.com
17. "the field of study concerned with discovering and describing the world around us by observing and experimenting"

Oxford Learner's Dictionary

18. "knowledge about the structure and behavior of the natural and physical world, based on facts that you can prove, for example by experiments"
19. "a system for organizing the knowledge about a subject"

Collins Dictionary
20. "the study of the nature and behavior of natural things and the knowledge that we obtain about them"

Saturday, August 5, 2017

Fundamentals of knowledge


This post is a collection of my favorite quotes about knowledge. I believe epistemology is important because it reveals the pathway to scientific discovery and innovation. There are 67 quotes divided into 10 sections:

A. Meditation leads to higher understanding (7)
B. Systematic analysis organizes our thinking (6)
C. Distraction is the enemy of knowledge (6)
D. Knowledge is a collection of puzzle pieces (7)
E. Language is the foundation of knowledge (9)
F. Nature is the perfect model (8)
G. There is only one fact, everything else is a belief (6)
H. Be skeptical of existing knowledge (5)
I. The mainstream is blind (8)
J. Discovery is a human desire (5)

This post uses the same format in my last post which was a collection of quotes critiquing academic economics.

A. Meditation leads to higher understanding


Rembrandt (1606-1669, artist)
1. "Try to put well in practice what you already know; and in so doing, you will in good time discover the hidden things which you now inquire about. Practice what you know, and it will help to make clear what now you do not know." (Quoted in a Dictionary of Thoughts)

Isaac Newton (1642-1726, physicist)
2. "I keep the subject constantly before me, and wait until the first dawnings open slowly, by little and little, into a full and clear light." (Quoted in Biographia Britannica)

Albert Einstein (1879-1955, physicist)
3. "There is no logical path to these laws; only intuition, resting on sympathetic understanding of experience, can reach them." (On the Method of Theoretical Physics, 1933)

George-Louis Leclerc, Comte de Buffon (1707-1788, philosopher)
4. "Genius is nothing else than a great aptitude for patience." (La visite a Buffon, ou Voyage a Montbard)

Anthony van Leeuwenhoek (1632-1732, biologist)
5. "A man has always to be busy with his thoughts if anything is to be accomplished." (Brainy Quote)

John Locke (1632-1704, philosopher)
6. "We are the ruminating kind, and it is not enough to cram ourselves with a great load of collections; unless we chew them over again, they will not give us strength and nourishment." (Hand Book: Caution and Counsels)

Immanuel Kant (1724-1804, philosopher)
7. "Reason... requires trial, practice, and instruction in order gradually to progress from one level of insight to another." (Idea for a Universal History from a Cosmopolitan Point of View, 1784)

B. Systematic analysis organizes our thinking


Hesiod (around 700 BC, poet)
8. "It is best to do things systematically, since we are only human and disorder is our worst enemy." (Brainy Quote)

Ibn Khaldun (1332-1406)
9. "Eventually, Aristotle appeared among the Greeks. He improved the methods of logic and systematized its problems and details. He assigned to logic its proper place as the first philosophical discipline and the introduction to philosophy." (1377, Muqaddimah)

Gregory Bateson (1904-1980, anthropologist)
10. "As I see it, the advances in scientific thought come from a combination of loose and strict thinking, and this combination is the most precious tool of science." (Culture Contact and Schismogensis, 1935)

Thomas Edison (1847-1931, inventor)
11. "I speak without exaggeration when I say that I have constructed 3,000 different theories in connection with the electric light, each one of them reasonable and apparently likely to be true." (Talks with Edison)

Ernst Mayr (1904-2005, biologist)
12. "Biological classifications have two major objectives: to serve as a basis of biological generalizations in all sort of comparative studies and to serve as key information storage system." (Quoted in Ontological foundations in knowledge organization)

Thomas Henry Huxley (1825-1895, biologist)
13. "The method of scientific investigation is nothing but the expression of the necessary mode of working of the human mind." (Our Knowledge of the Causes of the Phenomena of Organic Nature, 1863)

C. Distraction is the enemy of knowledge


Charles Beard (1874-1948, historian)
14. "When it is dark enough, you can see the stars." (Brainy Quote)

Charles Townes (1915-2015)
15. "In many cases, people who win a Nobel prize, their work slows down after that because of the distractions. Yes, fame is rewarding, but it's a pity if it keeps you from doing the work you are good at." (Brainy Quote)

Paul Dirac (1902-1994, physicist)
16. "The interpretation of quantum mechanics has been dealt with by many authors, and I do not want to discuss it here. I want to deal with more fundamental things." (The inadequacies of quantum field theory)

Socrates (470-399 BC, philosopher)
17. "The body is a source of endless trouble to us by reason of the mere requirement of food and is also liable to diseases which overtake and impede us in the search after truth: and by filling us so full of loves, and lusts, and fears, and fancies, and idols, and every sort of folly prevents our ever having, as people say, so much as a thought." (Phaedo)

Edward Titchener (1867-1934, psychologist)
18. "Knowledge is the product of leisure. The members of a very primitive society have no time to amass knowledge; their days are fully occupied with the provision of the bare necessities of life." (An Outline of Psychology, 1916)

Henry David Thoreau (181701862, philosopher)
19. "I find it so difficult to dispose of the few facts which to me are significant, that I hesitate to burden my attention with those with are insignificant, which only a divine mind could illustrate. Such is for the most part, the news in newspapers and conversation. It is important to preserve the mind's chastity in this respect." (Life with Principles, 1863)

D. Knowledge is a collection of puzzle pieces


Rene Descartes (1596-1650, philosopher)
20. "Each problem that I solved became a rule, which served afterwards to solve other problems." (Brainy Quote)

Linus Pauling (1901-1976, chemist)
21. "Facts are the air of scientists. Without them you can never fly." (Brainy Quote)

Monsignor Georges Lemaitre (1849-1934, astronomer)
22. "Scientific progress is the discovery of a more and more comprehensive simplicity... The previous successes give us confidence in the future of science: we become more and more conscious of the fact that the universe is cognizable." (Today in Science History)

Louis de Broglie (1892-1987, physicist)
23. "Two seemingly incompatible conceptions can each represent an aspect of the truth... They may serve in turn to represent the facts without ever entering into direct conflict." (Dialectica Volume 2, 1948)

Edward Teller (1908-2003, physicist)
24. "We must learn to live with contradictions, because they lead to deeper and more effective understanding." (Science and Morality, 1998)

Talcott Parsons (1902-1979, philosopher)
25. "Special emphasis should be laid on this intimate interrelation of general statements about empirical fact with the logical elements and structure of theoretical systems." (Brainy Quote)

Friedrich Wohler (1800-1882, chemist)
26. "Organic chemistry just now is enough to drive one mad. It gives me the impression of a primeval forest full of the most remarkable things, a monstrous and boundless thicket, with no way of escape, into which one may well dread to enter." (Today in Science History)

E. Language the foundation of knowledge


Ferdinand de Saussure (1857-1911, linguist)
27. "Without language, thought is a vague, uncharted nebula." (Cours de linguistique generale)

Ludwig Wittgenstein (1889-1951, philosopher)
28. "Without philosophy thoughts are, as it were, cloudy and indistinct: its task is to make them clear and to give them sharp boundaries." (Tractatus Logico-Philosophicus, 1922)

Ernest Rutherford (1871-1944, physicist)
29. "An alleged scientific discovery has no merit unless it can be explained to a barmaid." (Quoted in Einstein: The Man and His Achievement )

Thomas Hobbes (1588-1679, philosopher)
30. "Understanding being nothing else, but conception caused by speech." (The Leviathan, 1651)

Friedrich Nietzsche (1844-1900, philosopher)
31. "We have seen how it is originally language which works on the construction of concepts, a labor taken over in later ages by science." (On Truth and Lie in an Extra-Moral Sense, 1873)

Pierre Duhem (1861-1916, physicist)
32. "A symbol is not properly speaking, either true or false; it is rather something more or less well selected to stand for the reality it represents, and pictures that reality in a more or less precise, or a more or less detailed manner." (The Aim and Structure of Physical Theory, 1906)

W. E. B. Du Bois (1868-1963, sociologist)
33. "When you have mastered numbers, you will in fact no longer be reading numbers, any more than you read words when reading books. You will be reading meanings." (Brainy Quote)

Rachel Carson (1907-1964, biologist)
34. "If there is poetry in my book about the sea, it is not because I deliberately put it there, but because no one could write truthfully about the sea and leave out the poetry." (National Book Award for Nonfiction speech, 1952)

Herbert Spencer (1820-1903, sociologist)
35. "How often misused words generate misleading thoughts." (Brainy Quote)

F. Nature is the perfect model


Albertus Magnus (1200-1280, philosopher)
36. "Nature must be the foundation and model of science; thus Art works according to Nature in everything it can. Therefore, it is necessary that the Artist follows Nature and operates according to her." (De Vegetabilibus)

Louis Pasteur (1822-1895, chemist)
37. "There does not exist a category of science to which one can give the name applied science. There are sciences and the applications of science, bound together as the fruit of the tree which bears it." (Revue Scientifique, 1871)

Leonardo da Vinci (1452-1519, inventor)
38. "Human subtlety... will never devise an invention more beautiful, more simple or more direct than does nature, because in her inventions nothing is lacking, and nothing is superfluous." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

John von Neumann (1903-1957, mathematician)
39. "Truth.. is much too complicated to allow anything but approximations." (Quoted in The Works of the Mind by R. B. Heywood)

Simon Schama (1945-now, historian)
40. "Historians are left forever chasing shadows, painfully aware of their inability ever to reconstruct an ideal world in its completeness however thorough or revealing their documentation." (Dead Certainties, 1991)

Baruch Spinoza (1632-1677, philosopher)
41. "A definition, if it is to be called perfect, must explain the inmost essence of a thing, and must take care not to substitute for this any of its properties." (On the Improvement of Understanding, 1622)

George Wilhelm Friedrich Hegel (1770-1831, philosopher)
42. "The enquiry into the essential destiny of Reason as far as it is considered in reference to the World is identical with the question, what is the ultimate design of the World?" (Lectures on the Philosophy of History, 1832)

Immanuel Kant (1724-1804, philosopher)
43. "Human reason is by nature architectonic." (Critique of Pure Reason, 1781)

G. There is only one fact*, everything else is a belief


David Hume (1711-1776)
44. "In our reasonings concerning matter of fact, there are all imaginable degrees of assurance, from the highest certainty to the lowest species of moral evidence... A wise man, therefore, proportions his belief to the evidence." (An Enquiry Concerning Human Understanding, 1748)

Antoine Lavoisier (1743- 1794, chemist)
45. "The art of concluding from experience and observation consists in evaluating probabilities, in estimating if they are high or numerous enough to constitute proof." (Rapport des commissaires charges par le roi de l'exemen du magnetism animal, 1784)

Christian Huygens (1629-1695, mathematician)
46. "There are many degrees of Probable, some nearer Truth than others, in the determining of which lies the chief exercise of our Judgement." (Cosmotheoros, 1695)

Voltaire (1694-1778, writer)
47. "Doubt is not a pleasant condition, but certainty is an absurd one." (Letter to Frederick William, 1770)

Pierre-Simon Laplace (1749-1827, mathematician)
48. "Life's most important questions are, for the most part, nothing but probability problems." (Wikiquote)

Rene Descartes (1596-1650, mathematician)
49. "I think, therefore I am." (Le Discours de la M├ęthode, 1637)
* This is the only fact.

H. Be skeptical of existing knowledge


Francis Bacon (1561-1626)
50. "Truth emerges more readily from error than from confusion." (Novum Organum)

Ibn al-Haytham (965-1040 CE, philosopher)
51. "...if learning the truth is the goal, one is to make themselves an enemy of all that they read, and applying their mind to the core and margins of its content, attack it from every side." (Quoted in Bridging Cultures Bookshelf: Muslim Journeys)

Montesquieu (1689-1746)
52. "Nothing is a greater obstacle to our progress in knowledge, than a bad performance of a celebrated author; because, before we instruct we must begin with undeceiving." (The Spirit of the Laws, 1748)

Denis Diderot (1713-1790, writer)
53. "In order to shake a hypothesis, it is sometimes not necessary to do anything more than push it as far as it will go." (On the Interpretation of Nature, 1753)

Karl Popper (1902-1994, philosopher)
54. "Science must begin with myths, and with the criticism of myths." (Conjectures and Refutations, 1963)

I. The mainstream is blind


Arthur Schopenhauer (1788-1860, philosopher)
55. "Talent hits a target no one else can hit; Genius hits a target no one else can see." (1819, The World as Will and Representation)

Wolfgang Amadeus Mozart (1756-1791, musician)
56. "I pay no attention whatever to anybody's praise or blame. I simply follow my own feelings." (Brainy Quote)

Max Planck (1858-1947, physicist)
57. "New scientific ideas never spring from a communal body, however organized, but rather from the head of an individually inspired researcher who struggles with his problems in lonely thought and united all his thought on one single point which is his whole world for the moment." (Address on the 25th anniversary of the Kaiser-Wilhelm Gesellschaft, 1936)

Alexander Fleming (1881-1955, biologist)
58. "It is the lone worker who makes the first advance in a subject: the details may be worked out by a team, but the prime idea is due to the enterprise, though and perception of an individual." (Wikiquote)

Leonardo da Vinci (1452-1519, inventor)
59. "Though I may not, like them, be able to quote other authors, I shall rely on that which is much greater and more worthy - on experience, the mistress of their Masters. They go about puffed up and pompous, dressed and decorated with [the fruits], not of their own labours, but of those of others. And they will not allow me my own. They will scorn me as an inventor." (Quoted by The Notebooks of Leonardo da Vinci by Rudolf Flesch)

Bruno Latour (1947-now, philosopher)
60. "If one looks at the works of Newton to Einstein, they were never scientists in the way modernity understands the term." (Brainy Quote)

Fyodor Dostoyevsky (18112-1881, writer)
61. "Oh, how hard it is to be the only one who knows the truth! But they won't understand that. No, they won't understand it." (The Dream of a Ridiculous Man, 1877)

John Stuart Mill (1806-1873, philosopher)
62. "Persons of genius, it is true, are, and always like to be, a small minority; but in order to have them, it is necessary to preserve the soil in which they grow. Genius can only breathe freely in an atmosphere of freedom." (On Liberty, 1859)

J. Discovery is a human desire


Isaac Newton (1642-1727, physicist)
63. "I do not know what I may appear to the world, but to myself I seem to have been only like a boy playing on the sea-shore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me." (Quoted in Memoirs of the Life, Writings and Discoveries of Sir Isaac Newton)

Nikola Tesla (1856-1943, physicist)
64. "I do not think there is any thrill that can go through the human heart like that felt by the inventor as he sees some creation of the brain unfolding to success... Such emotions make a man forget food, sleep, friends, love, everything." (Quoted in Marconi and Tesla: Pioneers of Radio Communication )

Wilbur Wright (1867-1912, inventor)
65. "For some years I have been afflicted with the belief that flight is possible to man. My disease has increased in severity and I feel that it will soon cost me an increased amount of money if not my life. I have been trying to arrange my affairs in such a way that I can devote my entire time for a few months to experiment in this field." (Letter to Octave Chanute, 1900)

Sigmund Freud (1856-1939, psychologist)
66. "I am actually not at all a man of science, not an observer, not an experimenter, not a thinker. I am by temperament nothing but a conquistador - an adventurer, if you want it translated with - all the curiosity, daring and tenacity characteristic of a man of this sort." (Letter to Wilhelm Fliess, 1900)

Marie Currie (1867-1934, physicist)
67. "I am among those who think that science has great beauty. A scientist in their laboratory is not only a technician: they are also a child placed before natural phenomena which impress them like a fairy tale." (Madame Curie: A Biography)

Wednesday, August 2, 2017

What's wrong with academic economics?


This post is a collection of my favorite quotes critiquing academic economics. The common theme is that academic economics fails to describe real economic phenomena. There are 74 quotes divided into 11 sections:

A. Academic economics failed to predict the 2008 financial crisis (7)
B. Academic economics ignores things it can't codify (10)
C. Non-academic analysis is often more accurate (5)
D. Academic economics ignores economic history (8)
E. Academic economics ignores current events and real world problems (10)
F. Academic economics is too focused on theory (5)
G. Universal economic laws don't exist (4)
H. Academic economics airbrushes over a complicated reality (11)
I. Academic economics uses esoteric language (5)
J. Academic economics overrates mathematical models (5)
K. Academic economics ignores that every economy is unique (4)

This post was inspired by Noah Smith's Econ critique scorecard post. I encourage people to check out the original links below.

A. Academic economics failed to predict the 2008 financial crisis


George Akerlof (Nobel Prize 2001)
1. "There's actually a signal that such a black hole does exist because there wasn't anything in the economics profession that was detailing what was going to happen when we got into the great recession." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)

Michael Lewis
2. "[Michael] Burry said, 'I was in a state of perpetual disbelief. I would have thought that someone would have recognized what was coming before June 2007. If it really took that June remit data to cause a sudden realization, well, it makes me wonder what a 'Wall Street analyst' does all day." (The Big Short)

Lars Peter Hansen (Nobel Prize 2013)
3. "I believe that the recent financial crisis exposed gaps in our knowledge." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)

Alan Jay Levonovitz
4. "Unlike engineers and chemists, economists cannot point to concrete objects (cell phones and plastic) to justify their high valuation. They can't even point to the predictive power of their theories. They failed to predict the 2008 crisis." (The New Astrology, Aeon)

Robert Johnson
5. "In 2009, Jeffrey Sachs said to me 'I feel ashamed to be an economist because I didn't know what a credit default swap was and it proved to be very important.'" (How the Economics of the Economics Profession Resists New Thinking. YouTube)

Jean-Claude Trichet
6. "As a policymaker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools." (Reflections on the nature of monetary policy, non-standard measures and finance theory)

Jean Tirole (Nobel Prize 2014)
7. "Failure to foresee or prevent the financial crisis is a sore reminder of hubris. True enough, we are to work on most of its ingredients but like a virus that keeps mutating, new dangers emerged when we thought we understood and avoided existing ones." (Nobel Banquet 2014 - Speech by Jean Tirole. YouTube)

B. Academic economics ignores things it can't codify


Peter Radford
8. "Economists have limited their options by reducing their subject to that set of issues most easily modeled according to the disciplines' self referential code of modeling." (Why Mainstream Economic Models Make Little Sense)

Maria Konnikova
9. "Forget the qualitative, unquantifiable and irreducible elements and you are left with so much junk." (Humanities aren't a science. Stop treating them like one)

James Heckman (Nobel Prize 2000)
10. "Economics... is vulnerable in the following sense that if evidence is presented in anecdotal form or they say this is just descriptive, that is a killer in a lot of top journals." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

George Akerlof (Nobel Prize 2001)
11. "What I'm most worried about is what we don't see. I'm worried about the analysis that is never seen, that never becomes a paper and it doesn't become a paper because it can't be a paper. It can't become a paper because that's not what a paper in economics is all about." (AEA Webcast. Publishing and Promotion in Economics: The Curse of the Top Five)

Paul Ormerod
12. "Much of this knowledge is held at decentralized levels in tacit form which is hard or even impossible to codify." (The future of economics uses the science of real life social networks)

Rob Johnson
13. "The tribal practice of what constitutes valid evidence and not can influence what people will study and leave aside." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

James Heckman (Nobel Prize 2000)
14. "Adam Smith was really an anthropologist in this own way and I would say Ricardo in his own way. They were describing phenomena using simple economic models and analogies to describe it. I think that activity is substantially devalued." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

Anma Silim
15. "The lack of narrative around innovation is one of conventional economic theory's greatest flaws." (What is New Economic Thinking?)

Robert Skidelsky
16. "Most economics students are not required to study psychology, philosophy, history or politics... They are never given the mental tools to grasp the whole picture." (Economists versus the Economy)

Gary Saul Morson, Morton Shapiro
17. "Economic models (whether mainstream, behavioral or neuro) typically leave out culture because culture cannot be quantified specified in a lab experiment or discovered in neurons." (Cents and Sensibility)

C. Non-academic analysis is often more accurate


Ha-Joon Chang
18. "People that are not professional economists can have some judgements on economic issues. Sometimes their view can be better than professional economists because they may be more rooted in reality and less narrowly rooted." (Economics for Everyone RSA animate. YouTube)

Mark Skousen
19. "I've felt for some time that economics needs to be taught differently by economists who actually have had experience making a payroll or investing on Wall Street. When economics is taught by pure academics watch out." (Brainy Quote)

Muhammad Yunus
20. "I began my career as an economics professor but became frustrated because the economic theories I taught in the classroom didn't have any meaning in the lives of poor people I saw around me. I decided to turn away from the textbooks and discover the real life economics of a poor person's existence." (Brainy Quote)

James Heckman (Nobel Prize 2000)
21. "Did I need a Markov switching model to tell me about the stock market meltdown in 1987 or 2007? We had newspaper accounts. We had journalistic accounts. And I think the profession has had a real difficulty utilizing all these sources of information including observer reports. I mean literally you talk to people on the street." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

James Heckman (Nobel Prize 2000)
22. "I've worked on China and trying to look at what technical change is in China. If you were to use 20 year old data sets, it's a waste of time. It's much better to actually go the sites in Shanghai and further in the interior to see what the technologies are, who is actually engaged and what kind of investment is being made. Those anecdotal accounts are things that banks do, what business school people do but it's not what a real economists does." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

D. Academic economics ignores economic history


Paul Samuelson (Nobel Prize 1970)
23. "My notion of a fruitful economic science would be that it can help us explain and understand the course of actual economic history. A scholar who seriously addresses commentary on contemporary monthly and yearly even in this view, practicing the study of history - history in its most contemporary time phasing." (2003 interview with Paul Samuelson)

Howard Davies
24. "We all have good reason to be grateful that Ben Bernanke is an expert on the Great Depression..." (Economics in Denial)

Stanley Fischer
25. "I think I've learned as much from studying the history of central banking as I have from knowing the theory of central banking and I advise all of you who want to be central bankers to read the history books." (Humanitas: Stanley Fischer at the University of Oxford Lecture. YouTube)

William Ashley
26. "The historical method tries to free their minds at the outset of all priori theories and to see how they actually have been..." (An Introduction to English Economic History, 1888)

John Cochrane
27. "Economics should be much better at being the ark for simple lessons of economic history and experience. Alas our current professional training makes us pretty terrible at this."  (Russ Roberts on Economic Humility)

James Heckman (Nobel Prize 2000)
28. "Economic history has suffered a big beating. Economic historians are typically slow to get things out. They do these large scholarly studies. The tenure clock works against them and the publication journal works against them." (How the Economics of the Economics Profession Resists New Thinking. YouTube)

Tyler Cowen
29. "Overall I find that history and theory laden observation tend to be the forms of evidence which have convinced me the most." (Can economics change your mind)

Andy Haldane
30. "Cycles in money and bank credit are familiar from centuries past and yet for perhaps a generation, the symptoms of this old virus were left untreated... The symptoms should have been all too obvious from history." (What have the economists ever done for us?)

E. Academic economics ignores current events and real world problems


Asit Biswas, Julian Kircherr
31. "Practitioners very rarely read articles published in peer reviewed journals. We know of no senior policymaker or senior businessman who ever read regularly peer reviewed journals." (Prof, no one is reading you)

Kurt Bills
32. "Discovering various economic works, reading financial periodicals and keeping up on current events in geopolitics and economics around the world opened my eyes to many facets of how the extended order works." (Brainy Quotes)

Ha-Joon Chang
33. "People graduate without even knowing the GDP of their country." (Talks at Google. YouTube)

Asit Biswas, Julian Kircherr
34. "Professors are not shaping today's public debates or influencing policies even though they may be some of the most talented thinkers." (Prof, no one is reading you)

Robert Shiller (Nobel Prize 2013)
35. "What is the world going to look like in 50 years? I'm worried. It should be a big concern to the profession of economics. (What are the challenges for the next generation?)

Eric Beinhocker
36. "Students are providing an important pushing force rejecting curricula that paints abstract imaginary worlds and tells them little about the problems that will shape their future." (The Radical Remaking of Economics)

Joe Earle, Cahal Moran, Zach Ward Perkins
37. "The biggest economic catastrophe of our times wasn't mentioned in our lectures and what we were learning didn't have any relevance to learning it... We were memorizing and regurgitating abstract economic models for multiple choice questions." (The Econocracy)

Unlearning Economics
38. "In practice, this vision of the economy detracts attention from important social issues and can even serve to conceal outright abuses." (No, Criticizing Economics is not Regressive)

Stephen King
39. "Young economists arrive in the financial world with little or no knowledge of how the financial system operates. This is a matter of collective guilt. Economic models typically assume the financial system is a black box." (Quoted in What's the use of economics?)

Gary Saul Morson, Morton Shapiro
40. "Aristotle long ago pointed out, one needs a fundamentally different sort of reasoning inasmuch as actual cases have features no theory can anticipate. One needs judgement, wisdom and experience. In practical reasoning, one begins with a deep understanding of the specific situation and reasons from there." (Cents and Sensibility)

F. Academic economics is too focused on theory


Ludwig von Mises
41. "The study of economics has been again and again led astray by the vain idea that economics must proceed according to the pattern of other sciences." (Economists dissing economics. Unlearning Economics)

William Ashley
42. "There is a divergence of opinion as to the proper method to pursue in the investigation of present phenomena... Economists tend in one of two opposite directions. Either they use the method of deduction practiced by Ricardo and defended by J.S. Mill and Cairnes or they proceed by way of historical inquiry and the observation of actual facts."  (An Introduction to English Economic History, 1888)

Ariel Rubinstein
43. "I am not convinced that [economists'] advice would be less valuable if it were based less on economic theory and more on expert knowledge of the relevant problem." (Remarks on Economics Rules by Dani Rodrik)

Ronald Coase (Nobel Prize 1991)
44. "Economics has become a theory driven subject. I believe the approach should be empirical. You study the system as it is and understand why it works the way it does and consider what changes could be made." (Ronald H. Coase: On Economics. YouTube)

Lars Palsson Syll
45. "And to say that macroeconomic debates are just about selecting models for policy advice is not true, at least not if you look further than the seminar room at the economics department at Oxford university." (Wren-Lewis driveling on macroeconomics)

G. Universal economic laws don't exist


Alan Kirman
46."Hayek argued there are no economic laws, just patterns." (Orthodox Economics Empirically Invalid and Theoretically Flawed. Bring on Complexity Economics)

Adam Smith
47. "I have no great faith in political arithmetic and I mean not to warrant the exactness of either of these computations." (The Wealth of Nations)

David Glasner
48. "In economics the simple predictions that can be accurately made is almost nil because economics is inherently a theory of complex social phenomena and simplifying the real world problems to which we apply the theory to allow testable prediction to be made is extremely difficult and hardly ever possible." (What is so Great about Science? o How I Learned to Stop Worrying and Love Metaphysics)

Dani Rodrik
49. "The diversity of models in economics is the necessary counterpart to the flexibility of the social world." (Economics Rules)

H. Academic economics airbrushes over a complicated reality


Unlearning Economics
50. "In the realm of international trade, economists have been all too inclined to support trade deals - often quite vociferously on the basis of simple ideas like comparative advantage while ignoring the actual details of the trade details." (No, Criticizing Economics is not Regressive)

Maria Konnikova
51. "When you try to straighten out the tangle, you may lose far more than you gain." (Humanities aren't a science. Stop treating them like one)

Friedrich Hayek (Nobel Prize 1974)
52. "I believe it is only microeconomics which enables us to understand the crucial functions of the market process: that it enables us to make effective use of information about thousands of facts of which nobody can have full knowledge." (Coping with Ignorance, 1978)

Jedrzej Malko
53. "The cognitive value of bringing all dimensions of social reality under one common denominator is negative. The search for any one prime mover, the true and hidden structure or some general logic of history is always harmful. The attraction of simple answers lies not in what they reveal about the world but in how much they hide from us, making life less complicated than it should be." (Jedrzej Malko Demystifies Economic Concepts in His Book 'Economics and its Discontents')

Alfred Marshall
54. "Nature's action is complex: and nothing is gained in the long run by pretending it is simple and trying to describe it in a series of elementary propositions." (Principles of Economics, 1890)

Joseph Stiglitz (Nobel Prize 2001)
55. "The world is so complex to try to simplify it into a few mathematical equations is an enormous achievement. The question always is, what are you leaving out? If it gets too narrow, the blinders may rule out things that are really important." (Joseph Stiglitz on what makes a good economist. YouTube)

Justin Wolfers
56. "More than any other economics I know, [Deaton] understands that to get the big picture right you've got to get all the small details right too." (Why Angus Deaton Deserved the Economics Nobel Prize. New York Times)

Gary Saul Morson, Morton Shapiro
57. "As hedgehogs see complexity as an illusion concealing an underlying simplicity, foxes see just the opposite." (Cents and Sensibility)

Gary Saul Morson, Morton Shapiro
58. "Joe Mokyr's 'The Enlightened Economy: An Economic History of Britain 1700-1850' explains the rise of Britain to economic preeminence through a complex plurality of factors irreducible to any one of them." (Cents and Sensibility)

Joseph Stiglitz (Nobel Prize 2001)
59. "In debate, one randomly was assigned to one side or the other. This had at least one virtue, it made one see that there was more than one side these complex issues." (Autobiographical essay)

Jean-Baptiste Say
60. "It is, perhaps, a well founded objection to Mr. Ricardo, that he sometimes reasons upon abstract principles to which he gives too great a generalization." (A Treatise on Political Economy, 1832)

I. Academic economics uses esoteric language


Roger Backhouse, Bradley Bateman
61. "Government doesn't cut an abstract entity called 'government spending'. It cuts veterans benefits, homeland security and Medicare/Medicaid." (Wanted Worldly Philosophers. New York Times)

Alfred Marshall
62. "Great mischief seems to have been done by... drawing broad artificial lines of division where nature has made none." (Principles of Economics, 1890)

Peter Radford
63. "It is always tempted, therefore, to bang such problems into bizarre shapes in order to attempt to redefine them for analysis, hence the blind spots and contortions over the recent crisis and over inequality." (Why Mainstream Economic Models Make Little Sense)

John Maynard Keynes
64. "Too large a proportion of recent mathematical economics is mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols." (Economists dissing economics. Unlearning Economics)

Aaron Gordon
65. "Esoteric topics rules academia. These topics get researched, presented and published and somewhat tragically, immediately dispatched into the far reaches of the JSTOR achieves." (Killing Pigs and Weed Maps: The Mostly Unread World of Academic Papers)

J. Academic economics overrates mathematical models


Mark Blaug
66. "Economists have converted the subject into a sort of social mathematics in which analytical rigor is everything and practical relevance is nothing." (Economists dissing economics. Unlearning Economics)

Tony Lawson
67. "In economics faculties, probably more than 90% of what is taught focuses or employs some form of mathematical reasoning." (Really Reorienting Modem Economics. YouTube)

David Andolfatto
68. "...it would be correct to say that DGE theory cannot account for financial crises." (In defense of modern macro theory)

Brad Voracek
69. "While today's experts hold prestigious positions, their understanding of math is often greater than their understanding of the economy. as the 2008 recession demonstrated, the majority of current experts didn't get things right." (Ending the Econocracy: The Need for Pluralism in Economics)

Milton Friedman (Nobel Prize 1976)
70. "Economics has become increasingly an arcane branch of mathematics rather than dealing with real economic problems." (Economists dissing economics. Unlearning Economics)

K. Academic economics ignores that every economy is unique


Friedrich Engels
71. "The conditions under which men produce and exchange vary from country to country and within each country again from generation to generation. Political economy therefore cannot be the same for all centuries and for all historical epochs." (Anti-Duhring, 1877)

Roger Backhouse and Bradley Bateman
72. "In the past there were more course on comparative economic systems contrasting capitalism with socialism, French, Scandinavian and British models." (Wanted Worldly Philosophers. New York Times)

Ha-Joon Chang
73. "In Singapore, 90% of land is owned by government. Where is the theory that explains this economy?" (Talks at Google. YouTube)

Andrew Lo
74. "From an ecological perspective, I know it's hard to not make value judgments but as a scientist what we might want to do is first study the ecosystem, measure all of the various different species and their biomasses and look at mating rituals and behaviors. And once you actually map out all of these relationships, you can then decide what you want to do with the information." (Adaptive Markets: Financial Evolution at the Speed of Light. YouTube)

Sunday, July 30, 2017

Dani Rodrik's support for pluralism


About a month ago, I read and analyzed the book 'Economics Rules' by Dani Rodrik. The core message is that economists should embrace a large tool kit of economic models and be able to select specific models to analyze real world situations. Rodrik also has some interesting things to say about mathematical economics and critics of the economics profession.

This book has had profound impact on how I think about economic analysis. Initially I was opposed to the idea of pluralism, but eventually I changed my mind to agree with Rodrik. I even had to revise one of my old posts from January to incorporate my new understanding.

This post is a collection of my favorite quotes from the book. I tried to organize the quotes into a coherent structure to emphasize the main points. To avoid copyright issues, I got permission from Rodrik to make this post.

Support for pluralism

"Rather than a single, specific model, economics encompasses a collection of models. The discipline advances by expanding its library of models and by improving the mapping between these models and the real world. The diversity of models in economics is the necessary counterpart to the flexibility of the social world." (page 5)

"In part because economists take the natural sciences as their example, they have a tendency to misuse their models. They are prone to mistake a model for the model, relevant and applicable under all conditions." (page 5)

"Knowledge accumulates in economics not vertically, with better models replacing worse ones, but horizontally with newer models explaining aspects of social outcomes that were unaddressed earlier." (page 67)

"In the end, it was clear that no single theory could fully explain the story of US inequality since the 1970s. Nor was there a good way of parsing the relative contributions of different theories. Certain theories (models) gave us a better understanding of the channels through which trade, technology and other factors may have operated. The failure of other theories allowed us to rule out mechanisms that appeared equally plausible at the outset. There was no closure, but there was plenty of learning along the way." (page 143)

"Today it is almost a mantra for development economists, finance experts, and international agencies that no single set of policies is appropriate for all countries and that domestic reforms must be tailored to specific circumstances." (page 167)


How to choose the right model

"[A model's] conclusions are true only to the extent that their critical assumptions approximate reality. When they don't, we need to rely on models with different assumptions." (page 18)

"As Stanford economists Paul Pfleiderer explains, we always need to apply a 'realism filter' to critical assumptions before a model can be treated as useful." (page 26)

"Economic models are cases that come with explicit user's guides (teaching notes on how to apply them). That's because they are transparent about their critical assumptions and behavioral mechanisms."  (page 73)

"Freshly minted PhDs come out of graduate school with a large inventory of models but virtually no formal training (no course work, no assignments, no problem sets) in how to choose among them." (page 84)

"Eventually, we developed a decision tree that helped us navigate across potential models... We would start at the top of the tree by asking whether the constraints on investment were mainly on the supply side of on the demand side... At each node of the decision tree, we tried to develop informal empirical tests to help us select among models that would send us down different paths." (page 89)

Support for simple models

"In truth, simple models of the type that economists construct are absolutely essential to understanding the workings of society. Their simplicity, formalism, and neglect of many facets of the real world are precisely what make them valuable." (page 11)

"What are economic models? The easiest way to understand them is as simplifications designed to show how specific mechanisms work by isolating them from other, confounding effects." (page 12)

Support for mathematical economics

"Math ensures that the elements of a model (the assumptions, behavioral mechanism, and main results) are clearly stated and are transparent. Once a model is stated in mathematical form, what it says or does is obvious to all who can read it." (page 31)

"[Math] ensures the internal consistency of a model (simply put, that the conclusions follow from the assumptions). (page 32)

"Verbal arguments that seem intuitive often collapse or are revealed to be incomplete under closer mathematical scrutiny. The reason is that 'verbal models' can ignore nonobvious but potentially significant interactions." (page 34)

Critique of mathematical economics

"Math plays a purely instrumental role in economic models. In principle, models do not require math, and it is not the math that makes the models useful or scientific." (page 33)

"Too many economists fall in love with the math and forget its instrumental nature. Excessive formalization (math for it's own sake) is rampant in the discipline." (page 35)

"The profession's stars and most heavily cited economists are those who have shed light on important public problems... not its mathematical wizards." (page 37)

"Efforts to construct large-scale economic models have been singularly unproductive to date. To put it even more strongly, I cannot think of an important economic insight that has come out of such models." (page 39)

Analysis of the 2008 financial crisis

"That economists were mostly blind-sided by the crisis is undeniable. Many interpreted this as evidence of a fundamental breakdown in economics... But what makes this episode particularly curious is that there were, in fact, plenty of models to help explain what had been goin on under the economy's hood. Bubbles (steady increases in asset prices divorced from their underlying value) are not a new phenomenon." (page 154)

"Models of self-fulfilling panic (a coordination failure in which individually rational withdrawals of credit lines produce collective irrationality in the form of a systemic drying up of liquidity) were well known to every student of economics." (page 155)

"A key pattern in the run up to the crisis was excessive risk taking by managers of financial institutions. Their compensation depended on it, but their behavior was no consistent with the interests of the banks' shareholders. This divergence between the interests of managers and shareholders is a centerpiece of principal-agent models." (page 155)

"In sum, economists became overconfident in their preferred models of the moment: markets are efficient, financial innovation improves the risk-return trade-off, self-regulation works best, and government intervention is ineffective and harmful. They forgot about the other models." (page 159)

What are the critics saying?

"I felt that many of the criticisms coming from outside the field missed the point. There was too much misinformation about what economists really do." (page xiii)

"Many of the complaints are well known: economics is simplistic and insular; it makes universal claims that ignore the role of culture, history and other background conditions; it reifies the market; it is full of implicit value judgments; and besides, it fails to explain and predict developments in the economy. Each of these criticisms derives in large part from a failure to recognize that economics is, in fact, a collection of diverse models that do not have a particular ideological bent..." (page 6)

"One of the most frequent complaints about economics labels it a club that shuns outsiders. This exclusiveness makes the discipline insular, according to the critics, and closed to new and alternative perspectives on economics. Economics should become more inclusive, they argue, more pluralistic and more welcoming of unorthodox approaches." (page 196)

"Pluralism with respect to conclusions is one thing; pluralism with respect to methods is something else. No academic discipline is permissive of approaches that diverge too much from prevailing practices, and economics is unforgiving of those who violate the way work in the discipline is done. An aspiring economist has to formulate clear models and apply appropriate statistical techniques." (page 199)

"For some, these constraints represent a kind of methodological straitjacket that crowds out new thinking. But it is easy to exaggerate the rigidity of the rules within which the profession operates." (page 200)

Friday, June 30, 2017

Chess metaphor for macroeconomics


I think of macroeconomics as being like a chess game. Similar to chess, the world economy is made of many different economic actors with different abilities and placements. The world economy has a structure that is continually evolving. Instead of relying on a particular macroeconomic theory, I think it's more effective to pragmatically analyze the structure of economic actors in an economy to determine the best course of action. In chess, players must also pragmatically analyze the structure of the pieces to make decisions.

Here is what each chess piece represents in the economy:

  • Pawns: low income people
  • Queen: billionaires
  • Rooks, bishops and knights: companies
  • King: planet earth
  • Opponent's pieces: goods and services

Pawns represents a low income people because pawns have the least mobility and are the weakest pieces on the board. If a pawn is able to miraculously reach the other side of the board, they acquire the abilities of a queen. This represents when a poor person through hard work and luck is able to become a billionaire.

The queen represents billionaires because the queen has the greatest mobility and power in the game. Billionaires are the most powerful actors in the economy.

Rooks, bishops and knights represent companies because they have a lot of power but not as much as the queen. Companies are extremely diverse, therefore it's fitting that they can be either a rook, bishop or knight.

The king represents planet earth because if the king dies, the game is over. If planet earth becomes so polluted that it's uninhabitable, it's game over for society. A defensive strategy to protect the king is symbolic of regulations to protect the environment.

The opponent's pieces represent goods and services because the goal of economics is to produce goods and services. The goal of chess is to conquer the opponent's pieces.

When playing chess, it's important that all of your pieces work together. It's important that your pieces back each other up. Unsupported pawns stand no chance of surviving. Pawns need the help of more powerful pieces to make a greater contribution. Bottom line, your pieces must act like a team. Imagine playing a game of chess without moving your queen; you will lose. This is the similar to not taxing billionaires to pay for things that will improve society.

Here's a final quote from Adam Smith which is the one of the early uses of the chess metaphor,
...in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. (The Theory of Moral Sentiments, 1759)

Saturday, June 17, 2017

What is economics?


What is economics? Here is my answer:

Economics is the study of the production, distribution and consumption of goods and services.

In other words, economics is the study of the economy.

This post is a collection definitions of 'economics' from famous economists. I have divided the definitions into four categories: scarcity, wealth, decision-making and open-ended. This post was inspired by Roger Backhouse and Steven Medema's paper 'On the Definition of Economics'.

For each definition, I have provided a short analysis.

Wealth based definitions


Adam Smith (1723-1790)
"[Economics is] the nature and causes of the wealth of nations." (The Wealth of Nations, 1776)
  • I think Smith's definition in agreement with the definition I stated above. 'Wealth' is a good substitute word for 'goods and services'. 'Nature and causes' is a good substitute for the word 'study'.

Jean-Baptiste Say (1767-1832)
"[Political economy is] the science of production, distribution and consumption of wealth." (A Treatise on Political Economy, 1803)
  • This definition is basically the same as the one I provided above. 'Wealth' isn't as descriptive as 'goods and services' but means the same thing. My only problem with this definition is that the word 'wealth' could be misinterpreted for 'abundance', therefore I prefer the phrase 'goods and services'.

John Stuart Mill (1806-1873)
"[Political economy] is the science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the production of wealth in so far as those phenomena are not modified by the pursuit of any other object." (On the definition of Political Economy, 1867)
  • Although this definition is confusing, I agree that economics revolves around the 'wealth'. That's really all this definition is saying.

Thomas Adams (1873-1933), Richard Ely (1854-1943), Max Lorenz (1876-1959) and Allyn Young (1876-1929)
"[Economics is] the wealth-getting and wealth-using activities of man." (Outlines of Economics 4th edition, 1926)
  • I agree that economics has to do with  'wealth-getting' (production) and 'wealth-using' (consumption) but I think this definition would be better if it mentioned 'wealth-distribution'.

Scarcity based definitions


Lionel Robbins (1898-1984)
"[Economics is] the science which studies human behavior as a relationship between ends and scarce means which have alternative uses." (Essay on the Nature and Significance of Economic Science, 1932)
  • This is currently the most influential and popular definition of economics. I'm generally against 'scarce' definitions of economics because I don't think 'scarce' is an accurate mindset for a world with unlimited opportunity.

George Stigler (1911-1991)
"[Economics is] the study of the principles governing the allocation of scarce resources among competing ends when the objective of the allocation is to maximize the attainment of the ends." (The Theory of Competitive Price, 1942)
  • Once again, I don't think economics should be about 'scarce resources'.

Milton Friedman (1912-2006)
"[Economics is] the science of how a particular society solves its economic problems... an economic problem exists whenever scarce means are used to satisfy alternative ends." (Price Theory: A Provisional Text, 1962)
  • I don't think economics should revolve around 'problems'. What about all the good things in life?

Paul Samuelson (1915-2009)
"Economics is the study of how people and society end up choosing with or without the use of money to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption, now or in the future, among various persons and groups in society. It analyzes the costs and benefits of improving patterns of resource allocation." (Economics 10th edition, 1976)
  • I agree with this definition except that I would replace the word 'scarce' for 'limited'. But even the word 'limited' is kinda wrong. There are some economic resources I would describe as 'abundant'. Maybe it would be best to just remove the word 'scarce'.

Gary Becker (1930-2014)
"[Economics is] the study of allocation of scarce means to satisfy competing ends." (Economic Theory, 1971)
  • I think this definition is too focused on the 'distribution' and 'consumption' part of economics with not enough emphasis of 'production'.

Robin Bade and Michael Parkin
"[Economics is the] social science that studies the choices that individual, business, government and entire societies make as they cope with scarcity." (Foundations of Microeconomics, 2002)
  • This definition revolves around scarcity. It's as if society is given a pie that must be divided up with no potential to create more pie. This definition doesn't talk about the 'production' part of economics.

Decision-making based definitions


Carl Menger (1840-1921)
"[Economics] is related to the practical activities of economizing men." (Principles of Economics, 1871)
  • What does it mean to economize? According to Google, "to spend less; to reduce one's expenses". Although this definition kinda works, I still think it's really broad and doesn't properly define the boundaries of what economics is.

Alfred Marshall (1842-1924)
"Political economy or economics is a study of mankind in the ordinary business of life. It examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing... thus it is on the one side a study of wealth and on the other, and more important side, a part of the study of man." (Principles of Political Economy, 1890)
  • For the most part I agree with this definition. I agree that 'ordinary business of life' revolves around economics. I like how this definition focuses on what is 'most closely connected with the attainment and use of the material requisites of wellbeing'.

Summer Slichter (1892-1959)
"The subject matter of economics is industry; the process by which men get a living... economics studies industry, not as a technological process, but as a complex of human practices and relationships." (Modern Economic Society, 1931)
  • This definition is very similar to Marshall's definition. I agree that economics is all about 'industry' (goods and services) and the 'process by which men get a living' (production, consumption).

James M. Buchanan (1919-2013)
"[Economics is] the study of the whole system of exchange relationships."
  • This definition has too much emphasis on the 'distribution' part of economics while ignoring 'production' and 'consumption'.

David Colander (1947-now)
"Economics is the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs and political realities of the society." (Microeconomics 6th edition, 2006)
  • Although I think this definition is valid for economics, I think its better suited for sociology.

Greg Mankiw (1958-now)
"Economics is the study of how society manages its resources." (Principles of Economics 2nd edition, 2001)
  • This is a broad definition but I think it works. Ultimately, this definition has to do with the production, distribution and consumption of 'resources'.

James Gwartney, David MacPherson, Russell Sobel and Richard Stroup
"Economics is the study of human behavior with a particular focus on human decision-making." (Microeconomics: Private and Public Choice 11th edtion, 2006)
  • This definition seems better suited for psychology.

Open-ended


Jacob Viner (1892-1970)
"Economics is what economists do." (Quoted by Kenneth Boulding in Economic Analysis, 1941)
  • This definition is completely inadequate. What's the point of definitions and words in the first place? Without words and concepts we are lost children in the woods.