“What is ‘truth’ in Economics?”

From pages 154-155 of Frank Knight’s 1940 review essay titled “‘What Is Truth’ in Economics?” as this essay is reprinted in Knight’s 1956 collection, On the History and Method of Economics:

Economics and other social sciences deal with knowledge and truth of a different category from that of the natural sciences, truth which is related to sense observation – and ultimately even to logic – in a very different way from that arrived at by the methodology of natural science. But it is still knowledge about reality.

The fact that economists, with relatively rare exception, cannot conduct controlled laboratory experiments which allow a focus on the behavior of a small handful of variables does not render the knowledge arrived at by economic scholarship – observation, research, and reasoning – unscientific…

To fancy that one can gain an adequate understanding of the workings of the economy merely by carefully observing and measuring the relatively few objective pieces of quantified data that are typically available to economic researchers – “the” unemployment rate, “the” four-digit concentration ratio of this and that industry, “the” Gini coefficient for this and that country…is foolish. All such observable empirical facts are the results of vast and complex plan formation and modification and human interactions. Observable facts about the economy have no meaning on their own, and they are not – or ought not to be – the subject-matter of economics.

From Cafe Hayek 9/22/2020

The evolution of psychiatry

Psychiatric therapies have never been atheoretical – psychiatrists have always justified their treatments with some school of thought: Freudian psychodynamic theories placed blaPsychiatric therapies have never been atheoretical – psychiatrists have always justified their treatments with some school of thought: Freudian psychodynamic theories placed blame on early childhood and subconscious urges; behaviourism justified the application of pain to try and train people out of wrongthink; and more recently, chemical imbalance theories were used to advertise pharmaceuticals, despite the narrative of simple dopamine and serotonin dysfunctions having been long dismissed in academic circles…Psychiatry today can be considered a discipline in crisis, surviving only because psychological and pharmaceutical treatments are effective for some people, some of the time, and so we still need them…

In 1973, after gay rights protestors had stormed an APA meeting…the APA called a vote to reconsider homosexuality’s status as a mental disorder. By a 58% majority, it was struck off.

Voting to decide whether a condition is a disease is not the sign of a mature science, yet to this day consensus alone is the deciding factor of whether a mind is deemed disorderly…

Nevertheless, this reference to evolutionary function is the only way to define function by an objective biological process rather than relying solely on subjective norms and cultural values – or indeed a vote.

https://www.worksinprogress.co/issue/the-evolution-of-psychiatry/

 

Friedrich August von Hayek’s speech at the Nobel Banquet, December 10, 1974

F.A. Hayek on the importance of humility and limitations of Economics and the social sciences in general.

I feared…the Nobel Prize confers on an individual an authority which in economics no man ought to possess.

This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence…

I am not sure that it is desirable to strengthen the influence of a few individual economists by such a ceremonial and eye-catching recognition of achievements, perhaps of the distant past.

https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/speech/

Language and Economic Misunderstanding

Interesting post about the nature of language and how it can misconstrue a complex reality and ultimately lead to misunderstandings and poor policy actions by governments.

Muddled thinkers confuse the world of our senses with the way in which it is depicted in language.

Yet as is true of all beneficial institutions, language is imperfect – it has, some might say, its ‘costs.’ Among the ‘costs’ of language is its tendency to cause us to suppose that the abstractions that we describe with words possess a concrete reality that these abstractions don’t possess. 🔥🔥🔥 [flames are my addition]

https://cafehayek.com/2020/05/quotation-of-the-day-3159.html

For more posts related to Economics, click here.

Scientism and Philosophy: Wittgenstein’s forgotten lesson

There are many questions to which we do not have scientific answers, not because they are deep, impenetrable mysteries, but simply because they are not scientific questions. These include questions about love, art, history, culture, music-all questions, in fact, that relate to the attempt to understand ourselves better. There is a widespread feeling today that the great scandal of our times is that we lack a scientific theory of consciousness. And so there is a great interdisciplinary effort, involving physicists, computer scientists, cognitive psychologists and philosophers, to come up with tenable scientific answers to the questions: what is consciousness? What is the self?

https://www.prospectmagazine.co.uk/magazine/ray-monk-wittgenstein

“The Limits of Science” About the scientific method and its impact, applying it to the human sciences

Longer read but really thoughtful discussion of the scientific method and its limits but also reflects on the extent to which we can know about things the closer we get to them and the more information we can gather. Some interesting passages quoted below.

https://www.nationalaffairs.com/publications/detail/the-limits-of-science

“The closer we get to our subject and the more we know, however, the more the scientific method breaks down. An astronomer can feel comfortable calling a faraway star’s path a line, even though it may curve out there at the edge of the universe; he can assume the scientific method has revealed the truth, and it will likely never be disproven. But as a doctor, I can’t focus on a few facts to the exclusion of others, for life is the level on which I work. In the operating room, I see people react differently to anesthesia all the time; I see lines become curves. I see a patient’s facial expression convey more than a supposedly objective measurement. I see the chaos of a dappled skin pattern convey more accurate information than what the scientific method has built out of carefully isolated details.

“And though there is a great deal of variety in how human bodies react, it is nothing compared to the variety and unpredictability of human behavior. This is the level on which social scientists, human scientists, and psychologists work, and, unlike faraway stars, human life is something that we know Continue reading ““The Limits of Science” About the scientific method and its impact, applying it to the human sciences”

Freakonomics Podcast: Abortion and Crime, Revisited

The authors of the book, Freakonomics, created some controversy when they laid out the case that the legalization of abortion in the United States in the 1970s was largely responsible for the dramatic drop in crime in the 1990s and beyond. In this podcast, the main author and economist behind the study discusses the fallout and criticism from that case but more importantly discusses several important concepts related to the human sciences and how people acquire knowledge generally.

Some interesting moments:

33 minutes: the challenges for a layperson to learn about social science research and the limitations of media reporting and sensationalism. Also talks about the nature of creating knowledge in economics.
47 minutes: on the challenges of explaining to people what economists do and the validity of their methods despite seeming sophisticated to the nonexpert.

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Does mentoring “at risk” youth do more harm than good? The fascinating “Cambridge-Somerville Youth Study”

The “Cambridge-Somerville Youth Study” was a fascinating study in constructing knowledge in the human sciences but more importantly, using scientific methods to come to conclusions that seem to be completely counterintuitive: that mentorship programs can do more harm than not intervening in the lives of children considered at risk. The Freakonomics episode linked below gets into great detail about this.

Freakonomics Podcast: When Helping Hurts

Jump ahead to the 6 minute mark to hear about the “Cambridge-Somerville Youth Study”

http://freakonomics.com/podcast/when-helping-hurts/

Charities aren’t doing enough to determine if they’re really making a difference

First do no harm. It’s a basic tenet of medicine. When intervening in peoples lives – even with good intentions – we need to check whether we are doing them any damage. But sadly, this key principle from the medical profession has not been taken to heart by charities.

https://theconversation.com/charities-arent-doing-enough-to-determine-if-theyre-really-making-a-difference-95110

Similar to an older post “How do we measure the effectiveness of charitable giving?”

https://toktopics.com/2015/02/22/how-can-we-measure-the-effectiveness-in-charitable-giving/

 

Motivated Reasoning Is Disfiguring Social Science

Worthwhile article that examines the nature of knowledge in the social sciences as well as its limitations caused by human limitations and the structure of our institutions that produce knowledge.

If moral arguments for equality or against corporal discipline are constructed on a foundation of faulty science, then the foundations of that morality collapse as the faults are exposed. It is far safer to ensure that moral arguments remain independent of scientific claims—to argue, for instance, that gender equality is a moral imperative irrespective of whether or not gender differences are biological, or that hitting children is wrong irrespective of whether it leads to negative outcomes for the child.

https://quillette.com/2019/02/23/motivated-reasoning-is-disfiguring-social-science/?fbclid=IwAR2CVIZg98n-3URoBvzgAAdWJGypTl4QMkDMR6WfqlIiIJHQGCCUwk5NmVQ

Interestingly, here is another post from the same publication coming to the opposite conclusion about spanking which also speaks to the nature of the production of knowledge in the human sciences

https://toktopics.com/2018/02/04/the-spanking-debate-is-over-how-can-we-prove-anything-in-the-human-sciences/

Academic Grievance Studies and the Corruption of Scholarship

“Something has gone wrong in the university — especially in certain fields within the humanities,” the three authors of the fake papers wrote in an article in the online journal Areo explaining what they had done. “Scholarship based less upon finding truth and more upon attending to social grievances has become firmly established, if not fully dominant, within these fields.”

Their original post”

https://areomagazine.com/2018/10/02/academic-grievance-studies-and-the-corruption-of-scholarship/