Physics vs. Economics

At my prodding, Sean Carrol considered the differing public treatment of physicists and economists:

In the public imagination, natural scientists have figured out a lot more reliable and non-obvious things about the world, compared to what non-experts would guess, than social scientists have. The insights of quantum mechanics and relativity are not things that most of us can even think sensibly about without quite a bit of background study. Social scientists, meanwhile, talk about things most people are relatively familiar with.

Hey, economists can talk obscure technical jargon just as easily as physicists. We don’t actually do that so much in public, because the public respects us less. Talking more technically wouldn’t make the public respect us more.

On the very basics of their fields (the Big Bang model, electromagnetism, natural selection), almost all natural scientists are in agreement. Social scientists seem to have trouble agreeing on the very foundations of their fields. If we cut taxes, will revenue go up or down? Does the death penalty deter crime or not? For many people, a lack of consensus gives them license to trust their own judgment as much as that of the experts.

Revenue if tax cut and crime if death penalty aren’t remotely near the foundations of economics. We can’t talk about economic foundations in public without using obscure technical concepts the public won’t tolerate. Physicists are more allowed to talk their foundations in public, as they are allowed more tech talk. (I’ll consider consensus issues below.)

The social sciences deal with fantastically more complicated subjects, about which it’s very naturally more difficult to make definitive statements, especially statements that represent counterintuitive discoveries. The esoteric knowledge that social scientists undoubtedly possess, therefore, doesn’t translate directly into actionable understanding of the world, in the same way that physicists are able to help get a spacecraft to the moon.

There is a final point that is much trickier: political inclinations and other non-epistemic factors color our social-scientific judgments, for experts as well as for novices. … When deciding where to place that trust, we rely on a number of factors, mostly involving the track record of the group to which the purported expert belongs, if not the individual experts themselves. So my advice to economists who want more respect from the outside world would be: make it much more clear to the non-expert public that you have a reliable, agreed-upon set of non-obvious discoveries that your field has made about the world. People have tried to lay out such discoveries, of course — but upon closer inspection they don’t quite measure up to Newton’s Laws in terms of reliability and usefulness.

The public is taught to credit physicists for all those physical things around them they enjoy, like cars, planes, phones, and skyscrapers. The public is not taught to credit economists for all those great economic institutions around them like markets, firms, cities, and industries. So naturally physicists are seen as contributing more. But is this fair?

Yes, economists were only a supporting influence in creating all those great economic institutions, unless we want to define all businessmen as economists. But similarly, physicists were only a supporting influence in creating all those great physical devices, unless we want to define all engineers as physicists. There were useful steam engines long before thermodynamics helped explain them, and it took far more than basic physics to get men to the moon, just as it took far more than basic economics to create modern industries. It is actually quite hard to say which discipline has been more useful overall to the world.

They key difference, I think, is that more interested parties see themselves as losing if the public listens to economists, and these parties therefore dispute economists in public. Such interested parties also influence individual economists, and so weaken within-economics consensus. In contrast, few care enough about what physicists say to dispute them in public.

The fact that economists are more disputed in public than physicists seem plenty sufficient to explain the differing public treatment of the two fields. Even if physicists did have a more “reliable, agreed-upon set of non-obvious discoveries,” that couldn’t explain the differing public treatment of the two fields for the simple reason that the vast majority of the public has no idea about such things. They don’t know about physical or economic discoveries, nor about how reliable or useful such things are. What the public mainly knows is that when physicists talk few disagree, but when economists talk lots of folks disagree, and each ordinary Joe is himself often tempted to disagree.

Now the fact that economists are more disputed does in fact give the public more reason to doubt what economists say. But this only justifies increased uncertainty, not swapping expert opinion for their own personal reasoning. The desire to believe that what is in your interest is also in the general interest can on average distort individual reasoning just as much as it can expert reasoning, if not more so. In both fields it is better to believe nothing, or believe the experts.

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  • Ben

    Economists are less respected because the direct relevance of their profession for elites means most of them are corrupted to promote ideas like “tax cuts pay for themselves.”

    There’s a great moment in the financial crisis documentary Inside Job where it’s pointed out to an economist that he is mainly paid by the banks he’s defending – he practically snarls at the interviewer that he is short on time (instead of, say, explaining how he manages the conflict of interest). The same “expert” wrote a glowing report on the stability of the Icelandic economy (pre-crash), then changed the title on his CV to make out that it was about the *instability* of the Icelandic economy.

  • Ask any physicist a question about (most areas of) physics and you will invariably get the same answer. Ask an economist a questions about economics and you could get as many answers as economists.

    • Oops, pressed submit too soon. My next sentence –

      If one set of answers is no different from random (and would listening to the debate about, say, Keynsian stimulus be any different if the economists adopted random positions), why would you give it less weight than a consistent set of recommendations that you get in relation to other subject areas?

      • Brian M

        If I understand your issue correctly, then this is the answer to your question:

        It has to do with a statistic called reliability (in this case, test-retest or inter-rater reliability would be applicable). But in this case it is even simpler since you are asking them exactly one question. If you have a limited sample size to draw your data from, the larger the variability is among the data points, the less reliable the average of them is. If you took one sample of 20, and then a different sample of 20, in the case where the variance is greater, the expected value of the correlation between those two samples will be lower. So in essence, the likelihood of making a wrong prediction based on your limited sample is higher. (But in the case where variance is low, it is very likely you will get a similar answer from a different sample.) This is why you would not want to weigh the economists opinions as heavily when there is not consensus.

      • waitaminute

        I don’t know about the rest of you, but back in high school I learned the difference between accuracy and precision. Brian M, you’re calling precision “reliability” then inferring accuracy based on precision. Neither is advisable.

        Hence the joke where three economists go hunting; one shoots a foot to the right of the deer, the second shoots a foot to the left of the deer, and the third shouts, “Hurray! We got it!”

  • Pingback: Robin Hanson and Russ Roberts «  Modeled Behavior()

  • Matthew Fuller

    I respect your intelligence, credentials, and opinions Dr. Hanson as much as I trust the retrodictions of climatologists.

    (Which is to say, anthropogenic climate change is real, just don’t expect much accuracy in the long term forecast)

    But when you dodged the very reasonable cause of the general public lack of trust in economic professors “jargoned” opinions, and replaced it with your own spin, you lost a fan.

    Strange days, eh?

    Why not point to economists track records instead and win back the whole profession? I take your opinions of mind uploading seriously as their are so few experts in that burgeoning field. But economics is different.

    I thought that was the point of your prediction markets. How can anyone reading this blog miss something so apparent? Maybe I just commented too soon and others will see the bait and switch.

  • mjgeddes

    #Hackers Maxim #5 Never trust a politician. Never trust an economist. In fact, never trust anyone.

  • John

    The public is taught to credit physicists for all those physical things around them they enjoy, like cars, planes, phones, and skyscrapers. The public is not taught to credit economists for all those great economic institutions around them like markets, firms, cities, and industries. So naturally physicists are seen as contributing more. But is this fair?

    Of course it’s not fair. Carrol’s article seemed to take that as implict. Complaining about how the public and ‘interested parties’ have cut down the status of you and your profession, rather than making actionable suggestions, is not productive discourse.

    • Matthew C.

      Yes, economists invented firms, markets, cities and industries. Right?

  • Ian

    What exactly does the death penalty have to do with economics? That seems a lot closer to political science…

    >>Yes, economists were only a supporting influence in creating all those great economic institutions, unless we want to define all businessmen as economists. But similarly, physicists were only a supporting influence in creating all those great physical devices, unless we want to define all engineers as physicists.<<

    I would do both, actually. Business, as far as I'm concerned, is a form of applied economics, and many types of engineering are just forms of applied physics.


    • ninux


  • Mitchell Porter

    I detect increasing public skepticism about the speculative extremes of theoretical physics. Certainly, there are still a lot of people who love hearing about extra dimensions, parallel universes, and what lies “through the wormhole”. But there’s also rising cranky dissatisfaction, the result of hearing physicists say too many incredible things without any evidence. The most devoted public fans of theoretical physics now tend to be people who also believe in things like reincarnation, telepathy, and a cosmic consciousness.

    The reasons for public skepticism about economists are far more straightforward and include public discord among economists, politicization of disagreement among economists, and the impression that the opinions of economists are ideological rather than scientific.

    • Evil Mammoth

      The most devoted public fans of theoretical physics now tend to be people who also believe in things like reincarnation, telepathy, and a cosmic consciousness.

      That’s because they miss the point; they see an opportunity to hang the language of science upon their superstitions and, in doing so, give their beliefs the air of validity. Furthermore, the more esoteric the jargon the better. All the better to hoodwink you with, my dear. (Well, not you specifically; you know what I mean.) This is nothing new, really.

      Say what you will about theoretical physics and elegant math. We can only hope we have the means one day with which to thoroughly test such claims, but most legit fans—even woeful laymen like me—should understand the place these theories hold. I can think of a few physicists who may have oversold the predictions of string theory, but the crankiness may be coming from those who don’t quite grasp the role theoretical physics plays in shaping our understanding of the universe, namely hypothesis generation. The media also has a tendency to write very sexy and very misleading headlines. (Surprise, surprise.) Perhaps these dissatisfied grumps have also mistaken enthusiasm for certainty.

      • LDE

        How would anyone EVER test for a zero-dimensional particle?! It’s unfalsifiable.

        Of course, if “particles” are indeed just mathematical, inifintely divisible abstractions, or can become wave or wavicles at whim to suit the theory, then of course it’s the perfect fairytale to justify another few million dollars for the pointless next hadron collider.

        The public are sceptical about mainstream economics and mathematical “physics” for good reason; they don’t make any sense.

  • Society gives more money to economists than to physicists,
    so economists are obviously valued more, even though physicists have sort of more respect.

    There are also more economists than physicists, so there might be a market surplus.

    As for my personal experiences of this stuff, being a physicist; I have received a lot of accusations from ordinary people, such as being responsible for the cold war, all pollution, unhappiness, delusions, market collapse, etc.

    As for the real value of economists versus physicists: I think economists overvalue each other, and undervalue the real productivity gains done by physicists, even inside economics, as evidenced by the current trend of automatic traders winning.

    • Matt Flipago

      False. Economist are valued at the margin more. Marginal utility is uncorrelated with total utility. You probably just misspoke though.

  • Ely

    Revenue if tax cut and crime if death penalty aren’t remotely near the foundations of economics.

    …Then your definition of a social scientist and the general public’s are misaligned and your initial comparison with physics is misplaced. The general public wants to know things about fancy quantum mechanics, asteroids, and lots of equations on a chalk board. That’s what people choose to prefer about physics. What they choose to prefer from social science is results that effect daily concerns like taxes or the consequences of a legal decision. Maybe you should call it social science_{public} which is different from social science_{academia}. From physics, people perceive that physics as it relates to grandiose explanations of reality is the real, daily, visceral part of physics. They don’t feel this way about economics. Perhaps it has to do with the computational complexity of attaining equilibria. Real social systems behave nothing like their underlying models (consider the PPAD completeness of finding Nash equilibria, just as an example). This is just less true in physics until you get down to an unrelate-to-able level where it might as well be a fantasy story which the public likes to hear about.

    In my own field which is computer vision, there is the same dichotomy. I would consider “vision science” to encompass machine learning, A.I., probabilistic modeling, multiple view geometry, surface properties, and physics of light. Most people I speak with in the public about what I do think it should be how to make their digital camera work better. Just because physics_{academia} is closer to physics_{public} than there corresponding social science counterparts doesn’t seem to me to be a cause for concern. Actually, it seems like the perfect research project for a social scientist, and I predict the public won’t care about whatever they discover and this trend won’t change.

    Also, “bad news” in physics rarely means the average person loses money.

  • Asher

    Mebbe it’s cuz all the questions that the opinion leaders want answers for involve the pseudo-science that is macro-economics. All the really big-issue questions have really obvious answers.

  • Physicists gave us nuclear bombs/atomic power. Quantum mechanics has given us some other useful technologies although they’re less salient to the general public. And while they weren’t sufficient for the moon landing, most would agree that without physicists it would not have occurred. It is hard to make comparable claims for economists. Markets and firms seem more like a field of study for economists rather than experimentation and creation. I think an economist might have suggested index funds and Al Roth by himself has created some cool mechanisms for getting people what they want when markets aren’t allowed (I think Google’s AdWords are another contemporary example of economists engaging in praxis) but otherwise we associate economists with arguments about politics, or (this is less salient to the public) with consulting which Arnold Kling would dub an information asymmetry industry. David Stove (or maybe somebody else) once said that the main benefit philosophers have given is disabusing us of the bad ideas of other philosophers, and economists are regarded somewhat similar. Milton Friedman once said that because of the efforts of economists over the centuries, tariff rates are one percent lower than they would have been otherwise, and thus they have earned their salaries a hundredfold. A physicist would not have been so self-deprecating.

    • Douglas Knight

      Quantum mechanics has given us computers and lasers. Why haven’t physicists succeeded in communicating this to the public? (have they tried?) I think the public does credit them to physicists, at least the lasers, which they find quite cool, but not to QM.

  • Michael

    “In contrast, few care enough about what physicists say to dispute them in public.”

    I think this is closer to the real point. I’m not convinced that people trust physicists any more than economists. Rather, people will trust any academician’s views as long as those views don’t conflict with their own. They have no views on relativity, so they trust a physicist’s. However, when people feel physics encroaches on their religious beliefs, say, they’re more than happy to dismiss the physicists in favor of their parishioners (heck, they might even hang the physicist–not a fate common for economists). The “problem” with economics is that it treads too closely to people’s world-views.

  • Doug S.

    Biologists don’t get any respect either – just ask the average American what he or she thinks of evolution. 🙁

    • Asher

      No kidding. Ask most Americans whether or not the human species has undergone any divergent evolution of the past hundred thousand years, or so. Better yet, ask any humanities professor, who will almost certainly rabidly oppose the notion, while accepting evolution, in general.

  • A

    Going in the same direction as in the comment from Ely, I think that the original comment by Sean Carroll would be more correct if he changed “very basics of their fields” by “things non-experts in the area care about”.

  • I think the main difference between the two, call them hard sciences versus social sciences, is in their evolution and experimental abilities as a science which I think goes to the heart of why the hard sciences are more certain.

    In natural philosophy/sciences, it was about seeing the world, making a hypothesis based upon those observations, and then testing the hypothesis in such a way that results can

    In economics, there were only proclomations of observed behavior, followed by math to describe it, versus the other way around.

    Additionally, setting up economic experiments is not possible in the real sense. There are certainly real world scenarios which can be studied, but its usefulness outside of the specific scenario can be argued against because of this.

    This also allows for setting up faux experiments, which allows more personal bias to enter the end results.

    & why is untestable in a very real sense, when why in all social sciences involves humans making decisions under given scenarios.

    Think about defining irrational…. is it irrational to put money into a known bubble? Why/why not? Hint: money made or lost isn’t relevant and in many ways is defined by the individual based upon their values (not morals, but values such as time sensitivity, risk aversion, etc, etc).

    We also know that even when asking people directly, why did you do this, sometimes the answers given are still, even if inadvertant, wrong.

    This isn’t to say I disagree with said proclomations or even that any one specific idea in economics is wrong, only that these ambiguities allow any one with a logical argument to strongly oppose what others see as obviously true.

    At least that’s my two synapses

    PS: I think with new mathematical modeling and analysis techniques along with technological abilities allowing the crunching of large data sets, combined finally with the massive amount of data available could show a future where economic studies improve a great deal and in the long run, hopefully produce a general consensus on the basic laws of human nature which effect economics and all other social sciences.

    Which leads to another thought about the increasing value of being able to decipher bad research.,.., not just bad research, but as the cost of gaining information reaches zero, analysis of that information becomes more of a differientiator in society itself….. but I digress.

    • Jared Diamond called the hard sciences “easy” and the soft ones “hard”.

    • ragweed

      The difference between physics/natural sciences and social sciences, in terms of the compexity of the system and the ability to do meaningful experiments, grows less when you start to get into larger and more complex systems. There are physical and natural scientific questions that suit themselves to well controlled labratory experiments, but when you get into things like understanding ice-field dynamics under differing climate regimes, ecosystem-wide energy flow and trophic interactions, or the physics of real-world cloud formation, then it becomes much more difficult and one needs to rely on quasi-experimental modeling and proxies. You can’t for example, actually remove all arctic sea-ice in order to test the feedback affects – you need to create a model, with all the inherant challenges and shortcomings. And while there are ways to design experiments that remove key species from an isolated experimental population (like an island), that doesn’t always scale to large-scale systems. These types of questions are more like the challanges facing social sciences.

  • Albert Ling

    the very complexity of economics make it much more fuzzier and unpredictable, uncertain, and hard to reach absolute ‘truths’. Also, even if some truths can be reached, they might change because human nature might change (culturally over time, or even biologically by evolution or artificial modification i.e. transhumanism).
    In contrast, particles will probably behave the same a billion years from now.

    So of course you will respect less the ‘consensus’ of economists because what they are telling you is uncertain, fuzzy and ephemeral.

  • > Revenue if tax cut and crime if death penalty aren’t remotely near the foundations of economics.

    They seem pretty foundational to me… They follow directly from supply & demand, and ‘incentives matter’.

    • Tyrrell McAllister

      They seem pretty foundational to me… They follow directly from supply & demand, and ‘incentives matter’.

      What, precisely, follows directly from those considerations alone? For example, if your tax rate is at x%, how does “supply & demand” alone tell you “directly” whether revenue will go up if you increase taxes to (x + epsilon)% ?

  • Rafal Smigrodzki

    To sum it up, economists are less respected because economic thinking has more enemies. This parallels other natural sciences, such as evolutionary biology, or climate science, which threaten powerful interests (organized religion, the bureaucratic-environmentalist complex) and thus are under constant attack, weakening their position (evolutionary biology), or even completely pervert them (climate science).

    The enemies of truth do us all a disservice.

  • Jonas

    Interesting lecture on the topic by Andrew Lo:

    Warning: Physics Envy May be Hazardous to Your Wealth

  • Anonymous

    “We can’t talk about economic foundations in public without using obscure technical concepts the public won’t tolerate.” Example?

    • Nylund

      I wanted to just pick a random sentence from a very standard (and uncontroversial) first year econ Ph.D. text like Mas-Colell, Whinston, and Green (ie, the foundations he’s talking about), but I’m having a hard time finding a sentence that doesn’t involve greek or math symbols that I can reproduce here. Here is a not-too-mathy passage picked for no particular reason other than it had no Greek letters in it and simple math notation:

      “If a continuously differentiable demand function x(p,w) is generated by rational preferences, then we seen that it must be homogenous of degree zero, satisfy Walras’ law, and have a substitution matrix S(p,w) that is symmetric and negative semidefinite at all (p,w). We now pose the reverse question: If we observe a demand funciton x(p,w) that has these properties, can we find preferences that rationalize x(.)?..the answer is yes…the results tell us two things. First, it tells us that only are the properties [listed above] necessary consequences of the preference-based demand theory, but these are also all of its consequences. As long as consumer demand satisfies these properties, there is some rational preference relation that could have generated this demand…”

      That is to say, economists can say, “If demand exhibits certain properties, we know there exists some possible preference relationship that is rational that could have generated it.” But even here, rationality has a specific technical meaning, and furthermore, if someone asked what properties were needed to make this conclusion, you’d have to then go into explaining what negative semi-definite means, what Walras’ law is, etc. etc.

      This is just in the first couple chapters (and your first couple weeks) studying econ. These are the sorts of “foundations” he’s talking about, and the sort of foundations that there isn’t really any controversy over. But it’s sure as heck hard to explain it to the public, nor would anyone ever really want to hear about it. But, it is an integral part of the micro-foundations upon which classical demand theory is built.

      I mean, really, who wants to hear the definition of the weak axiom of revealed preferences, about the differences between Hicksian and Marshallian demand, or why the Slutsky equation is important?

      The truth is the public never hears about the 90% of economics everyone agrees on. It’s used for cool things too. Google makes good use of the economic theory of auctions when they sell their ads.

      But notice in that article, meant for the public, the reporter cops out and says, “His talk quickly becomes technical. There’s the difference between the Generalized Second Price auction model and the Vickrey-Clark-Groves alternative. Game theory takes a turn; so does the Nash Equilibrium.”

      That is, the article doesn’t even bother trying to explain it. They mention “Vickrey-Clark-Groves” as a way of saying, “you wouldn’t understand,” then, to keep the reader interested, it throws out the name Nash, because, hey, there was a popular movie about the guy starring Russell Crowe, so people kinda sorta recognize that even if they don’t know what a subgame perfect Nash Equilibrium is.

  • The problem with the social sciences is of course lack/difficulty of experimentation.

    Physicists delight in clarity of what they think they currently understand, and what they are less confident about, and what they just have not clue about.

    Economist aren’t as free to focus on what they don’t know, because they can’t shake out the bad ideas by experimenting.

    I think this leads to a willingness of economists to speak confidently upon matters where they themselves can not be sure. The public soon picks up that these ‘experts’ are of lower quality than experts in the ‘harder’ sciences, so they get less respect (which is probably a good thing for society).

    I’m excited to see how advances in computer technology could potentially ‘bridge the gap’ and allow experimentation in the ‘softer’ sciences. We are close to modeling the complexity of the human mind. For the first time social scientists might actually be in a position to create experiments. It could be the dawn of a great flowering of progress in these fields.

    If I were a social scientist, I would start focusing on how to use groups of AIs in a simulation environment to get rigorous results.

    Ability to experiment is the only way forward.

    • There is an entire area of experimental economics, and has been since the 1960s. It won a Nobel prize in the last decade.

  • As Herbert Gintis puts it (in The Bounds of Reason):

    It is often said that the mathematical rigor of contemporary economic theory is due to the economists’ ‘physics envy.’ In fact, physicists generally judge models according to their ability to account for the facts, not their mathematical rigor. Physicists generally believe that rigor is the enemy of creative physical insight and they leave rigorous formulations to the mathematicians. The economic theorists’ overvaluation of rigor is a symptom of their undervaluation of explanatory power. The truth is its own justification and needs no help from rigor.

  • Robert Koslover

    Most (not all, but nearly all) controversies in physics become clearly resolved with the passage of time, as the results of experiments and follow-up investigations accumulate that either prove one view or another to be the accurate (or more accurate) one. In contrast, the most fundamental controversies in economics seem to just go on forever, with (it seems to me) most of the results from the substantial historical record (e.g., to compare the effectiveness of economies under different types of governments, such as socialist/authoritarian vs free-market, for example) being essentially ignored by the many supposedly learned and esteemed economists involved. And that, in my view, fully justifies the relatively low-regard that the public has for the profession of economics. In fact, I’d say that the “economists” of today probably deserve no more respect than the “physicists” of (roughly) a few hundred years ago (if judged by today’s standards): Both seek/sought the truth, but are/were at the same time deeply confused and misguided by their ideological/religious biases.

    • I think you are confusing interesting with fundamental. The most interesting questions about how to usefully arrange physical objects will remain controversial for a long time. Basic physics principles are much less so. Same with econ.

  • Lots of people are disrespectful of physicists. We can start with anti-nuclear-power activists and continue through young-Earth creationists, astrologers, people who think that quantum mechanics means that refusing to perceive something means it doesn’t exist, etc….

    Have you ever tried telling a liberal activist that depleted uranium is relatively harmless?

    • John Emerson

      “Relatively” is a weasel word. Depleted uranium is less radioctive than nuclear fuel uranium, but it’s still toxic, not mostly because of radioactivity.

      The question of the toxicity of depleted uranium is not a physicist’s question in any case, it’s a medical question.

      • Oldsamples

         you mean biophysical question 😉

  • Mark M

    Physicists and economists are treated differently. You provide reasons for the difference in treatment. They seem like rational reasons for the differences.

    The general public perceives the economy directly, and are in no position to understand the limits of their perception. It’s not reasonable to believe the public will dismiss the evidence of their own knowledge, intuition, and experiences, however inaccurately they model the real world, and choose to believe “nothing” when experts contradict each other.

    I disagree with your arguments about why economics experts disagree with each other, but it really doesn’t matter whether you’re right or wrong in terms of how the public perceives and reacts to it. Change the public behavior of economists and public perception will follow.

  • Michael Wengler

    I am an Applied Physicist trained at the same instituton (Caltech) as Robin.

    I think economists have much the harder job than physicists.

    In an important sense, physicsists pick their problems as ones likely to yield to the methods they like to use. Properties of electrons? We have lots of electrons, they don’t change over time, and you don’t need to get your research plan checked as ethical when you look in to them. Indeed, to the extent physicists differ from chemists, both are extraordinarily effective at learning things that produce fantastic econmic value, but they do approach it in pretty different ways.

    Economists are stuck with the hard problem of understanding a system which involves human actors. Not only is a human extraordinarily more complicated than an electron, but the human has “memory” so that a human now is almost certainly gigantically different from a human 30 years ago or 100 years ago, fuhgedaboud 1000 years ago in its economic behavior. And indeed, the mere fact of an economist telling you what is happening in a market will cause humans to change what they do in the market as a result of the information!

    If you are willing to limit yourself to the problems your methods work easily on, then physicists are great. If you weight the value of the profession by how important the questions they are working on are, then economists come up equal with them.


  • Physicists are respected because of the atomic bomb. Once economists figure how how to blow up another country’s economy they’ll get respect.

    Note that this isn’t a hypothetical problem. The USA used extensive sanctions against Iraq in the 1990s to try to drive Saddam out of power. It was a complete failure. If we’d had economists worthy of respect they’d’ve figured out a way to pull it off.

    • Matthew C.

      They are doing a pretty bang-up job of blowing up this country’s economy. . .

  • paulfchristiano

    I have very different attitudes towards economists and physicists not because of beliefs about the utility of the fields, but because of beliefs about the character and intellectual demands of economics research. I would be very interested to see an economist’s list of the most intellectually interesting and important results in economics.

    • jrs

      That is a good question, and not one that is discussed enough I don’t think. I have thought about it before, but have largely forgotten my responses and thus this is a rough, off the cuff response. In no particular order

      1) Specialization’s impact on productivity (Smith) precursor to the assembly line
      2) Comparative advantage which argued against Mercantilism/ Protectionism, and defied the common sense of many that for one to gain from a trade the other must have been ripped of/lose (Ricardo, but Smith really also)
      3) General Supply and Demand, the effects of price floors/ceilings
      4) Free markets underproviding of Public Goods (Samuelson)
      5) Externalities (Coase)
      6) Spurious regression/ Non-Stationarity and Cointegration (really statistics but most call Granger and Engel, Johansen and Juselius econometricians so…)
      7) New Economic Geography and formations of cities (Krugman)
      8) Assymetric information, market for lemons etc. (Akerlof, Shiller, Spence)
      9) The connection between the Phillips curve (inflation unemployment trade off) and the real interest rate. Similar to the natural rate of unemployment hypothesis, Phelps and Friedman (which ties the natural rate to real interest rates)
      10) The connection between currency premiums and the Gap between the exchange rate and its Purchasing Power Parity level (Frydman and Goldberg. Helps explain forward discount bias and excess returns puzzle (can be applied to Mehra and Prescott 1985 findings in equities using P/E ratios instead of PPP)
      11) The connection between real exchange rate swings and margin squeezes (as opposed to constant mark up pricing), Krugman and Phelps
      12) Fundmanetal disconnect, Meese and Rogoff 1983, general finding it is difficult to predict/explain asset prices with a time invariant model based on fundamentals. Shiller similar with AER 1981 paper on equities
      13) Overturning Say’s law, liquidity trap issue, Keynes and Hicks
      14) Rising relative cost of locally provided services with productivity increases (Baumol)
      15) Behavioral insights are more psychologists, loss aversion Tversky and Kahnemann, ambiguity issues Ellsberg etc. but I will include those types of findings as well.

  • ezra abrams

    how passionate are you about
    a) the mass of the proton
    b) roll of taxcuts in relation to changes in employment

    Since psychologists teach that we disregard data which conflicts with our beliefs, one can see why social scientists are held in low esteem: on avg, most of what they say will conflict with most people.
    On the other hand, since no one really cares about the mass of the proton, physcists are held in high esteem

    In regard to the relative complexity thing, Richard Feynmann says, roughly, next time a physicist is boasting about physics , ask him what happens when you push water through a pipe; he can’t tell you.

  • Drewfus

    Perhaps social science is just physics getting ahead of itself.

  • mjgeddes

    Hackers Maxim #6 You know there’s a conspiracy because you’re in on it.

  • mike

    Any idiot can call himself an economist without being challenged. If someone holding a degree in English calls himself a physicist, that person will immediately be called a quack.

    Beyond that: if you ask actual economists (those with graduate education in the field), you will get a unified response on the tax cut – revenue impact question. No, tax cuts are not self-financing. No dispute. If you think there is some dispute, you haven’t been talking with actual economists.

  • I think it is the degree of intellectual integrity that is applied to problems. Feynman set the standard for physics when he said.

    “The first principle is that you must not fool yourself, and you are the easiest person to fool.”

    He was talking about cargo cult science:

    It is plainly obvious that the current US economic problems are due to a liquidity trap and not due to US debt or deficits (otherwise interest rates wouldn’t be at historic lows). It isn’t due to high taxes or corporations wouldn’t be sitting on loads of cash. The deficit can’t be due to Social Security because Social security is still $2.5 trillion in surplus. These are not close calls. That some who consider themselves economists can’t perceive them is about their intellectual integrity.

    The economists who say otherwise, are fooling themselves and trying to fool the rest of us. Their motivations for self-deception don’t really matter, the motivations of the cargo cult practitioners didn’t matter either, their attempts to summon cargo from ancestors are simply magical thinking, magical thinking that they don’t have the intellectual integrity to question.

    I see this is exactly like cargo cults. There isn’t a causal nexus between what is proposed and how it is supposed to fix the problem. For example, the claim that lower taxes (right now) will spur investment and job creation (right now) doesn’t make sense. Why would corporations that are already sitting on loads of cash invest the cash they would get from tax cuts when they already have surplus capacity? If there is surplus capacity, there is no need and no utility for investment. Tax cuts (right now) would only benefit those corporations that are making profits (right now), which means they are already making a profit which means they are already selling what ever goods and services they are providing. If they are already making a profit, why don’t they expand now when interest rates are at historic lows? Because they don’t foresee demand for the increased capacity, so they are saving their cash which is what is driving interest rates to historic lows.

    What Krugman calls the Very Serious People are what I would call Cargo Cult Economists.

    • Matthew C.

      Wow Daedelus, and here I thought people were buying gold and terrified to invest or hire in their businesses because they thought Washington and the Fed were run by idiots who are running this country into the ground by destroying the dollar and spending trillions of dollars we can never repay. But it turns out that we just aren’t printing money FAST ENOUGH and running ENOUGH of a budget deficit.

      Perhaps we can hire Gideon Gono as our next Fed chairman. . .

      • Well Matthew you thought wrong. If people think that the US is spending money that will never be repaid, why are interest rates on US treasury bills so low? They are the lowest they have been in 50+ years.

        Interest represents sum of the perceived risk that the borrower (US Government) will default and the time value of money (inflation plus discount rate). People buying T bills perceive the risk of default to be very low and that they have nothing better to do with their money (i.e. can’t think of how to invest it in something productive).

        If people are terrified to invest in hard assets for their business (readily apparent because they are not doing so), why are they not terrified of investing in Government paper (readily apparent because they are doing so)?

        I think you are right that some people don’t trust the US Government and are buying gold. I think those are the people (tea partiers) who listen to Glen Beck and believe what he says about gold. I think they have been misinformed, but I think that is true of anyone who listens to Glen Beck.

        There is something wrong with the idea that because people don’t trust the US government they are buying its debt in record numbers at record low prices.

        From August 1, 2011 to September 1. 2011, the US added $355,056,348,594.30 in debt. That is more than all the gold in Fort Knox. At the August 11, 2011 price of 1,890.04 per oz it is only $278 billion.

        All the gold that has ever been mined (~165,000 tonnes by 2009) is only worth ~$10 trillion at $1,890.04 per oz. The total US debt is greater than all the gold that has ever been mined.

        People with money are buying US treasuries in record numbers even as those treasuries produce record low yields.

      • Matthew C.

        The “market” for treasuries is not a real market, BTW. And printing money and handing it to bondholders is a form of default by inflation. The financial system is in its last few laps around the track, the engine is leaking oil, and will be seizing up momentarily. Gold has a 5000 year record of success as money — fiat systems — none has even made it 100 years. I know where I am putting my money.

    • Marcus

      The following is in response to your reply to Matthew C.

      Treasury rates are very low because:

      1. The Fed has announced that it intends to put a floor on Treasury prices, which implies that it will purchase as much as necessary to enforce its rate ceiling. Why not buy US Gov paper when you know you can flip it back to the Fed at a guaranteed price? It’s risk-free. Historically low rates represent major players front running central bank policy. Thus, low rates do not reflect the market’s belief in the ability of the Federal Gov to repay its debts. They reflect a belief in the Fed’s willingness to print money in unlimited quantities. From Bernanke’s famous helicopter speech:

      “A more direct method, which I personally prefer, would be for the Fed to begin announcing explicit ceilings for yields on longer-maturity Treasury debt (say, bonds maturing within the next two years). The Fed could enforce these interest-rate ceilings by committing to make unlimited purchases of securities…”

      2. Volatile market conditions have sent capital scurrying into perceived safe havens like bonds, gold, the Swiss franc, and the US dollar.

      3. Positive feedback and trend following accentuates the price action caused by the factors named above.

      Regarding gold, the tea party argument is silly. Gold has been moving in a strong upward price trend since 2000, long before the tea party existed, driven in part by central bank purchases in the Middle East, investors in China and India, influential market participants like Jim Rogers, John Paulson, and George Soros, and large institutional buyers like the University of Texas.

  • ad

    They don’t know about physical or economic discoveries, nor about how reliable or useful such things are.

    But they know that computers, aircraft, vaccines, antibiotics and so on tend to work.

    On the other hand, quite a lot of economists seem to have been very surprised by economic events over the last few years.

    • Matthew C.

      Bingo. . .

      Some of us were able to see the obvious and apparent housing bubble, unlike Ben Bernanke and the rest of the hapless and hopeless money printers at the Fed, and even sold our equities before the crash because we could see the disaster coming.

      And some of us are now selling our dollars and buying gold, because we can see the disaster coming. . .

      • Matthew C.

        And (unfortunately) the number of mainstream economists who foresaw the bubble pop and financial collapse apparently can be counted on the fingers of the hands of a double amputee. . .

  • Daublin

    It’s a very good line of questioning. Certainly it would be good to make economics more respectable.

    One difference not mentioned in the article is that economists have a history of making predictions that turn out to be wildly false. A good example is Samuelson’s text book claiming that the Soviet economy appeared to be sustainable. Another example would be the overall comfortableness with the U.S. economy before the housing and financial crisis of recent years. Physicists seem more likely to simply stay out of realistic policy issues, so they avoid the temptation to reach way beyond what they know.

    If you want to see economics look good, start by shunning economists who opine way beyond what the science has learned. From the sound of things, just about anything in macro should be considered highly tentative. Do you think you could convince Paul Krugman or John Taylor to publicly state that, after decades of research, there’s still not much firm information about macroeconomics?

    • Matthew C.

      Of course not, Krugman and his ilk are too busy advising Von Havenstein — oh, sorry, I mean Ben Bernanke — to print money faster and harder.

  • “Ask any physicist a question about (most areas of) physics and you will invariably get the same answer.”

    I am suprised nobody seems to have heard of “The String Wars”

  • And there is a video

    “Physics in Trouble: Why the Public Should Care ”

    • Robert Koslover

      That’s a fascinating lecture by Lee Smolin. Thanks for posting the link to it.

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  • Physics is simple, so the physicists all agree. Economics is complex, so economists will tend to disagree, as causality becomes increasingly difficult the more complex the process being studied. All scientists come in “after the fact” to explain the world — most discoveries in science explained a new technology, whether we are talking about thermodynamics or information theory.

    There is less disagreement among physicists than among biologists, and less among biologists than among brain scientists/psychologists, and less among them than among social scientists. This is predictable because we are seeing more complexity at each level.

    • richard silliker

      physics is complex, therefore simple. physics deals with mass. physics is rational in that cause and effect are used to elucidate function and form.

      economics is complicated, therefore hard to understand. economics is massless. economics is a mutating aggregate where form and function are used to manipulate cause and effect.

      is it any wonder that some people view economics in a lesser light.

      physics deals with the rational metabolism of this universe.

      economics deals with metabolism in an irrational way, up to and including the cannibalization of our species.

      in physics the lever is the implementer.

      in economics the lever is lacking.

    • Genee

      Economy is the manmade simple distribution of paper on a small blue dot. Physics is the understanding of ourselves, the universe and everything we will ever know (that actually is real) Which is more simple? I sincerely hope you’re joking, or you really are brainwashed. Even the hardest math in economy doesn’t come close to middle physics. The reason there are so few physicists in economy (though increasing) is because they have better, more important things to do with their lives. Such as advancing our species understanding of the world as a whole; Leading to literally all new technological advancements. If humanity weren’t standing on the shoulders of these former giants we would be in the stone age. Most of todays biggest people in finance and economy are rich because they are reliant on a broken system and a corrupt one.

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  • Doc Merlin

    All physicists don’t agree. Thats just an illusion because most people can’t understand what physicists disagree about. Start a debate between the loop quantum gravity guys and the string theorists, or worse the standard model guys and the string theorists.

    On the other hand, economics seems understandable so the disagreements seem more common than they are.

    Example: “Is being able to sell organs welfare increasing over not being able to?” almost all economists will say “yes!” Almost all non-economists will say “no”.

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  • Robert

    This article is hilarious. One of the best pieces of inadvertent satire I’ve read in a long time. 

  • GrayceJ

    Thank Albert Einstein. He grounded theoretical physics at a time when experimental physics was king. Now, theoretical anything is running side by side with provable, demonstrable anything. Economics is a social science, and has a rate of decay that depends on the changing knowledge of the players. There is not one actual “economy.”