How economics became a religion
There&#x27;s a good section in Harari&#x27;s recent book Sapiens where he lumps ideologies with religion. Basically the common thing is a shared strong belief in some idea, the only difference being whether it involves supernatural creatures.<p>My own take on economics is I&#x27;m glad I studied it while also studying engineering. Taken with a proper science, you learn an awful lot about how how to think critically. If you only do science, you don&#x27;t think too much about whether the conclusions are warranted. You gasp, but it&#x27;s true. And it&#x27;s because you can pursue the evidence in a very detailed way in sciences, and that has been done for you by the time you come to study it. So when you&#x27;re learning, most of the time isn&#x27;t spent on considering whether you believe in quantum tunnelling. Your time is mostly spent understanding the intricacies of the explanation, and calculating predictions based on the theory.<p>With economics, all my engineering friends would make a face when you talked about it. Law of one price? Really? Oh yeah, it&#x27;s an idealised world. And in contrast to the frictionless, airless world in intro physics, we don&#x27;t have much of a clue of how loosening the assumptions affects the model. For instance there are agent based models where you get multiple prices. Other unlikely things are where some consumer is meant to be optimizing some utility function. Most graduates will find this hard to do with a computer, so I&#x27;m not sure I believe the hand-wavy &quot;they use a heuristic&quot; explanation. Also, my parents ran a restaurant and despite having an economics degree I never saw my dad draw a nice supply and demand X to set prices.<p>That being said I still think there&#x27;s a lot of value in economics, especially on the micro end. It&#x27;s worthwhile having a simple market model in your head, where &quot;market model&quot; actually means a catalog of how markets can deviate from Econ 101. Mainly it&#x27; a collection of failures of information. Lemon problem, star-systems in employment, network externalities. Also game theoretic ideas are useful to have heard of, even though the actual models are incredibly complex.<p>With macro, I wondered whether anything was learned. A lot of it seems like mathfuscation. Econometric models can get very complicated. More complicated normally means it needs a lot of data to validate. But how is economic data gathered? Well it depends on what the economic theory of the time finds important. And it&#x27;s not cheap or easy to gather, so you don&#x27;t get terribly much data. A GDP print comes out maybe four times a year. And the economic regime has shifted over the years with various governments, so how do we draw any conclusions?<p>A lot of the political &quot;lessons&quot; in economics are badly reasoned. Especially when you chat with political types, you get a single example in support of some idea. (Print money? Weimar Republic!) It decays into storytelling, which is not science.<p>Post uni, I&#x27;ve had an interesting journey. At one stage I saw a lot of value in libertarian ideas. I was always wary of certain people I knew who just swallowed it whole. They&#x27;re very loud, and somewhat articulate, but the more confident someone was, the less likely it was they knew the evidence. For instance you&#x27;ll sometimes run into someone who denies that monopolies have ever existed. They can explain away everything with their model: the invisible hand was trying, but mankind got in the way. Usually a red mankind.<p>And that brings me back to religion. A lot of people who don&#x27;t know what they&#x27;re talking about will confidently tell you their version of economics is the right one. Even when you have counterexamples, which you will because you&#x27;re a graduate, they will wave it off generically (X is actually misunderstood &#x2F; X is not that important). Some of these people are actually intelligent fools, and they&#x27;ll create elaborate and technically sophisticated explanations for their world view. It&#x27;s often impossible to get them to see any light, because your objections will not cause them to overturn their world view.<p>How do you know it is fruitless? With ideology as with religion, nothing is ever explained simply. Find the right professor and he&#x27;ll explain in a way you will understand why a plane flies. Find a religious person or ideologue, and the explanation is elusive. It&#x27;s part of god&#x27;s plan, or it&#x27;s the hand again<i>. If you get the feeling the emperor has no clothes, you&#x27;re right.<p></i> I actually like Adam Smith, his explanations were simple and not trying to take things to extremes. For instance he talked about how what the market wanted might not be good for the people in it, because if you specialise in some aspect of pinmaking you might find it boring. It&#x27;s a bit unfortunate how he&#x27;s been characterised over the years.