Why I Am Not an Austrian Economist
Last year, I finished The Great Transformation by Karl Polyani, published in 1944 (the same year Hayek published The Road to Serfdom), Judea Pearl's The Book of Why and Mastering Metrics by Angrist and Pischke.<p>The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence(?). Reminds me of something like Ayn Rand's egoism. It just seems to me you can't persuasively argue a philosophical theory without empirical justification<p>I have a more favorable view towards Polyani's methodology, who largely draws on historical sources. The historical approach seems at least some what grounded compared to the pure theory used in much of economics<p>Economic theory and statistics can't answer questions like "How much of an effect can we expect if we were to raise minimum wage by one dollar an hour".<p>A randomized control trial is the gold standard, and the way forward seems to be more experiments like the RAND Health Insurance Experience and the Oregon Health Insurance Experiment. Even these results and their policy implications are subject to debate, so how could pure theory even get close?<p>However, randomized experiments in the social sciences often aren't feasible for cost or ethical reasons. So econometrics has developed tools to work on natural experiments, or even observational data, like Differences-in-Differences, Instrumental Variables, Regression Discontinuity designs.<p>Even a brief skim of methodological considerations in economics reveals how much uncertainty there is. I am only a fan of economics (only high school and college microeconomics) so I'm likely wrong