Mathematical economics is fraying at both ends. Critics of the over-mathematization of economics keep chipping away at the spurious correlations and the theoretical equations that are either too simple or too complicated. At the other end, notable mainstream economists like Paul Romer see fundamental problems in the way economics is done today.
His paper on “Mathiness” was picked up by the Wall Street Journal. “Mathiness” is “the use of mathematics to persuade or mislead rather than to clarify,” and is ubiquitous in the economics profession these days.
Unfortunately, Romer’s conclusion in his paper offers a non-solution:
[back in the good ol’ days] Not universally, but much more so than today, when economic theorists used math to explore abstractions, it was a point of pride to do so with clarity, precision, and rigor. Then too, a faction like Robinson’s [politically motivated] that risked losing a battle might resort to mathiness as a last-ditch defense, but doing so carried a risk. Reputations suffered.
So all the profession needs to do to get over this destructive love affair with mathiness is a fresh injection of “clarity, precision, and rigor.” This is like telling a group of criminal graffiti artists to use stencils when they’re defacing buildings.
The real problem is much deeper than Romer realizes. Economics is the science of human action. It deals with motivated human choice. As such, there are no strict quantitative relationships like the ones in the hard sciences. Objects don’t choose to fall at a certain speed, or choose to react to other objects in certain ways. Humans choose. Our choices are based on preferences which change unpredictably in an infinite number of ways over equally unpredictable and infinite varieties of circumstances.
The details of human action are unpredictable and not conducive to strict quantitative rules, but the logic of action provides a rich framework for doing economics.