McCloskey critique

McCloskey critique

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Encyclopedia
The McCloskey critique refers to a critique of post-1940s "official modernist" methodology in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

, inherited from logical positivism
Logical positivism
Logical positivism is a philosophy that combines empiricism—the idea that observational evidence is indispensable for knowledge—with a version of rationalism incorporating mathematical and logico-linguistic constructs and deductions of epistemology.It may be considered as a type of analytic...

 in philosophy. The critique maintains that the methodology neglects how economics can be done, is done, and should be done to advance the subject. Its recommendations include use of good rhetorical devices for "disciplined conversation."

Substance


Deirdre McCloskey
Deirdre McCloskey
Deirdre N. McCloskey is an American economics professor. Her job title at the University of Illinois at Chicago is Distinguished Professor of Economics, History, English, and Communication...

's 1986 book The Rhetoric
Rhetoric
Rhetoric is the art of discourse, an art that aims to improve the facility of speakers or writers who attempt to inform, persuade, or motivate particular audiences in specific situations. As a subject of formal study and a productive civic practice, rhetoric has played a central role in the Western...

 of Economics
argues that "The Mathematization of Economics Was a Good Idea", but that "economic modernism" took equilibrium model-building and econometrics
Econometrics
Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...

 (especially "existence-theorem
Existence theorem
In mathematics, an existence theorem is a theorem with a statement beginning 'there exist ..', or more generally 'for all x, y, ... there exist ...'. That is, in more formal terms of symbolic logic, it is a theorem with a statement involving the existential quantifier. Many such theorems will not...

" mathematics, and statistical significance
Statistical significance
In statistics, a result is called statistically significant if it is unlikely to have occurred by chance. The phrase test of significance was coined by Ronald Fisher....

) "absurdly" far. Roughly speaking McCloskey wants economics to make interesting, new, and true statements about the real world, and argues that proving the hypothetical possibility of an effect within an analytical framework is not a constructive way of doing this. Although the conventional way of connecting the economic model with the world is through econometric analysis, she cites
Citation
Broadly, a citation is a reference to a published or unpublished source . More precisely, a citation is an abbreviated alphanumeric expression Broadly, a citation is a reference to a published or unpublished source (not always the original source). More precisely, a citation is an abbreviated...

 many examples in which professors of econometrics were able to use the same data to both prove and disprove the applicability of a model's conclusions. She argues that the vast efforts expended by economists on analytical equations is essentially wasted effort.

In "Ask what the boys in the Sandbox Will Have", McCloskey identified the economists whom she accuses of leading economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 astray in the 1940s:
  1. Paul Samuelson
    Paul Samuelson
    Paul Anthony Samuelson was an American economist, and the first American to win the Nobel Memorial Prize in Economic Sciences. The Swedish Royal Academies stated, when awarding the prize, that he "has done more than any other contemporary economist to raise the level of scientific analysis in...

    : In her view, Samuelson wanted economics to resemble more closely the hard sciences (especially physics
    Physics
    Physics is a natural science that involves the study of matter and its motion through spacetime, along with related concepts such as energy and force. More broadly, it is the general analysis of nature, conducted in order to understand how the universe behaves.Physics is one of the oldest academic...

    ), and elevated the "vice" of "blackboard proofs" and other mathematical (but not necessarily scientific) values to accomplish this.
  2. Lawrence Klein
    Lawrence Klein
    Lawrence Robert Klein is an American economist. For his work in creating computer models to forecast economic trends in the field of econometrics at the Wharton School of the University of Pennsylvania, he was awarded the Nobel Memorial Prize in Economic Sciences in 1980...

     was the econometrician
    Econometrics
    Econometrics has been defined as "the application of mathematics and statistical methods to economic data" and described as the branch of economics "that aims to give empirical content to economic relations." More precisely, it is "the quantitative analysis of actual economic phenomena based on...

     she says is responsible for the modern "mistake" of confusing statistical significance with scientific significance.
  3. Jan Tinbergen
    Jan Tinbergen
    Jan Tinbergen , was a Dutch economist. He was awarded the first Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in 1969, which he shared with Ragnar Frisch for having developed and applied dynamic models for the analysis of economic processes...

     she considers responsible for the third vice of social engineering
    Social engineering (political science)
    Social engineering is a discipline in political science that refers to efforts to influence popular attitudes and social behaviors on a large scale, whether by governments or private groups. In the political arena, the counterpart of social engineering is political engineering.For various reasons,...

    , which is based on the other two. McCloskey says that this presumes to know more than it can, and raised the prestige of the mathematical "modernist methodology" above other ways of performing economics.


Her complaint against the modern profession, and against the Nobel Prize winners above, has provoked a strong defense from the economic mainstream. It has led to debates with such figures as Kenneth Arrow
Kenneth Arrow
Kenneth Joseph Arrow is an American economist and joint winner of the Nobel Memorial Prize in Economics with John Hicks in 1972. To date, he is the youngest person to have received this award, at 51....

, who vigorously support the "Samuelson" approach, and argue that the quantity of analytical mathematical model
Mathematical model
A mathematical model is a description of a system using mathematical concepts and language. The process of developing a mathematical model is termed mathematical modeling. Mathematical models are used not only in the natural sciences and engineering disciplines A mathematical model is a...

s in modern economics is a critical requirement for progress. However, McCloskey acknowledges the virtues as being born from each man's "genius", and rather blames the vices as being created not by these three Nobel economists, but by their students and their students' students, including herself.

The Diagnosis & Solution


McCloskey says that most economists when they write are "tendentious", assuming that they know already, and concentrating on a high-standard of mathematical proof
Mathematical proof
In mathematics, a proof is a convincing demonstration that some mathematical statement is necessarily true. Proofs are obtained from deductive reasoning, rather than from inductive or empirical arguments. That is, a proof must demonstrate that a statement is true in all cases, without a single...

 rather than a "scholarly" accumulation of relevant, documented facts about the real world. The advice she offers colleagues here is to spend more time in the archives, and write more heavily researched papers from specific observations in the real world (she argues that this is the norm in the natural sciences on which economics believes it is modelling itself, but that most economics practitioners actually base their methodology more closely on pure mathematics
Mathematics
Mathematics is the study of quantity, space, structure, and change. Mathematicians seek out patterns and formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proofs, which are arguments sufficient to convince other mathematicians of their validity...

).

Since she says: "No one really believes a scientific assertion in economics based on statistical significance" the solution she proposes to establishing cause and effect in economics is "calibrated simulation
Simulation
Simulation is the imitation of some real thing available, state of affairs, or process. The act of simulating something generally entails representing certain key characteristics or behaviours of a selected physical or abstract system....

". Calibrated simulation relies on measurement and numerical techniques (such as Monte Carlo method
Monte Carlo method
Monte Carlo methods are a class of computational algorithms that rely on repeated random sampling to compute their results. Monte Carlo methods are often used in computer simulations of physical and mathematical systems...

s) to test the robustness of its predictions, without requiring a closed-form solution proving that the postulated relationship will always hold (or will be reached in "equilibrium
Economic equilibrium
In economics, economic equilibrium is a state of the world where economic forces are balanced and in the absence of external influences the values of economic variables will not change. It is the point at which quantity demanded and quantity supplied are equal...

", or be impossible). As an illustration, she contrasts the Babylonian and Greek
Ancient Greece
Ancient Greece is a civilization belonging to a period of Greek history that lasted from the Archaic period of the 8th to 6th centuries BC to the end of antiquity. Immediately following this period was the beginning of the Early Middle Ages and the Byzantine era. Included in Ancient Greece is the...

 "rhetoric
Rhetoric
Rhetoric is the art of discourse, an art that aims to improve the facility of speakers or writers who attempt to inform, persuade, or motivate particular audiences in specific situations. As a subject of formal study and a productive civic practice, rhetoric has played a central role in the Western...

" used to back up the claim that the square on the long side
Hypotenuse
In geometry, a hypotenuse is the longest side of a right-angled triangle, the side opposite the right angle. The length of the hypotenuse of a right triangle can be found using the Pythagorean theorem, which states that the square of the length of the hypotenuse equals the sum of the squares of the...

 of every right angle triangle has the same area as the sum of squares on the other two sides: While Greek geometry
Geometry
Geometry arose as the field of knowledge dealing with spatial relationships. Geometry was one of the two fields of pre-modern mathematics, the other being the study of numbers ....

 found
Euclid
Euclid , fl. 300 BC, also known as Euclid of Alexandria, was a Greek mathematician, often referred to as the "Father of Geometry". He was active in Alexandria during the reign of Ptolemy I...

 a 'universal proof', the Babylonian engineers simply measured the sides of a thousand right triangular stones, and applied the heuristic
Heuristic
Heuristic refers to experience-based techniques for problem solving, learning, and discovery. Heuristic methods are used to speed up the process of finding a satisfactory solution, where an exhaustive search is impractical...

 that since all of these obeyed the relationship so would the rest. McCloskey believes that the Babylonian approach is more applicable to economics, and that Moore's Law
Moore's Law
Moore's law describes a long-term trend in the history of computing hardware: the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every two years....

 and advances in modeling software will soon make it easier to use and understand than the Greek approach.

In Calibrated Simulation is Storytelling she writes that one way to describe scientific theories is how mechanically mathematical they are: at the one end lie such hypotheses as Newtonian
Isaac Newton
Sir Isaac Newton PRS was an English physicist, mathematician, astronomer, natural philosopher, alchemist, and theologian, who has been "considered by many to be the greatest and most influential scientist who ever lived."...

 celestial mechanics
Celestial mechanics
Celestial mechanics is the branch of astronomy that deals with the motions of celestial objects. The field applies principles of physics, historically classical mechanics, to astronomical objects such as stars and planets to produce ephemeris data. Orbital mechanics is a subfield which focuses on...

 which can be reduced entirely to equations - at the other are important works such as The Origin of Species
The Origin of Species
Charles Darwin's On the Origin of Species, published on 24 November 1859, is a work of scientific literature which is considered to be the foundation of evolutionary biology. Its full title was On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the...

which are "entirely historical and devoid of mathematical models". McCloskey says that economics would benefit from recalibrating its output within that spectrum to the more historical, "narrative" analysis.

See also

  • Epistemological anarchism
    Epistemological anarchism
    Epistemological anarchism is an epistemological theory advanced by Austrian philosopher of science Paul Feyerabend which holds that there are no useful and exception-free methodological rules governing the progress of science or the growth of knowledge...

    , Paul Feyerabend
    Paul Feyerabend
    Paul Karl Feyerabend was an Austrian-born philosopher of science best known for his work as a professor of philosophy at the University of California, Berkeley, where he worked for three decades . He lived a peripatetic life, living at various times in England, the United States, New Zealand,...

    's cricism of fixed methodology in the natural science
    Natural science
    The natural sciences are branches of science that seek to elucidate the rules that govern the natural world by using empirical and scientific methods...

    s, is often compared with McCloskey's.
  • Economic history
    Economic history
    Economic history is the study of economies or economic phenomena in the past. Analysis in economic history is undertaken using a combination of historical methods, statistical methods and by applying economic theory to historical situations and institutions...