Lee Smolin: Physics Envy and Economic Theory

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[utubemaymunadam]

Economics has suffered massively from a desire to look like a hard science. Instead its incredibly complicated and can't be reduced to laws. Path dependence, complexity, disequilibrium are all part of what is taught in (most) graduate schools these days, but this is a very elite group. The majority of the profession are undergraduate degree holders that do not appreciate that they only have illustrative models rather than complete solutions when they try and apply their skills in government.

[Mjiujtsu]

I didn't know he could speak Italian

[HSet]

A lot of comments about his hand motion. Such a brilliant and witty observation internet! You might want to pay attention to what he's saying. This is not a stupid man.

[Guizambaldi]

The neoclassical model is just the benchmark model. It is the simplest one. It helps you understand some things. What people from the natural sciences might not understand is that our models are not perfect descriptions of reality. We know that. They are very imperfect descriptions of a certain realm we are studying. If you are thinking about financial crisis, you add some more structure. If you want to think about monopolies, you add a different hypothesis on your market structure.

The problem with economics is that we have a plethora of models, but we don't always know exactly which one to use in each circunstance.

We still need to better provide validity to the assumptions we make, test the theories using our newly acquired and decent statistical techniques (RDD, diff-in-diff and IV), replicate more studies and throw away the models that don't work well.

We are still a scince in the making, on the transition between a philosophical, assumption-based field, to a scientific, empirical-driven field. We have some very good results in some areas: we know for certain some things about trade, about demand and relative prices, about aggregate demand and recessions, how to do an auction and how to evaluate public policies. But we still don't know for sure a hell lot.

[RaeudigerRuediger]

The economy should be looked at as a complex adaptive system. Every attempt to observe the whole system, its behaviour or outcomes will ultimately chance the whole systems or groundings on which I based my attempts to change it in the first place. People are part of the economy and that is also why it is so completely different from Physics (although I don't know much about physics). And that is also, in my opinion, why the contemporary upcoming of the connections between psychology, behavioral sciences, neurosciences and social sciences with economics are very important. Interpretation is key.

[Nicko]

Careful... The wandering hand could attack at any second

[flirm]

What are your qualifications? Nothing he said here regarding equilibrium is new. As he stated, these ideas have been known and acknowledged since the 70's by, and not limited to, many people that contributed to the development of neo-classical economics. This isn't controversial in any way. You could argue the physics envy aspect as it is not really objectively verifiable, but that would be pointless in any case.

[Hydorior]

The claims you make are not only "blithering" and "unsubstantiated", but foolish and dogmatic. And that anti-scientific approach is EXACTLY the kind of thinking that we do NOT need. If you really crave superstition that much, cling to whatever esotericism suits you. But do not mess with science. Neither physics or economics, for that matter.

[Joddit]

Unfortunately, you know nothing about me, other than being an economist, but it doesn't seem to stop you from making predictions, or should I say estimates, about my persona.

That is rather telling.

[russelltreadway]

This guy doesn't know what he is talking about. He sounds and looks like he does, but he doesn't.

[MrBlockyTV]

Can he stop moveing his hand i could listen with his hand moveing around like this...

[martinguila]

He should have used more repetitive hand gestures because then the message would be much clearer.

[ccadavreexquiss]

He is very dedicated hand-jiggler but he is also a great physicist. Even one of the most inspiring and open-minded in my opinion. If you are interested, I suggest you read his last book "Time Reborn" where he's more eloquent on the economics' subject and how it's related to both his own scientific field and to this new vision of time.

[NabeeltheThird]

I couldn't agree more, with all you're comments. Anyone not in physics or math cannot even begin to comprehend how difficult these subjects are. And I've seen it first hand, physicists and mathematicians are generally good in all fields of academia (probably due to high logic skills require to do them).

[jordanweir]

very interesting, i never would've thought that the style of newtonian physics could've affected something as different as economics o_o 

[Joddit]

:)

I have to admire your attempts to try and talk sense into these people in a youtube comment section. But to be honest, if people are using words like pseudo-science and indoctrination, and then blaming others for not saying anything, it seems rather useless to me.

[BartAlder]

If Lee ever loses his 'speaking hand', or if someone glues it to his hip you just know he'll fall mute.

[JoeJones]

But in the same vein an economist can accurately predict how the sales of a product will change with the price.
Newton had to invent calculus in order to work with more complex systems than physics understood until then.
Economics needs a similar advance.
Everything in the economy follows a pattern. The same way the weather systems follow a pattern. The issue is we haven't got the skills to accurately predict the patterns because they get so complex.

[Joddit]

"certainly smarter than any economist"

That's a rather bold claim. I have no reason to doubt this man's intelligence, nor his expertise in his field. His grasp of the complex field of economics, however, is lacking.

Signed, an economist (probably one of the ones who are certainly not as smart as this fellow).

[jpawhees]

2:00-2:43 One thing I understand is that you don't haft to make someone elses life worse to make yours better. It benefits to make their lives better to make yours better.