Saturday, May 09, 2015
Economists don't have "physics envy"
I hear all the time that economists have "physics envy". This doesn't seem even remotely true. I'm not sure whether "physics envy" means that economists envy physicists, or that economists want to make physics-style theories, or that economists wish their theories worked as well as those of physicists. But none of these are true.
Reasons why economists don't have physics envy include:
1. Economists make a lot more money than physicists.
2. Economists are treated as experts on practically anything. An economist can talk about why hipsters have moustaches, and get taken seriously. An economist can talk about which restaurants are the best, and get taken seriously (Update: NO, I'm not saying Tyler's book is bad, I haven't even read it, so HUSH). An economist can talk about politics, marriage, popular music, sex, race, or sports and get taken as seriously as any expert in those fields. An economist can talk about how much progress physicists are likely to make, and get taken seriously. Physicists get taken seriously when they invent quantitative rules for things, but otherwise are treated as just one more tribe of crazy nerds with their heads in the aether.
3. Economic theorists, traditionally, have been free from the constraints of empirical validation. Econ didn't start out with any data to speak of, so it developed a culture where data wasn't the measure of a good theory. That culture has been slowly changing, as IT and statistics allow us to do much more empirics. The wild econ theorist is being slowly tamed, though they occasionally buck against their new constraints. But economics is still nowhere near as enslaved to empirics as physics is. Ed Witten, a brilliant physicist who invented superstring theory and won a Fields Medal, will probably never get a Nobel prize, since no one has yet figured out a way to test superstring theory. In econ, though, un-validated theories - even empirically unsuccessful theories - do sometimes get Nobel prizes, especially in macro.
4. Economists and physicists have totally different reasons for thinking their theories are beautiful. Physicists tend to appreciate the symmetry of their theories, or their connection to geometry. Economists tend to appreciate the fact that their theories can be derived from axioms of human behavior. Economists don't usually see themselves as a high-up floor on the tower of science that begins with math and progresses through physics to chem, then bio, then psych. They tend to see their own field as part of an entirely different tower, unsupported by the other sciences, built on the foundation of axioms - not empirical laws or derived properties - of human behavior.
(Note for physics/math people: what economists call "axioms" are what physicists call "postulates".)
5. Economics theories aren't really much like physics theories in the first place. In particular, the word "equilibrium" means totally different things in the two fields. In econ, the word "equilibrium" is incredibly general - it just means the solution of any system of equations in an economics model, really. A few economic equilibria are similar to equilibria in physics models, but not most. A lot of people outside econ don't seem to understand how economists use the word.
So economists don't have physics envy. But there is a related field that absolutely does have physics envy: Financial engineering.
Financial engineering doesn't use the axiomatic stuff econ uses - instead it fits curves, like applied math. Often, the math is very similar to that used by physicists, and this is why physicists often go into financial engineering. But financial engineering doesn't work nearly as well as physics, which definitely leads financial engineers to wish that it did work as well.
So if you want to tease anyone for having "physics envy," tease financial engineers, not economists. The only way economists are ever going to envy physicists is if they find out how much physicists...well, never mind.