Friday, December 18, 2015

Macro theory vs. string theory


After reading this cool article about the debates surrounding string theory, someone on Twitter asked me to do a post comparing it to macro theory. Well, I did that a long time ago back when I was a snarky young lad, but as someone at Bloomberg once said to me, "If you know a good story, tell it from time to time," so here goes.

String theory and macro (business cycle and growth theory) have one big problem in common: They're not easily testable. They are not untestable. There's a big difference. With string theory, if you could build a really really really huge powerful particle collider, you could probe particles down to the Planck scale, and you could establish whether or not particles are shaped like tiny strings. With macro, if you could observe a whole bunch of planets with no mutual trade between them, or if you could establish a world government and get it to do random policy experiments, you could definitely test growth and business cycle theories.

The problem is, we can't do any of these things. String theory deals with ultra high-energy phenomena, and macro deals with aggregate time series, and those are just very difficult things to observe. In both cases, one big problem is the lack of experimental controls. High-energy phenomena can sometimes be indirectly observed by looking at black holes or the echoes of the Big Bang, and the effects of time-series macro phenomena can be observed every quarter. But you can't really put these things in a lab (well, not real versions of them, anyway), so you can't poke and prod them and explore counterfactuals and deduce the underlying structure, etc.

(Update: This was a little confusing. Yes, you can test theories by looking at non-controllable phenomena. If a macroeconomic theory says "There will be a huge recession next year" and there is no recession, the theory has major problems. But because you can't do controlled experiments, you often have to deal with multiple competing theories that fit the same data. Did they U.S. economy recover from the Great Recession because of easy monetary policy, or in spite of it? And so on. In physics, this is especially problematic when looking at data from the Big Bang, of which there is only one. As you might expect, there are tons of theories floating around about how the Universe began, some of which incorporate string theory.)

So that's one similarity. A second is that studying both has led to useful spinoffs. Studying macro has led to time-series techniques like GARCH models, and arguably to much of microeconomics itself. Studying string theory has led to some cool mathematics, and to some other useful modeling techniques that have been applied in other areas of physics.

Now for the big difference. String theory is not really relevant to the real world. Although string theory techniques have found real-world applications, the theory itself has not and probably never will. No one in our lifetimes or our posthuman grandchildren's lifetimes is likely to build a machine that runs on string theory. Even if the theory - in all its myriad offshoots - turns out to be total crap, it doesn't really matter whether anyone believes in it or not. You might complain that we're wasting our society's brightest minds by paying them to study an untestable theory, but you'd then have to make the same complaint about much of mathematics itself.

In that sense, string theory is "safe" for the world. Macro theory might not be. If we pick the wrong macro theories, we could enact policies that cause real human disasters for millions. In fact, this probably happens quite often.

When data don't give you a guide to policy, major policy failures are inevitable. But what if macro is not totally untestable, but just mostly untestable? What if the evidence gives us a very weak but nonzero signal about which theories are good and which are bad?

This is the danger. If macro policy is hugely important and the signal from data is very weak, then small sociological phenomena within the econ profession - conformity, political bias, etc. - might cause great harm to real people. And bad scientific techniques - ignoring data entirely while placing too much faith in plausibility - might also cause cause real-world harm.

To sum up: If string theory happens to be complete B.S., there is essentially no loss to society. If prevailing macro theory (New Keynesian models now, RBC in the 80s, etc.) is complete B.S., there might be no loss, but there might very well be a big loss. This is probably why the public gets a lot madder about macro debates than about high-energy physics debates.

24 comments:

  1. So, maybe you answered all this back when you were a snarky young lad. But...

    So, one obvious comment is that I am under the impression that various people involved with string theory are hoping that somebody will figure out a way o test it and its rivals that has not yet been figured out presumably through some odd secondary effect test, sort of like how background radiation was observed and people realized that it may have come from the big bang. Than again, maybe not.

    The other is I am wondering if you care to comment on the rivals to string theory, of which there appear to be several, with some of the leading advocates of them hanging out at the Perimeter Institute in Waterloo, ON, which I visited once. Lee Smolin is the director there and seems to be sort of the godfather of that gang of rivalers to Witten-style string theory.

    Something that I find sort of interesting is that they seem to have sort of an attitude like a lot of heterodox economists, that they are dissed and discrimiated against unfairly and so on, with Smolin in particular expressing sympathy with heterodox econmists, especially the macro ones.

    This makes for more of a parallel than you have let on, given that indeed it is hard to test macro theories as well as string theory, and we have a sociology of there being certain more established approaches that seem to dominate dominant academia and think tanks (and in econ, policy shops like central banks), with these less accepted theories that cannot be all that easily rejected pushed aside to some extent but whining about it all the way.

    Barkley Rosser

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    1. It's not hard to test string theory. It's always true. In any universe. No matter what the physics is. It's the truest theory ever.

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    2. Noah,

      Just checked link to your earlier snarky piece and see that you commented at length on the Smolin-Perimeter Institute gang and their allies.

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  2. "This is probably why the public gets a lot madder about macro debates than about high-energy physics debates."

    If you're talking about academic arguments, I don't think the average American could even name a macro theory model, much less get upset about one.

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    1. The educated public knows more than you think, I believe.

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    2. The same public that wants to bomb Agrabah? :)

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    3. @Nick, Lol!!... Americans = dopes.

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    4. that's the re-educated public

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  3. Todd Kreider4:43 PM

    "To sum up: If string theory happens to be complete B.S., there is essentially no loss to society."

    Sure there is. Opportunity cost: A generation of theoretical physicists could have explored productive avenues, which could greatly benefit society, even if some of those also turned out to be dead ends. By coincidence, I've been rereading Lee Smolin's "The trouble With physics" and his complaint is that so many grad students apparently have felt that they had no choice, career wise, but to go into string theory. (Smolin is a skeptic but admits the string people may be correct.)

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    1. Well...it's not a *major* loss. ;-)

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    2. "With macro, if you could observe a whole bunch of planets with no mutual trade between them, or if you could establish a world government and get it to do random policy experiments, you could definitely test growth and business cycle theories."

      No. You can test theories not only by experiment but also by observation, if the theory is actually testable. For example, Einstein's gravitational theory and Eddington's observation of eclipses. I don't know about string theory, but the problem I think is *not* inherent in macro-economics.

      One problem is that economists don't specify how the variables are to be tested or measured (by observation, history) independently. If you did, then you could determine *by observation* of history whether the claimed relationship among variables is corroborated or refuted. Another problem is that when a strong form of a theory is refuted, it is weakened by fudge factors and turned into a 'tool' of analysis. That can't predict or explain anything, but you can find a lot of (uninformative) confirmations that way—and then give policy recommendations which have the veneer of a grounding in theory.

      The problem is not inherent in macro, but in economists either unwilling to make theories testable, or unwilling to accept refutation and make modifications testable, rather than using fudge factors.

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    3. No. You can test theories not only by experiment but also by observation, if the theory is actually testable. For example, Einstein's gravitational theory and Eddington's observation of eclipses. I don't know about string theory, but the problem I think is *not* inherent in macro-economics.

      Good point. I think what I wrote there was confusing. There is an analogy there but it's not so simple. The Big Bang is the best analogy, since it only happened once.

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    4. Well, Smolin's group at Perimeter Institute are actually working on various rivals of string theory. Maybe it is all a waste of time, but as I noted earlier, it is not out of the question that somebody may figure out a way to indirectly test these theories against each other, in which case having developed them will not be just a purely mental exercise. But then again, maybe nobody will figure out a way we can test them in any foreseeable future.

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  4. Anonymous8:23 PM

    "The world hangs by a thin string , and that string is the psyche of macro-man....."

    Carl Jung

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  5. "You might complain that we're wasting our society's brightest minds by paying them to study an untestable theory, but you'd then have to make the same complaint about much of mathematics itself."

    Huh? Mathematics is "tested" by proving a mathematical idea, or by proving it false. Mathematics is about the world of mathematical ideas.

    But physics is about the physical world. A *physical* theory that can't be tested in the physical world is a failure.

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    1. But those ideas are only in those categories because of the way we set up academic departments. Would it help to put string theorists in math departments? They'd still be able to teach physics classes. Very little would change.

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    2. String theorists should not be allowed to teach physics. Their tools have no value.

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  6. String theory failure is much worse as simple lack of experimental confirmation. String theory has no content whatsoever. No observation in any conceivable universe could falsify string theory. It's consistent with everything. It started with a hope that certain fundamental symmetries would constrain observation. It has achieved exactly the opposite.

    Macro theories constrain little given the available data sets. String theory constrains no data sets, short of seeing the true nature of things. It's the worst mathematical obscurantism one can imagine. Although there's some cool math behind it.

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  7. BTW, there isn't actually any data on the big bang either, only hypothetical scenarios. There are cosmogony theories that don't include any big bang.

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  8. Another difference between string theory and macro economics: string theory is an extension of successful theories, quantum mechanics and field theory on one hand, and general relativity on the other. There's reason to think a theory like string theory could be right, even if we won't know for a while. Macro economics doesn't build on success.

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    1. No need to wait. String theory already predicts everything.

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  9. Anonymous1:52 AM

    I'm no physicist, but I find this discussion fascinating. I'd appreciate it if anyone could answer this question.

    George Ellis and Joe Silk oppose string theory, on the grounds that it's (to any practical extent) untestable. That seems a reasonable objection.

    However, they make a distinction between string theory and dark matter and energy:

    "These unprovable hypotheses are quite different from those that relate directly to the real world and that are testable through observations — such as the standard model of particle physics and the existence of dark matter and dark energy."
    http://www.nature.com/news/scientific-method-defend-the-integrity-of-physics-1.16535

    Are dark matter and energy any more testable than string theory?

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  10. Anonymous8:39 AM

    "If you know a good story, tell it from time to time"
    I didn't know JJ Abrams worked at Bloomberg

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  11. jon livesey1:10 PM

    "This is probably why the public gets a lot madder about macro debates than about high-energy physics debates."

    That is a true fact, but I am puzzled why the public thinks it has an *opinion* about macro, when it knows very well that it does not have an opinion about high energy Physics.

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