Why is there no economics theory largely accepted or considered true?

Question

An exact science is any field of science capable of accurate quantitative expression or precise predictions and rigorous methods of testing hypotheses, especially reproducible experiments involving quantifiable predictions and measurements.

Physics and Chemistry can be considered as exact sciences in this sense.

Physicists always agree each other on their theories and their predictions.

Economics is a science that analyzes the production, distribution, and consumption of goods and services and economists, just as physicist, use mathematical modeling to achieve their results.

That being said, I'm unable to understand why economists always disagree each other on their theories and why still today there is no economics theory that is largely accepted or considered true, in contrast with Newtonian mechanics or Quantum Mechanics that are considered no longer debatable.

Can anybody explain?

Answer 1

Side note first: I don't think that physicists always agree on their theories and predictions. As chemist I can say that chemists certainly do not always agree. And, also for the hard sciences, finding the truth is not so easy [1] [2].

But to your question: I think you may be interested in Tomáš Sedláček's "Economics of Good and Evil". The book follows the idea that economic world views are quite fundamental beliefs: he speaks about the world views (myths) and says that also the statistical models employed in econometrics incorporate these world views.

The other thing is that while the "hard" sciences rely very much on controlled experiments, this is much less the case in macro-econometrics. And IMHO it would be either unethical to perform macro-economic controlled trials (you may count communism/socialism vs. capitalism/free market economy in the 21st century as such an experiment, but how free were the participants to participate? And how well randomized was the trial?) or unpractical (who'd sign up for a controlled, randomized makro-economical trial? Where should it take place (buy half of antarctica, maybe?). So the starting conditions for this science are that you have your set of beliefs (of which you are more or less aware), you have noisy observational data (and no controlled experiment, hardly any prospective study, you need to do mostly with retrospective analyses), and you have a possibly mixed set of "believers" (in different [economic] world views) in the society you study that act more or less accordingly to their world view.

One point where the hard sciences are at a huge advantage is that they can (with a few precautions) rely on having a much lower feedback (i.e. the "experimenter" influencing the outcome of the experiment). Predictions and independent testing are possible. Even the weather-forecasters can have enough tests to judge whether they are doing well or not at forecasting. However, with macro-economics, things don't work out that way. If a macro-economist makes a prediction, it can in theory be right or wrong, but in addition, the society may take it into account and act accordingly (say, to avoid the predicted problem). So you end up with situations where you can either argue that the prediction was wrong - or that the prediction was right, but as society acted accordingly, the problem was avoided. For the science part that means that no conclusions about the correctness of the prediction can be drawn.
Yes, it would in priciple be possible to make a prospective macro-economic study: people should hand in their predictions in a covered way, never talk about them, and after a previously specified period of time the envelopes with the predictions are opened and compared to what really happened. One could then have a look how many predictions were correct. However, even that would not solve the problem of concurring macro-economic world-views, as societies that implement the policy in question need to be "available" to check the predictions against.

In addition, macro-economics usually doesn't change that fast. How many possibilities has even a perfect macro-economist to make interesting (≈ information gain by the prediction being fulfilled) predictions during a human lifetime? If the prediction period is too short, the prediction is not very interesting (obvious). If the period is too long, the event may occur for purely random reasons. If the event didn't occur till now, who guarantees it won't in the future? And would that be far-sighted or random? Now, add to this situation a multitude of persons who do predict this or that, so we'd need to filter out those predictions that truly bring information gain for the science of macro-economics from the noise of accidentally correct predictions.

All together I think that we're looking at a very noisy system here, which means that "convergence" to the "truth" should be expected to be very slow. And by the way, I don't know whether there is only one macro-economic truth: I can very well imagine that there exist different sets of economic rules that lead to "solutions"*.
Which is why I think that this is a politics question.

* Solutions being e.g. prosperous/pleasant to live in/... economic systems - put in other characteristics - which underlines the ethic dimension Sedláček insists on: the "solution" would be a "good" ("the right") economic system, and good (with the superlative "the right") is an ethic category.

Answer 2

because economics is, fundamentally, about human action and human choice - which are extremely complicated matters, and which are constantly tampered with, and engineered by, political powers (not that this is necessarily a bad thing - though most often it is). thus, you often just can't isolate your experiment environment; can't duplicate the conditions; can't control them. imagine running the 'same' experiment is Stalin's USSR and in Reigan's USA, and then in Cameron's UK...

Answer 3

Some economics theories that are pretty well universally accepted as true:

1. There's no such thing as a free lunch

2. The Law of Supply and Demand

3. The Water-Diamond Paradox solution is rooted in scarcity.

4. Gresham's Law: Bad Money drives out good

5. Rational People will, in theory, make rational actions, given all information. (Collolary: People never all the information)

6. People prefer stable money supplies and low unemployment over their opposites.

7. Monetary Stimulus in the short term is an accelerant to the economy, but in the long term is a negative thing.

8. We're all dead in the long term (John Maynard Keynes)

9. The Tiebout Hypothesis: Freedom of movement and a multipilicty of economic outcomes allows individuals to seek out the "best" system for their needs.

10. Rent Seeking behavior is chronic.

I could keep going on and on, but the point is this: There are many universally held economic theroms - probably as many as in any hard science.

Answer 4

The part of economics that is most like physics is called microeconomics. This relates to the law of supply and demand, and the determination of prices, quantities, and profitability. This part of economics is generally accepted as "true," but has little interest or relevance to politics.

Macroeconomics, or political econony is the part of the science that is of interest to people with a political bent. This has to do with role and function of the government in managing the economy, and represents the "ideological" part of economics Here, there are no theories that are widely "accepted" (except by subgroups of the population), because they are based on subjective hypotheses.

One politician that pushed for widespread acceptance of an economic theory was President Richard M. Nixon (a Republican), who said, "We are all Keynesians now." This was a reference to John Maynard Keynes whose views on the need for government intervention in the economy were accepted earlier by Democrats than by Republicans.

Answer 5

The question's view of science is more than a little outdated, and could benefit from referring to history and philosophy of science's work across the 20th century.

Marginalist economics works on a model known to have bad fit with empirical data on (the incredibly broad field of) actual human behaviour, but which is valued because it provides decent fit on a number of specific highly important social problems (small business pricing in markets that appear to clear, for example).

The assumptions in the marginalist model are deeply political.

The assumptions in other economic theories are deeply political.

The politics of the social ownership of wealth in capitalism have been a defining social divide since the fights over the corn laws pitted two sections of the English bourgeoisie against each other, with the working class in the middle.

Economics is fraught not because it has been politicised, but because it is inherently political.

Answer 6

Physicists always agree each other on their theories and their predictions.

You must have been some non-existent physicists. Take two leading theories: relativity and quantum physics. they are incompatible to each other so it cannot be true that both of them are correct.

the basic driving force of science is such disagreements - their resolution pushes the boundaries of science.

if scientists had agreed always, as you had indicated, science has died.

why still today there is no economics theory that is largely accepted or considered true,

define your "largely", :)

supply and demand are largely agreed upon; utility maximization is largely agreed upon; rationale individuals are largely agreed upon; and the list goes on and on.

generally speaking the disagreements are far fewer and in between in microeconomics than in macroeconomics. But that's not unique: physicists for example struggle with the time / geographical constancy of physical constants now.

I think your issue is more with your mis-understanding of science (including economics) and scientific advances.

Answer 7

Because physics deals with fundamental laws of nature while social sciences are not that fundamental - they have much more factors than the most basic laws. It is just a matter of fact that we have complexity composed of basic ingredients at fundamental level. Secondly, the dominating economic theory is determined by elites. Currently, we have power in the hands of capitalists and, therefore, politically we prefer capitalism - we believe in free market, its self-stabilization and so on.