Yesterday I ran into someone spouting the standard smear against the Austrian school (the “living in fantasyland” diatribe). He didn’t really have anything new to offer and the debate soon turned into the usual surreal accusations about Austrians being irrational for relying on reason (I’m not sure how that works…) without a real defense of econometrics.
Anyway, it got me wondering if anyone knows of an intelligent defense of econometrics as the primary tool of economics and which addresses Austrian concerns toward it? I’d be interested in reading it.
No, and there is no need for such a thing because Austrians have no problem with econometrics. What they do have a problem with is mathematics being substituted for economics and for theories being nothing but mathematical generalizations drawn from “empirical” observations. The boneheads who criticize the Austrian school rarely grasp this, and it should be no surprise, because they’re hardly the most original thinkers. All they can do is set up strawmen of the Austrian method. I enjoy watching them burn alongside their strawmen. It is worth noting that the main thrust of Mises’ arguments against the abuse of mathematics had to do with socialists who were over-confident in their mathematical models, and failed to address the real issues Mises was confronting them with.
-Jon
I didn’t mean to imply that Austrians would have a problem with econometrics as a complimentary tool (when used properly). But I keep running into supposedly credible economists who are using statistics and mathematics as their primary tool, with little or no logic even to support the outcome of studies. The recent debate on minimum wage with Block was a good example, since the opposition just kept repeating “but my study says this”, with absolutely nothing to support why it says it. So I figured there should be some rational explanation as to why so many economists rely primarily on econometrics.
There is: the rise of positivism within economics. Friedman’s essay on the topic is the best defence you can find, and perhaps one of the only ones.
-Jon
Sorry, should’ve said book. I meant this.
-Jon
thanks for the link, i’ll check it out.