Traditionally, economists have put the facts in a subordinate role and theory in the driver’s seat. Plausible-sounding theories are believed to be true unless proven false, while empirical facts are often dismissed if they don’t make sense in the context of leading theories. This isn’t a problem with math -- it was just as true back when economics theories were written out in long literary volumes. Econ developed as a form of philosophy and then added math later, becoming basically a form of mathematical philosophy.His proposed solution is to turn the thinking over to machines instead of people. I wonder how well that will work? Economic activity is based on decisions made by people for fairly complex reasons that machines don't experience. On the other hand, they'll be considering the data at a level of abstraction that will mask the actual causes of the decisions, and treat the decisions themselves as the data. Does losing the causality hurt anything? We'll find out.
In other words, econ is now a rogue branch of applied math. Developed without access to good data, it evolved different scientific values and conventions. But this is changing fast, as information technology and the computer revolution have furnished economists with mountains of data.
My concern, of course, is that if it does work well the people literally drop out of the equation. We'll make policy as if the decisions were what counted, and not the people who make those decisions -- and especially not what they hoped to achieve by making the decisions. But the purpose of economic activity is that very thing we'll be dropping out of our system for thinking about the activity. The real question by which you should judge economic activity is how well it helps the many, many people involved achieve what they'd hoped to achieve by undertaking an economic action. If you get a job, does it help you flourish, or does it lock you into a company store? Are you blocked from making economic decisions about selling your milk or pumpkins because of oppressive government regulation, and your inactivity doesn't show up in the data because it never rises to the level of a decision that can be counted?
Just the things I think we ought to care about are the things that will drop out of consideration.