Video: Economics is Fun: Why Economics Isn't (Natural) Science

Dr Madsen Pirie of Adam Smith Institute does a great job in explaining vivaciously why economics isn't (natural) science, which conventional practitioners try to mold them into--through statistical or econometric models.

Here's a good quote [1:07]

When an economist tries to simplify it by leaving out stuff by, so that a small model can be created you have assumed away the real world.

(hat tip Greg Ransom)



Economics is the youngest of all sciences to quote the great Ludwig von Mises.

And it is important to note that the science of economics represents a subdiscipline to the science of human action. Again Professor Mises in his magnum opus Human Action,

The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action. It is a knowledge that is our own because we are men; no being of human descent that pathological conditions have not reduced to a merely vegetative existence lacks it. No special experience is needed in order to comprehend these theorems, and no experience, however rich, could disclose them to a being who did not know a priori what human action is. The only way to a cognition of these theorems is logical analysis of our inherent knowledge of the category of action. We must bethink ourselves and reflect upon the structure of human action. Like logic and mathematics, praxeological knowledge is in us; it does not come from without.

All the concepts and theorems of praxeology are implied in the category of human action. The first task is to extract and to deduce them, to expound their implications and to define the universal conditions of acting as such.

And the difference between the science of human action from natural science in the words of Mises (emphasis added)

WHAT differentiates the realm of the natural sciences from that of the sciences of human action is the categorical system resorted to in each in interpreting phenomena and constructing theories. The natural sciences do not know anything about final causes; inquiry and theorizing are entirely guided by the category of causality. The field of the sciences of human action is the orbit of purpose and of conscious aiming at ends; it is teleological.

Both categories were resorted to by primitive man and are resorted to today by everybody in daily thinking and acting. The most simple skills and techniques imply knowledge gathered by rudimentary research into causality. Where people did not know how to seek the relation of cause and effect, they looked for a teleological interpretation.