Quote of the Day: Economics isn’t, and will never be, a science

I wonder how Chetty would use those tools to provide compelling answers to the following questions:

1. What is the expected rate of economic growth in conjunction with a 4 percent federal funds rate?

2. What is the effect on inflation of a 300 percent increase in the monetary base?

3. What is the effect -- the multiplier -- of a $1 increase in government spending on output?

4. What is the nonaccelerating inflation rate of unemployment, or the jobless rate that triggers rising prices?

5. What is the wealth effect from a 20 percent increase in the major stock indexes? What about a 100 percent increase?

The answer to all five questions is, it depends. And that’s one of the main reasons that economics isn’t, and will never be, a science.

Isaac Newton, the English physicist, mathematician and philosopher, pretty much explained the fundamental difference between economics and the hard sciences more than 300 years ago. With the physical sciences, we observe what happens in nature. Then we try to quantify it. An apple falls from the tree to the ground with increasing velocity. Water boils at 100 degrees Celsius at sea level. Light travels faster than sound. Each observation yields the same result. It’s why mathematicians end their proofs with QED -- “quod erat demonstrandum,” or that which was to be demonstrated -- and economists don’t.

Or, to paraphrase Newton: The same results are always obtainable under the same conditions. It is the repetitive duplication of a result that defines what are called laws of nature.

A law of nature, when properly measured, will yield duplicate results. A law of economics, even if properly measured, will not.

This is from Bloomberg’s columnist Caroline Baum explaining the difference between science and economics.