Reasons for Disagreements: Imperfect Information and Value Judgments
“If all the earth’s economists were laid end to end, they could not reach an agreement,” or so the saying goes. Politicians and reporters are fond of pointing out that economists can be found on both sides of many issues of public policy making. If economics is a science, why do economists quarrel so much? After all, physicists do not debate whether the earth revolves around the sun or vice versa.
The question reflects a misunderstanding of the nature of science. Disputes are normal at the frontier of any science. For example, physicists once did argue, and quite vociferously, over whether the earth revolves around the sun. Nowadays, they argue about antimatter, the “big bang,” and other esoterica. These arguments go mostly unnoticed by the public because few of us understand what they are talking about. But economics is a social science, so its disputes are aired in public. All sorts of people are eager to join economic debates about inflation, pollution, poverty, and Los Angeles road network, the map makers have produced a map that is oversimplified for our purpose. Too much has been assumed away. Of course, this map was never intended to be used as a guide to the La Brea tar pits, which brings us to an important point:
There is no such thing as one “right” degree of abstraction for all analytic purposes. The proper degree and need of abstraction depends on the objective of the analysis. A model that is a gross oversimplification for one purpose may be needlessly complicated for another.
