Economics as a Human Science

When discussing a new paper by GMU alum Vipin Veetil and GMU professor Richard Wagner, Scott Sumner makes the following comment:

[Veetil and Wagner] criticize the standard view, which is that in a large diversified economy the impact of micro level disturbances tend to balance out.

It is absolutely true that, at the macro level, micro level disturbances tend to balance out.  That is what’s wrong with macroeconomics.  All this aggregation masks the human element that is the core of economics.  At the end of the day, we are studying what Mises called “human action”, and what Adam Smith called “a certain propensity in human nature…the propensity to truck, barter, and exchange one thing for another.”  We are studying human behavior.  Economics is a social science; to aggregate so far as to balance out micro (ie, human) disturbances is to remove the “social” from the social science.  Our focus as economists should be on these social aspects, on these individual aspects and the institutions that arise to deal with the human element, of economics.  Anything else is, to quote James Buchanan, just applied mathematics; technically interesting, but economically useless.


2 thoughts on “Economics as a Human Science

  1. In statistics, it’s known as the Law of Large Numbers. As a sample size gets larger, its probability distribution tends toward the normal Gaussian distribution.

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  2. When you are talking at such a fundamental level of human nature, you MUST consider Korzybski’s “volition in a time domain.”
    When you make a decision involving a trade with someone else, the effort of thinking puts the present purchase with respect to past purchases (the value to you of present action with value to you of past action). But more importantly it includes competing the present purchase with future ones; thinking about savings for future purchases. The thinking also pits the prediction of one’s future income with future purchases. As Alfred Korzybski taught, only humans have volition in a time domain.

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