Alex Rosenberg and Tyler Curtain in 3:AM Magazine:
In physics our knowledge exceeds our understanding. In economics the reverse is true. Seeing why helps us make sense of both of these disciplines.
In physics we’ve reached the point where we know the nature of things to twelve decimal places. We reached that point by starting with common sense and correcting its predictions until we arrived at quantum mechanics—a theory that we literally can’t understand, despite the fact that we know it to be as close to the truth as any theory we have in any science. It took about 350 years—from Newtonian gravity to Schrödinger’s cat—to get to the point where knowledge exceeds understanding in physics.
Economics is harder than physics. It must be. It’s not much younger a science, having gotten its start with Adam Smith in 1776, a good 83 years before Darwin was able to put biology on a scientific footing. If economics were as easy as physics, it would have made more progress by now.
As far back as John Stuart Mill philosophers of science have been trying to figure out exactly why economics is harder than physics. They have given a variety of answers.
We think a large part of the reason is that unlike the physicists, the economists have been unwilling or unable to let go of the notion that their understanding of economic affairs counts as knowledge about economic behavior. Like physics, economics starts with common sense—in this case firm convictions about how we are driven to make choices by our desires and our beliefs, which the economists label preferences and expectations.
Giving up firmly held convictions isn’t just a problem for economics. Physics had the same problems: humans have difficulty relinquishing the conviction that motion requires force, that there is a preferred direction in space, that every event has a cause. But progress—as measured by prediction—required relinquishing our sense that we already know how things work. In the social sciences, it’s been almost impossible to give up trying to explain things by making sense of them in the form of stories we understand.