> “But science demands more than deduction — it requires theories to survive contact with data. Enter econometrics: the statistical battlefield where elegant theories either emerge victorious or die screaming.”
Are there good examples of empirical work overturning theory? It seems that often, when the result is unexpected, the takeaway is that the empirics are flawed rather than the theory incorrect.
The minimum wage could be an example, but many will argue the original DiD papers were quite flawed. The monopsony power explanation is also heavily contested anyways.
Absolutely, empirical work has overturned or reshaped theory in economics, though often after intense scrutiny and debate. Classic examples include the breakdown of the Phillips Curve during stagflation, anomalies challenging the Efficient Market Hypothesis (prompting the development of Behavioral Finance and Behavioral Economics), and consumption patterns inconsistent with the Permanent Income Hypothesis. It’s true that empirical surprises first face skepticism, but persistent, robust evidence ultimately drives theoretical progress and refinement.
"By 1935 economics entered into a mathematical epoch. It became easier for a camel to pass through the eye of a needle than for a non-mathematical genius to enter into the pantheon of original theorists.”
Not exactly true. The justly famed Stolper Samuelson trade theorem does not need advanced mathematics at all to demonstrate. To be true, "original" has to work extra hard.
> “But science demands more than deduction — it requires theories to survive contact with data. Enter econometrics: the statistical battlefield where elegant theories either emerge victorious or die screaming.”
Are there good examples of empirical work overturning theory? It seems that often, when the result is unexpected, the takeaway is that the empirics are flawed rather than the theory incorrect.
The minimum wage could be an example, but many will argue the original DiD papers were quite flawed. The monopsony power explanation is also heavily contested anyways.
Absolutely, empirical work has overturned or reshaped theory in economics, though often after intense scrutiny and debate. Classic examples include the breakdown of the Phillips Curve during stagflation, anomalies challenging the Efficient Market Hypothesis (prompting the development of Behavioral Finance and Behavioral Economics), and consumption patterns inconsistent with the Permanent Income Hypothesis. It’s true that empirical surprises first face skepticism, but persistent, robust evidence ultimately drives theoretical progress and refinement.
"By 1935 economics entered into a mathematical epoch. It became easier for a camel to pass through the eye of a needle than for a non-mathematical genius to enter into the pantheon of original theorists.”
Not exactly true. The justly famed Stolper Samuelson trade theorem does not need advanced mathematics at all to demonstrate. To be true, "original" has to work extra hard.