IDEAS home Printed from https://ideas.repec.org/a/erh/journl/v12y2020i1p24-49.html
   My bibliography  Save this article

Models and Reality: How Did Models Divorced from Reality Become Epistemologically Acceptable?

Author

Listed:
  • Asad Zaman

    (External Member of Monetary Policy Committee of State Bank of Pakistan and Director Social Sciences, Al-Nafi Online Educational Platform.)

Abstract

Economic models translate real problems to an artificial world, and calculate outcomes. The match between artificial worlds populated by rational robots, and the real world, is never assessed. Instead, models are judged on aesthetic grounds, involving conformity to preconceived principles of optimization and equilibrium. Despite methodological proclamations to the contrary, models are not judged by predictive performance. Economics models are formulated axiomatically, and never cross-checked against reality. Taking this (controversial) characterization of economic methodology for granted, this paper sketches trends in philosophy of science which led to a methodology which permits creation of mental models disconnected from reality. A key development was the separation of the observable phenomena from the underlying reality (noumena) which eventually allowed empiricist philosophers to jettison the underlying reality as part of what good models attempt to describe. The paper discusses contemporary methodologies for assessing models in economics and econometrics, and explains why these lead to models disconnected from reality.

Suggested Citation

  • Asad Zaman, 2020. "Models and Reality: How Did Models Divorced from Reality Become Epistemologically Acceptable?," International Econometric Review (IER), Econometric Research Association, vol. 12(1), pages 24-49, April.
  • Handle: RePEc:erh:journl:v:12:y:2020:i:1:p:24-49
    as

    Download full text from publisher

    File URL: http://www.era.org.tr/makaleler/211219.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Asad Zaman, 2012. "Methodological Mistakes and Econometric Consequences," International Econometric Review (IER), Econometric Research Association, vol. 4(2), pages 99-122, September.
    2. Olivier Blanchard, 2016. "Do DSGE Models Have a Future?," Policy Briefs PB16-11, Peterson Institute for International Economics.
    3. Asad Zaman, 2017. "Lessons in Econometric Methodology: The Axiom of Correct Specification," International Econometric Review (IER), Econometric Research Association, vol. 9(2), pages 50-68, September.
    4. Julian Reiss, 2012. "The explanation paradox," Journal of Economic Methodology, Taylor & Francis Journals, vol. 19(1), pages 43-62, March.
    5. Mehmet Karacuka & Asad Zaman, 2012. "The empirical evidence against neoclassical utility theory: a review of the literature," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 3(4), pages 366-414.
    6. Asad Zaman, 2010. "Causal Relations via Econometrics," International Econometric Review (IER), Econometric Research Association, vol. 2(1), pages 36-56, April.
    7. George W. Evans & Seppo Honkapohja, 2005. "An Interview with Thomas J. Sargent," CESifo Working Paper Series 1434, CESifo.
    8. Hausman,Daniel & McPherson,Michael & Satz,Debra, 2016. "Economic Analysis, Moral Philosophy, and Public Policy," Cambridge Books, Cambridge University Press, number 9781316610886, January.
    9. Morgan,Mary S., 2012. "The World in the Model," Cambridge Books, Cambridge University Press, number 9781107002975, January.
    10. Asad Zaman, 2015. "Deification of science and its disastrous consequences," International Journal of Pluralism and Economics Education, Inderscience Enterprises Ltd, vol. 6(2), pages 181-197.
    11. Morgan,Mary S., 2012. "The World in the Model," Cambridge Books, Cambridge University Press, number 9780521176194, January.
    12. Bergmann Barbara R, 2007. "Needed: A New Empiricism," The Economists' Voice, De Gruyter, vol. 4(2), pages 1-4, March.
    13. Cooter, Robert & Rappoport, Peter, 1984. "Were the Ordinalists Wrong about Welfare Economics?," Journal of Economic Literature, American Economic Association, vol. 22(2), pages 507-530, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Asad Zaman, 2020. "New Directions in Macroeconomics," International Econometric Review (IER), Econometric Research Association, vol. 12(1), pages 1-23, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicolas Brisset, 2018. "Models as speech acts: the telling case of financial models," Journal of Economic Methodology, Taylor & Francis Journals, vol. 25(1), pages 21-41, January.
    2. Asad Zaman, 2021. "Islamic Alternatives to the Secular Morality Embedded in Modern Economics البدائل الإسلامية للأخلاقيات العلمانية المُتضمنة في الاقتصاد الحديث," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 34(2), pages 83-100, July.
    3. Asad Zaman, 2012. "Methodological Mistakes and Econometric Consequences," International Econometric Review (IER), Econometric Research Association, vol. 4(2), pages 99-122, September.
    4. Wakamatsu, Naoyuki, 2020. "On Ricardo’s Multilayered Method: Wage Taxation and Foreign Subsidies Considered," MPRA Paper 103531, University Library of Munich, Germany.
    5. Giandomenica Becchio, 2020. "The Two Blades of Occam's Razor in Economics: Logical and Heuristic," Economic Thought, World Economics Association, vol. 9(1), pages 1-17, July.
    6. Arthur Brackmann Netto, 2017. "The Double Edge of Case-Studies: A Frame-Based Definition of Economic Models," Working Papers, Department of Economics 2017_21, University of São Paulo (FEA-USP).
    7. Sidika Basci & Nadia Hassan, 2020. "Using Numbers to Persuade: Hidden Rhetoric of Statistics," International Econometric Review (IER), Econometric Research Association, vol. 12(1), pages 75-97, April.
    8. Mark Casson, 2018. "The Theory of International Business: The Role of Economic Models," Management International Review, Springer, vol. 58(3), pages 363-387, June.
    9. Peter Rodenburg, 2016. "How Full is Full Employment?How Tools and Not Theory Explained Full Employment," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2016(2), pages 5-25.
    10. Ivan Moscati, 2022. "Behavioral and heuristic models are as-if models too — and that’s ok," BAFFI CAREFIN Working Papers 22177, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    11. Asad Zaman, 2014. "An Islamic Approach to Humanities مقاربة إسلامية للعلوم الإنسانية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 27(2), pages 3-28, July.
    12. Nicolas Brisset & Dorian Jullien, 2019. "Models as Speech Acts: A Restatement and a new Case Study," GREDEG Working Papers 2019-09, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    13. Kristin Asdal & Béatrice Cointe, 2022. "Writing good economics: how texts 'on the move' perform the lab and discipline of experimental economics," Post-Print hal-03429169, HAL.
    14. Graupe, Silja, 2016. ""Gefangene der Bilder in unseren Köpfen": Die Macht abstrakten ökonomischen Denkens," Working Paper Series Ök-18, Cusanus Hochschule für Gesellschaftsgestaltung, Institut für Ökonomie.
    15. Thiago Dumont Oliveira & Marwil J. Dávila-Fernández, 2020. "From modelmania to datanomics? The rise of mathematical and quantitative methods in three top economics journals," Scientometrics, Springer;Akadémiai Kiadó, vol. 123(1), pages 51-70, April.
    16. Morgan, Mary S., 2019. "Recovering Tinbergen," LSE Research Online Documents on Economics 101409, London School of Economics and Political Science, LSE Library.
    17. Morgan, Mary S., 2020. "Inducing visibility and visual deduction," LSE Research Online Documents on Economics 103540, London School of Economics and Political Science, LSE Library.
    18. Dorin, Bruno & Joly, Pierre-Benoît, 2020. "Modelling world agriculture as a learning machine? From mainstream models to Agribiom 1.0," Land Use Policy, Elsevier, vol. 96(C).
    19. Sachie Mizohata & Raynald Jadoul, 2013. "Towards International and Interdisciplinary Research Collaboration for the Measurements of Quality of Life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(3), pages 683-708, May.
    20. Gene Callahan & Andreas Hoffmann, 2017. "Two-Population Social Cycle Theories," Research in the History of Economic Thought and Methodology, in: Including a Symposium on New Directions in Sraffa Scholarship, volume 35, pages 303-321, Emerald Group Publishing Limited.

    More about this item

    Keywords

    Empiricism; Logical Positivism; Critical Realism; Economic Methodology.;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:erh:journl:v:12:y:2020:i:1:p:24-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: M. F. Cosar (email available below). General contact details of provider: https://edirc.repec.org/data/eratrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.