Beware of Economists Bearing Greek Symbols

Economists love formal mathematics much more than physicists do. Many economic journals encourage a faux-rigorous style with multitudes of axioms and lemmas in numbers that tend to be inversely proportional to their efficacy in the real world. But economists seem to have embraced formality and physi...

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Bibliographic Details
Published in:Harvard business review 2005-10, Vol.83 (10), p.16
Main Author: Derman, Emanuel
Format: Magazinearticle
Language:English
Subjects:
Differences
Economists
Mathematics
Physicists
Online Access:Get full text
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Summary:Economists love formal mathematics much more than physicists do. Many economic journals encourage a faux-rigorous style with multitudes of axioms and lemmas in numbers that tend to be inversely proportional to their efficacy in the real world. But economists seem to have embraced formality and physics envy without the corresponding benefits of accuracy or predictability. In economics, there are no laws at all, only models, and you're immensely lucky if you can predict up from down. Never forget that even the best financial model can never be truly valid because, unlike the physical world, the mental world of securities and economics is much less amenable to the power of mathematics.
ISSN:0017-8012