Should Economics be more mathematical?

Filed in Economic News and Opinion by on September 18, 2014 0 Comments

(For your reference, please read http://www.jbs.cam.ac.uk/media/2014/does-economics-need-less-maths-or-more/)

This old argument of Qualitative Economics versus Quantitative Economics has always been controversial (we are talking about Microeconomics specifically). While Mathematics is still an indispensable measurement for economists in the Western world, the Chinese favours a more qualitative approach. Given the current circumstances in China, it does not seem to be a failed case. In this article, I shall not argue which is better, as I believe there won’t be an end to this debate. However, allow me to ask another question: why do you find economics special?

Going back to the time when I was still in secondary school, Economics was the most interesting subject in my point of view. I remembered there was a time I came across two different food stores on the same street with my mum. We checked the prices of some food and they were the same.  With the concept of market competition in mind, I proudly announced to her the reason why the prices were indifferent.  If this reminds you of some similar experiences in your youth, perhaps you will notice the magic of economics does not come from the boring calculating, but the joy of grasping the explanatory and prediction power. It does not demand anything difficult – just making an easy observation matched with a simple theory will do.

As I continue through high school, and to a bachelor and even masters degree now, economics becomes a subject full of models flooded with numbers and calculations. Advanced theorists tag simple logic with an algebra, a number, an equation. I am getting confused, that I do not understand why on earth it is necessary to understand those utility functions, Edgeworth box and supply functions, when I can explain reality with a simple exchange theory. On top of this, the exams and assignments were filled with unrealistic assumptions, that the only way to get full marks was deriving some correct meaningless numbers.

In theory, there is nothing wrong with quantitative economics, but the world has gradually ignored the qualitative side, imbalancing the trade-off between internal and external validity. The shift leaves a big hole in economics analysis. The fact that Mathematics is way too convenient to explain different things is obvious. Economists compress various human behaviours into numbers, fit them into models and they are able to run some results. They think they have captured more through data, but they haven’t. The real problem here is we begin to forget what economics really is. The most powerful function of economics is, in my opinion; explaining the most common behaviour in the world with a simple idea. The Law of demand is an obvious example.

With the growing engagement of Freakonomics among the public, many raise concerns over the teaching of mainstream mathematical Economics. At least, schools and universities should provide students a choice whether to go qualitative or quantitative. This trend cannot be wrong. 21st century Economics should be fuelled by more craziness, imagination and bold approaches. A true economist to me is someone who dares to leave their office, shut down their computers and start walking  into streets to make real world observations – and this should be the spirit of every economist.

 

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About the Author ()

Keith is taking a Master in Political Economy at the London School of Economics and Political Science.