Lack of Scientific Rigour in Economics

Economics doesn’t have predicting power (the test of correctness for scientific theories)…

  • couldn’t predict recessions
  • doesn’t pursue distributive justice
  • better for designing economics/social institutions, maintaining social order, or incentivizing individuals in society

This is because in economics the strategy of people are not considered:

parametric agents.

→ In reality, individuals act based on how they think others may act; i.e. they are strategic agents.

→ Conventional economic theory is useless as a predictor—it’ll only satisfy one’s curiosity

→ The correct/better theory for modeling economics is Game Theory—the theory of strategic interactions