Economics is currently and usually defined as the social science studying the production, distribution, and consumption of wealth and of goods and services. It is a social science that uses mathematics and mathematical models, but its mathematical hypotheses and models are often not testable or verified experimentally. So it does not follow rigorously the rules or principles of the scientific method.
As a social science, economics is independent of the political acts of any government or other decision-making organization; however, many policymakers or individuals holding high positions that can influence other people's lives are known for arbitrarily using a plethora of economic concepts and rhetoric as vehicles to legitimize agendas and value systems.
Economics has been criticized for relying on unrealistic, unverifiable, or simplified assumptions, in some cases because these assumptions simplify the proofs of desired conclusions.
Mainstream economists such as Keynes and Joskow have observed that much of economics is conceptual rather than quantitative, and difficult to model and formalize quantitatively.
Economic theories are frequently tested empirically, largely through the use of econometrics using economic data. The controlled experiments common to the physical sciences are difficult and uncommon in economics, and instead broad data is observationally studied; this type of testing is typically regarded as less rigorous than controlled experimentation, and the conclusions typically more tentative. There is a field of study called experimental economics, but its methods have been somewhat criticized.
The historian and philosopher of economics Philip Mirowski observed that:
The imperatives of the orthodox research programme [of economic
science] leave little room for maneuver and less room for originality.
... These mandates ... Appropriate as many mathematical techniques and
metaphorical expressions from contemporary respectable science,
primarily physics as possible. ... Preserve to the maximum extent
possible the attendant nineteenth-century overtones of "natural order"
... Deny strenuously that neoclassical theory slavishly imitates
physics. ... Above all, prevent all rival research programmes from
encroaching ... by ridiculing all external attempts to appropriate
twentieth century physics models. ... All theorizing is [in this way]
held hostage to nineteenth-century concepts of energy.
Here are also ten plausible or possible reasons as to why economics is more an art than a science:
1 Economics is a discipline, not a science. Physics can send a
satellite to orbit Jupiter, tell you exactly when it will arrive and
the altitude it will orbit at. Economics can barely describe what
happened yesterday — and without any particular precision.
2 Markets are frequently ahead of, and often out of sync with, the
economy.[...]
3 Models are of limited utility. As statistician George Box has noted,
“All models are wrong, but some are useful.” That was the professor’s
way of explaining that models are imperfect depictions of reality.
It’s best not to become overly reliant on them.[...]
4 Contextualizing data often leads to error. What I mean is that
everything economists consider gets forced into their intellectual
framework. The imperfect lens of economic theory is less than an ideal
way to view the world.[...]
5 Narrative drives most of economics. Everything seems to be part of a
story, and how that story is told often leads to critical error. Think
about phrases like “stall speed,” “second half rebound,” “muddle
through,” “Minsky moment,” “austerity,” “escape velocity,” etc. All of
these lead to rich tales often filled with emotional resonance — but
not a lot of insight.
6 Economists are loathe to admit that “they don’t know.” This trait is
common in many professions, but I suspect the modeling issue may be
partly to blame. Whenever I see a forecast written out to two decimal
places, I cannot help but wonder if there is a misunderstanding of the
limitations of the data, and an illusion of precision.[...]
7 A tendency to confuse correlation with causation. This is one of the
oldest statistical foibles, and yet economics remains rife with it at
the highest levels.[...]
8 The peril of predictions. Another brain teaser: Why are Wall Street
economists so married to making forecasts? They are mostly miserable
at them [...]
9 Extrapolating current circumstances to infinity: Economists suffer
from the recency effect, just like everyone else does. Their
experiences with typical recession cycles in the postwar era left many
of them blind to the fact that something unusual was occurring. This
left them unable to understand how and why the post credit-crisis era
was so different from their prior experiences.[...]
10 Sturgeon’s Law: Not every economist is a prize winner. There is a
wide dispersion of talent in economics, and following Sturgeon’s Law —
“90 percent of everything is crap” — many among the rank and file
simply are not great analysts.
And on a side note: I am not trying to draw a distinction between
different groups of economists, say, between the macro and micro or
among various schools (Monetarists, Keynesians, Austrians). I don’t
find it compelling. In 2009, Nobel laureate Paul Krugman asked “How
Did Economists Get It So Wrong?” He wondered how “the profession’s
blindness to the very possibility of catastrophic failures in a market
economy” could ever have occurred.
