“The desire in the profession to make universalistic claims following certain standard procedures of statistical inference is simply too strong to embrace procedures which explicitly rely on the use of vernacular knowledge for model closure in a contingent manner. More broadly, such a desire has played a vital role in the decisive victory of mathematical formalization over conventionally verbal based economic discourses as the principal medium of rhetoric, owing to its internal consistency, reducibility, generality, and apparent objectivity. It does not matter that [as Einstein wrote] ‘as far as the laws of mathematics refer to reality, they are not certain.’ What matters is that these laws are ‘certain’ when ‘they do not refer to reality.’ Most of what is evaluated as core research in the academic domain has little direct bearing on concrete social events in the real world anyway. -Duo Qin
Maintaining that economics is a science in the ‘true knowledge’ business, yours truly remains a skeptic of the pretences and aspirations of econometrics. So far, I cannot see that it has yielded much in terms of relevant, interesting economic knowledge. Over all the results have been bleak indeed.
Firmly stuck in an empiricist tradition, econometrics is only concerned with the measurable aspects of reality. But there is always the possibility that there are other variables — of vital importance and although perhaps unobservable and non-additive, not necessarily epistemologically inaccessible — that were not considered for the econometric modeling.
A perusal of the leading econom(etr)ic journals shows that most econometricians still concentrate on fixed parameter models and that parameter-values estimated in specific spatio-temporal contexts are presupposed to be exportable to totally different contexts. To warrant this assumption one, however, has to convincingly establish that the targeted acting causes are stable and invariant so that they maintain their parametric status after the bridging. The endemic lack of predictive success of the econometric project indicates that this hope of finding fixed parameters is a hope for which there really is no other ground than hope itself.
Most of the assumptions that econometric modeling presupposes are not only unrealistic — they are plainly wrong.
If economic regularities obtain they do it (as a rule) only because we engineered them for that purpose. Outside man-made ‘nomological machines’ they are rare, or even non-existant. Unfortunately that also makes most of the achievements of econometric forecasting and ‘explanation’ rather useless.”