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Truth versus Precision in Economics
Advances in Economic Methodology Series
This engaging and intelligent book provides an accessible, down to earth assessment of the role of formalism and rigour in economics.
Professor Mayer argues that there is room in economics for both highly formalised theory and for the less formal theory that predominates in the natural sciences. But economists generally fail to distinguish between these two types of theory. As a result, they often act as if the strength of an argument depends on the strength of its strongest link. They misallocate effort, polishing those parts of the argument that tend to be formalised, while paying insufficient attention to the others. Drawing on public choice theory, Mayer shows how this emphasis on the strongest link has distorted research particularly in new classical theory. He advocates stricter econometric testing, showing that many procedures currently used are only soft tests.
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What Reviewers Are Saying
`Truth versus Precision in Economics by Thomas Mayer, is an extremely good book. Dealing with the subject which is highly controversial he has succeeded being both balanced and insightful. It is an unusual combination.' -- Gordon Tullock, George Mason University, US `. . . as a guide to how to be a good applied economist, and as a guide to some recent technical literature, this book is a great success.' -- Geoffrey E. Wood, Economic Affairs `I would recommend this book to all economists. This is an important book in general economics and not just that subsection called economic methodology.' -- Abraham Hirsch, Brooklyn College and the City University of New York, UK `This is a marvellous critique of contemporary economics, which I greatly enjoyed reading.' -- Roger Backhouse, University of Birmingham, UK `. . . Mayer's book is to be warmly recommended to all economists without distinction of specialisation. It goes without saying that it deserves to become compulsory reading for all scholars interested in economic methodology.' -- Andrea Salanti, Economic Notes `It is one of the tragedies of a subject like economics that there is generally a trade-off between rigour and relevance: the rigours of, say, Arrow-Debreu General Equilibrium Theory are purchased at the expense of any practical relevance and the practical relevance of, say, the privatisation-deregulation issue is unaccompanied by rigorous theorizing. On the whole, economists are inclined to prefer rigour to relevance and this produces the anti-empirical formalism that characterises much of modern economics. This book is a vigorous plea for a policy-relevant, empirically - oriented economics even at the cost of forgoing some analytic rigour. The argument is worked out, not just in general terms but in great detail with reference to leading propositions in modern macroeconomics. `This brilliant work ought to be read by every economist: it is potentially capable of transforming our subject for the better.' -- The late Mark Blaug, formerly of the University of London and University of Buckingham, UK `Mayer's "principle of the strongest link" provides the basis for a profound critique of contemporary macroeconomics and its obsession with formalism. It is the most rigorous methodological assessment of the New Classical and New Keynesian approaches to appear yet, and gives us enormous insight into the failure of these schools of thought to provide answers to the major economic problems of today. The book is filled with examples from the technical literature as well as anecdotes from Mayer's extensive experience in the profession. If it requires someone from within the neoclassical camp to point out the emperor's new fashions, then Mayer's book is the first to serve that role. Mayer's book puts some macroeconomic "meat" on the "bones" of the methodological revolution begun by McCloskey in the 1980s.' -- William Milberg, New School for Social Research, US `. . . this book should be widely read within the profession. If its charges of excess formalism and research distortion are true, economists are misallocating their resources and failing to apply their fundamental insights to their own practices. The only cure is heightened awareness and understanding of the problem. Mayer's book is a superb contribution to this end. -- Jon D. Wisman, Eastern Economic Journal `This book is a thoughtful critical contribution to economic methodology.' -- Leland G. Neuberg, Southern Economic Journal