Is the Market a Test of Truth and Beauty?

(Jacob Rumans) #1
Chapter dzǵ: Tacit Preachments are the Worst Kind ȁȂȈ

Ronald Giere (ȀȈȇȇ, esp. chap.Ȃ, “Models and Ļeories”) describes
models as stylizations or idealizations about which propositions hold more
rigorously true than they ever could about their possible counterparts in
reality (cf. HausmanȀȈȈȁ, pp.ȆȄ–ȇȁ,ȁȆȂ).F=maand other general “laws”
of mechanics are not really empirical claims but more like general schemas
that need to be filled in (GiereȀȈȇȇ, p.Ȇȅ). If the laws of motion, such
as the law of the pendulum, were to give a literally true and exact descrip-
tion of even the simplest of physical phenomena, they would have to be
incredibly more complex than any that could ever be written down. Ļe
nonuniformity of gravity near the earth’s surface, the gravitational force of
the moon, nonlinearities in air resistance, and so forth would all have to be
taken into account. Idealization and approximation are of the essence of
empirical science (pp.Ȇȅ–Ȇȇ). Hooke’s law “states that the force exerted by
a spring is proportional to the amount it is stretched,” the constant of pro-
portionality being “interpreted as a measure of the stiffness of the spring”
(p.ȅȇ). Such a statement presupposes certain “idealizations,” such as that
the spring is without mass and subject to no frictional forces, that the
force-displacement is linear, that the attached mass is subject to no fric-
tional forces, and that the wall is rigid, so the wall recoil due to motion of
the mass may be neglected (Giere, pp.ȅȈ–Ȇǿ). In mechanics, “Ļe equa-
tions truly describe the model because the model is defined as something
that exactly satisfies the equations” (p.ȆȈ). (Ļe physicist Henri Poincaré
repeatedly insisted on similar points about the role of stylizations and con-
ventions in science; see YeagerȀȈȈȃ, esp. pp.ȀȅȀ–Ȁȅȁ, and Poincaré’s writ-
ings cited there.)


Unlike a model, a theoretical hypothesis is ... a statement asserting some
sort of relationship between a model and a designated real system (or
class of real systems).... Ļe general form of a theoretical hypothesis is
thus: Such-and-such identifiable real system is similar to a designated
model in indicated respects and degrees. (GiereȀȈȇȇ, pp.ȇǿ–ȇȀ)

Lucas and Sargent (ȀȈȆȇ, p.Ȅȁ) say in effect that anyone uttering any
proposition of economics must, whether he realizes it or not, be working
with some sort of model in mind. It may be vague or clear, poor or good;
but if the economist does not set forth his model explicitly, he is just hiding
it from professional scrutiny and criticism.
Is it true, though, that one is necessarily working with a model? If the
term “model” is stretched to cover any piece of reasoning, then it seems
a mere equivocation to insist after all on a model in a narrower sense. If

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