[Bsharp]

All of your concerns are addressed in his article:

> The basis of any informed discussion is a mathematical model. The best way to think of a mathematical model is a way to force everyone to clearly enumerate all assumptions being made, and to accept all logical reasoning that follows from those assumptions. Given a model, everyone involved in a discussion can agree that either the conclusions of the model are correct, or one of the assumptions going into the model must be false. This is very important when disagreement is reached - disagreement in the conclusions implies disagreement with some assumption, so it makes sense to figure out which assumption is the cause of disagreement.

It’s also important not to be blinded by a model. The involvement of numbers does not make an argument empirically correct - it simply makes it more understandable and less likely to be logically flawed.

He knows the limitations of mathematical modeling and is simply presenting a basic simulation of these two policies subject to various assumptions.

[zoul]

As I understand it, the recent economic turmoils in various parts of the world seem to have shed a new light on the mathematical modelling of real economies. While the models might be a good discussion tool, forcing the parties to explicitly state various assumptions and ideas, they are essentially useless for predicting a real world economy.

And what’s worse, they seem like something dependable. Isn’t it very hard to judge how much a model has to do with reality? A discussion about a model might be a perfectly scientific, constructive and relevant discussion about a theoretical world that has almost nothing to do with the real one.

[Radim]

No, it might not. Not unless you use the word "scientific" in some creative way.

The "real world" is a necessary component for the scientific method. By comparing model predictions to real-world experiments, it allows refuting and refining models and theories. How else would you evaluate theories, to separate the chaff from the grain?

The feedback from observation is absolutely vital.

[zoul]

Please don’t generalize my arguments to scientific method as such, I am just talking about economy. A real-world economy is a wildly nonlinear system, a bit like the weather. And there’s always something important you may fail to take into account, like the role of the private financial sector in the recent economic crisis. You may argue that we are now wiser and our models better, but the plain fact is that the degree of correspondence between our models and the real economic world is very poor. When you tweak a model for such a complex system, how do you scientifically know it’s better for predicting the future behaviour? It’s madness to think that you could reasonably model what would happen after introducing a minimal income.

[Radim]

I agree with you, but that changes nothing.

You're basically saying that economy is not science, in the sense above. Which I agree with. It is madness.

This doesn't mean that things outside science cannot be useful -- just that it's not science.

[JackFr]

He would do well to read Hayek's Nobel Prize Lecture, "The Pretence of Knowledge".

"it simply makes it more understandable and less likely to be logically flawed" -- yes to the first part, no to the second.

[dllthomas]

I think it does make it less likely to be logically flawed, in that you can better see what is following from your assumptions. It's like stronger typing or an additional test in your test suite. It's perfectly possible to still get wrong results, but it's less likely. "Less likely enough" is another, extremely important question.