13.12.05

Por uma teoria não física e não matemática das ciências sociais

What is the problem, then, of using math for economics, and why are Austrians opposed to such a methodology? In a word, math is not an appropriate tool to describe human action. As Mises and Rothbard often pointed out, one cannot quantify human action. This does not mean that people do not engage in activity in which mathematics is not important, but rather that we cannot accurately use math to describe how humans behave.###

Take the simple "Lagrangian Multiplier" that we use in basic graduate-school economics to "explain" consumer behavior. Here, economists construct an equation in which one’s utility depends upon, say, goods "x" and "y." The ability to accumulate such goods is constrained by one’s income and the prices paid for the goods.

In determining the "optimal" state that the consumer can enjoy, one uses tools of multivariable calculus to reach a point where "equilibrium" is reached. At that point, the marginal utility of good "x" divided by the price of good "x" is equal to the marginal utility of good "y" over the price of that good. (I have not done the mathematical work on this page for obvious reasons.)

The problem here is that this "solution" is nonsense. Utility (or consumer satisfaction) cannot be measured in cardinal terms. There is no way to take a cardinal measure of someone’s satisfaction. I can say that I like chocolate more than vanilla, but I cannot put that preference in cardinal numbers. An attempt to do so is nothing short of an exercise in fraud.

When asked why they engage in such activities, economists usually admit that they cannot take cardinal measures of individual utility, nor can they compare the utility of one individual to another in cardinal terms. However, they then do it anyway, saying that while their activities are technically wrong, they pass the "market test" in economic analysis. People, they add, will "act as though they are engaging in measurement of cardinal utility," even if they really are not. In other words, even if something is not true, we pretend that it is true and act accordingly.

(...)

In using mathematics as the main tool for advancing economic thought, economists must operate on the assumption that human action adheres to a constant mathematical formula. While, as Rothbard and Mises note, that might be appropriate for the physical sciences, it is not appropriate when describing how humans behave.

This is not to say that the use of logic is inappropriate in economic science. Indeed, the Austrian methodology draws heavily upon logical inferences in deducing economic science from the initial observation that people act. Furthermore, mathematics is a branch of logic.