The Math Bubble

Well, I'll add a bit more here.

The issue is not math per se. It is the kind of math. What we have seen in econ reflects something that has gone on in math itself, a move away from Bourbakian emphasis on axiomatic formalism and towards computer simulation and other methods. Economists are still doing lots of math, but it looks more like the sort of things that Rob Axtell and the folks in the new GMU Computational Social Science Department do rather than what Gerard Debreu used to do.

One area that still seems somewhat wedded to axiomatic general equilibrium theory of the Walrasian sort is macro, especially those pushing the dynamic stochastic general equilibrium approach. Besides its GE part, it also includes the idea of a representative agent with rational expectations. Most microeconomists know enough to know that this is utter bilge, but it is very deeply entrenched in macro, with Nobel Prizes still being given out for it (see Kydland and Prescott two years ago), and I fully expect Barro and Sargent to get ones also in the not-too-far distant future.

However, even here, there is much more emphasis on computer simulation and calibration than on theorem proving.

One reason for the rise of empirical research is the great data out there now. When I was a grad student 30 years ago, data grubbing was laborious work. Nowadays plenty of businesses, government agencies and non-profits have tremendous datasets. One company turned over to me a 1.5 million record database of their retail transactions, something that couldn't have happened in the old days.

So perhaps empirical work pushed math aside. But I also have to say that perhaps the math theory didn't really produce much of value.

[Mathematical approaches] have had fifty years of ever-increasing hegemony in economics. The empirical evidence on their contribution is decidedly negative." Sound familiar, Mr. Caplan?

The Austrian school was right. Mathematical rigor in economics is not a reliable predictor of human action. What caused this paradigm shift, you ask? Why, the French Revolution II, of course. (http://www.paecon.net/HistoryPAE.htm)

[Duplicated comment. See Monte's comment on Memetic Suicide--Econlib Ed.]