Editing Neoclassical economics (section)

=== Methodology and mathematical models ===
{{more|Unreasonable ineffectiveness of mathematics#Economics and finance|Financial economics#Challenges and criticism}}

{{Expand section|supporting views citing basis in statistical science, comparability with other social sciences|date=August 2021}}

Some see mathematical models used in contemporary research in mainstream economics as having transcended neoclassical economics,<ref>David Colander, Richard Holt, and J. Barkley Rosser Jr. (2004) The changing face of mainstream economics, ''Review of Political Economy'', V. 16, No. 4: pp. 485–99)</ref> while others disagree.<ref>Matias Vernengo (2010) Conversation or monologue? On advising heterodox economists, ''Journal of Post Keynesian Economics'', V. 32, No. 3" pp. 485–99.</ref> Mathematical models also include those in [[game theory]], [[linear programming]], and [[econometrics]]. Critics of neoclassical economics are divided into those who think that highly mathematical method is inherently wrong and those who think that mathematical method is useful even if neoclassical economics has other problems.<ref>Jamie Morgan (ed.) (2016) 'What is Neoclassical Economics? Debating the origins, meaning and significance', Routledge.</ref>

Critics such as [[Tony Lawson]] contend that neoclassical economics' reliance on [[Function (mathematics)|functional relations]] is inadequate for social phenomena in which knowledge of one variable does not reliably predict another.<ref>{{Cite book |title=A guide to what's wrong with economics |date=2004 |publisher=Anthem |editor=Edward Fullbrook |isbn=978-0-85728-737-3 |location=London |oclc=860303932}}</ref> The different factors affecting economic outcomes cannot be experimentally isolated from one another in a laboratory; therefore the explanatory and predictive power of mathematical economic analysis is limited. Lawson proposes an alternative approach called the contrast explanation which he says is better suited for determining causes of events in social sciences. More broadly, critics of economics as a science vary, with some believing that all mathematical economics is problematic or even [[pseudoscience]] and others believing it is still useful but has less certainty and higher risk of methodology problems than in other fields.<ref>{{Cite web|last=Shiller|first=Robert J.|date=November 6, 2013|title=Is Economics a Science? {{!}} by Robert J. Shiller|url=https://www.project-syndicate.org/commentary/robert-j--shilleron-whether-he-is-a-scientist|access-date=April 11, 2021|website=Project Syndicate|language=en|archive-date=November 9, 2013|archive-url=https://web.archive.org/web/20131109094135/https://www.project-syndicate.org/commentary/robert-j--shilleron-whether-he-is-a-scientist|url-status=live}}</ref><ref>{{Cite book |title=What is neoclassical economics?: debating the origins, meaning and significance |date=2016 |editor=Jamie Morgan |isbn=978-1-317-33451-4 |location=London |oclc=930083125}}</ref>

[[Milton Friedman]], one of the most prominent and influential neoclassical economists of the 20th century, responded to criticisms that assumptions in economic models were often unrealistic by saying that theories should be judged by their ability to predict events rather than by the supposed realism of their assumptions.<ref>{{Cite book |title=The philosophy of economics: an anthology |date=2008 |publisher=Cambridge University Press |editor=Daniel M. Hausman |isbn=978-0-511-37141-7 |edition=3rd |location=New York |oclc=192048246}}</ref> He claimed that, on the contrary, a theory with more absurd assumptions has stronger predictive power. He argued that a theory's ability to theoretically explain reality is irrelevant compared to its ability to empirically predict reality, no matter the method of getting to that prediction.