Schedule a Free Consultation

facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
What is the Science of Economics? Thumbnail

What is the Science of Economics?

“It is a dreary, desolate, and indeed quite abject and distressing one; what we might call, by way of eminence, the dismal science.”

-Scottish essayist Thomas Carlyle


Carlyle’s description of economics has been popular for over 200 years, albeit mostly for his depressing depiction of it as “dismal”.  Be that as it may, dismal or not, he accurately cast economics as a “science”.  Over the past few years, the term “’science” has appeared in the press and been used by the media more than at any time in history, fueled mostly by debates about climate change and COVID.  Unfortunately, much of this rhetoric has revealed a vast ignorance about what science, or a science, is.  First of all, science is a “process”, not a thing.  It is a way of discovering things about the natural world by comparing (testing) competing hypotheses, selecting those most supported by observations and replication, and revising or rejecting them as the data indicate.  It is an endlessly ongoing process – science is never “settled”.  There are some things that are observationally true, and hence, essentially undebatable, such as the fact that water is composed of two atoms of hydrogen and one of oxygen.  But questions about complex systems remain works in progress (What is gravity?  How was the solar system formed?  What was the source of the Earth’s water?  What is the origin of plate tectonics?  And on and on).  The media is replete with references to the “settled science” of climate change; nothing could be further from the truth.

Economics is usually referred to as a “social” science as opposed to the “hard” or “natural” sciences (physics, biology, geology, etc.).  Economics is concerned with how people use and distribute resources – what could be more natural?  Economists form hypotheses, test them, and revise and reject them just as physicists do.  Regardless of labels, economics has some “truths” every bit as real as those taken for granted in the hard sciences.  One of these things is that people (and firms) are price sensitive, they buy more of something when its price falls and vice versa (demand curves are downward sloping).  It’s only when the chicken is on sale that my grocery store runs out and I have to get a rain check!

However, it seems that recently many people, including economists and others in business, are willing to simply ignore some bedrock principles of economics.  A headline in the Wall Street Journal on January 19 declared “Peloton to Raise Price of Bikes, Treadmills as Demand Slows”.  Let’s see how that works out!  Probably like other decisions that have driven the stock’s price down 85% in the past year.  We have also heard many in the media and among the political class claiming that the huge increase in government spending in the past two years has nothing to do with the current surge in inflation and that even more government spending is the way to curb it.  Milton Friedman must be spinning in his grave.  This willful rejection of economic reality is serious -- we can steer clear of Peloton management’s bad decisions, but we can’t escape the inflation storm we are riding out.  Let’s hope some cooler heads with a sense of economic reality come to prevail before we face a real disaster.

Click here to schedule a call with a BWC advisor today.


The information presented in this article is obtained from or based on sources believed to be reliable. BWC does not represent or warrant its accuracy or completeness and is not responsible for losses or damages arising out of errors, omissions or changes or from the use of information presented in this article. The article does not purport to contain all the information that an interested party may desire and, in fact, provides only a limited view. Information presented does not constitute an offer to sell or a solicitation of an offer to buy any security.

 All investments involve risk, including loss of principal invested. Past Performance does not guarantee future performance. Individual client accounts and performance vary. BWC does not provide tax advice.

 About Beirne Wealth Consulting Services, LLC – www.beirnewealth.com

Beirne Wealth Consulting Services, LLC (“BWC”) is a privately owned, SEC Registered Investment Advisor* with offices in Connecticut and Pennsylvania. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372.

 *Registration does not imply a level of skill or training.

 © 2022 Beirne Wealth Consulting Services, LLC (BWC). All rights reserved. Reproduction or Use without permission is prohibited.