Chocolate Math

(Dusting the ol' blog after a long time..)

As I begin a career in academics, I have been thinking of what I call, the academic SPECTRUM of research. At the one end there is the empirical stuff which is very data driven and essentially an exercise in statistics. At the other end is the theory, which is driven by abstract mathematics.

What is amazing is how mathematics has really become the ONLY language of research - there is absolutely no other recognized way to communicate ideas in academics. Now, whether this is a good thing , especially in the social sciences, is a point of debate. (which, sadly, nobody wants to get into).

An uncharitable view of economics is that it is an elaborate exercise in "mathematical curve fitting" . By that, I mean - you pick up some nice smooth curves (log x, e to the x etc) from the mathematicians and then write stories to link them up with real-world phenomenon. Now, obviously - the properties of the above curves have been extensively researched by the math guys, so over-enthusiastic economists try to ascribe real world meanings to every one of properties and call them by grand names "Law of ..." this and that.. How else would you make a discipline out of it ! (The math guys will be like, whoa! dude - SLOW DOWN)

Anyway, the justification is that these are on a  "best efforts" basis. I buy that notion. After all, mathematics helps keep your thinking straight (and these are Krugman's words). But really, the most important thing that people seem to forget is this :

Math can only take you so far. We are nowhere close to the level of sophistication required to handle the real-world. Think of it as playing with binary digits while real world phenomenon requires the notion of complex coordinates.

More practically, what does this mean to all the academics doing research in economics & finance ?

Here's an analogy :
Imagine math as pure chocolate coming from the cocoa tree. There is a long line of economists lined up in front of the tree. At the very end of the line, far away from the tree, are the "white chocolate" economists - who use a little bit of math (chocolate) but a LOT of milk, sweeteners etc - in the work they do. They are far away from the "pureness" of the tree and closer to the town (real world) where they sell their economic ideas (white chocolate). At the very beginning of the line, are the "dark chocolate" economists, who use a LOT of math and very little of anything else. They don't really have much business with the town, most 'consumers' can't digest a lot of this variety. Right ON the tree are the mathematicians themselves ! Here, the chocolate cocoa is BITTER - Imagine, these guys must be really hard-core to like that stuff.

So, a potential researcher should decide which section of the line he wants to belong to. For myself, I can't be ON the tree ! Pure cocoa is too bitter for me. I'd like my feet grounded, though I prefer living in the forest rather than a being a man-about-town ;)  So, here's to the dark chocolate days !!