Mises and Hayek mathematized: Towards mathematical ‘Austrian’ economics…

Nice paper on a topic which is always a stirring one – mathematicisation of economics.

This one is by Marek Hudík of Charles University in Prague. He first points to costs and benefits of using maths. Then he says use of maths actually complements Austrian school:

The paper argues that the communication gap between the “Austrian” economics and the rest of the profession could be narrowed if the “Austrian” economics becomes more mathematized. Benefits and costs of mathematization are presented: on one hand, mathematics is a language which is universal and at the same time more precise and more efficient than verbal language; on the other hand, mathematization may lead to a neglect of issues that are difficult to formalize, to a loss of a touch with reality and to a decrease of intelligibility for lay people. It is argued that none of the costs is of such a character as to constitute an argument for avoiding the use of mathematics altogether. In particular, it is stressed that mathematization is not in conflict with the “Austrian” methodology, although some aspects of the “Austrian” economics may be at the present state of knowledge difficult to formalize.

At the end he says, one should expect more math guys in Austrian school in future.

Well, the problem is not really with usage of math. It is the excess of math. It just takes the context away and puts all economics across the world in one size fits all kind of approach.

Austrian School stresses a lot on contexts and institutions (based on whatever little I have read). It will be interesting how the school balances these two things.


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