The question is, how did economics change its attitude to mathematics in the forty years between Håvelmo’s The Probability Approach in Econometrics and his Nobel Prize in 1989, when he was pessimistic about the impact the development of econometrics had had on the practice of economics. Coinciding with Håvelmo’s pessimism, many economists were reacting strongly against the ‘mathematisation’ of economics, evidenced by the fact that before 1925, only around 5% of economics research papers were based on mathematics, but by 1944, the year of Havelmo and von Neumann-Morgenstern’s contributions, this had quintupled to 25%1. While the proportion of economics papers being based on maths has not continued this trajectory, the influence of mathematical economics has and the person most closely associated with this change in economic practice was Paul Samuelson.

Economics has always doubted its credentials. Laplace saw the physical sciences resting on calculus, while the social sciences would rest on probability8, but classical economists, like Walras, Jevons and Menger, wanted their emerging discipline economics to have the same status as Newton’s physics, and so mimicked physics. Samuelson was looking to do essentially the same thing, economics would be indubitable and immutable if it looked like Formalist mathematics, and in this respect he has been successful, the status of economics has grown faster than the growth of maths in economics. However, while the general status of economics has exploded, its usefulness to most users of economics, such as those in the financial markets, has collapsed. Trading floors are recruiting engineers and physicists, who always looked for the relevance of mathematics, in preference to economists (or post-graduate mathematicians).

http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/‎

The question is, how did economics change its attitude to mathematics in the forty years between Håvelmo’s The Probability Approach in Econometrics and his Nobel Prize in 1989, when he was pessimistic about the impact the development of econometrics had had on the practice of economics. Coinciding with Håvelmo’s pessimism, many economists were reacting strongly against the ‘mathematisation’ of economics, evidenced by the fact that before 1925, only around 5% of economics research papers were based on mathematics, but by 1944, the year of Havelmo and von Neumann-Morgenstern’s contributions, this had quintupled to 25%1. While the proportion of economics papers being based on maths has not continued this trajectory, the influence of mathematical economics has and the person most closely associated with this change in economic practice was Paul Samuelson.

Economics has always doubted its credentials. Laplace saw the physical sciences resting on calculus, while the social sciences would rest on probability8, but classical economists, like Walras, Jevons and Menger, wanted their emerging discipline economics to have the same status as Newton’s physics, and so mimicked physics. Samuelson was looking to do essentially the same thing, economics would be indubitable and immutable if it looked like Formalist mathematics, and in this respect he has been successful, the status of economics has grown faster than the growth of maths in economics. However, while the general status of economics has exploded, its usefulness to most users of economics, such as those in the financial markets, has collapsed. Trading floors are recruiting engineers and physicists, who always looked for the relevance of mathematics, in preference to economists (or post-graduate mathematicians).

http://physics.ucsd.edu/do-the-math/2012/04/economist-meets-physicist/‎

Basically mathematics and physics provide the metaphors and models by which to understand economics. It becomes a problem when a tool becomes interesting in and of itself, apart from the domain for which it is to be used and directed towards.

http://www.amazon.com/Lecturing-Birds-Flying-Mathematical-Financial/dp/0470406755

http://ineteconomics.org/blog/institute/roman-frydman-modeling-world-imperfect-knowledge

I just stumbled across this fascinating question and I probably should offer a disclaimer before I begin.  I am part of a Math and Econ department at a university; as far as we know, it is the only one in the US.

I thoroughly enjoyed Janamejay Singh and Shian-Loong Bernard Lew's observations. I must say that I have some mixed emotions about some of the directions in economics. I am convinced that part of this is attributable to the push for certain types of publications in the tenure and promotion process at some universities along with the kinds of articles accepted by academic journals.  Certainly, this is nothing new as I heard the same thing decades ago.

Regardless, it seems to me that we have an obligation to expand the frontiers of knowledge and learning, hopefully for the common good.  Sometimes related disciplines help in this endeavor and along with it, sometimes exclusivity follows.  Although some benefit from this exclusivity, this is certainly not universal.

Going in a completely different direction for a moment, I cannot begin to describe the joy of conversing with my incredibly bright and talented math colleagues.   I am not sure what is the optimal level of math, physics, and related disciplines in economics; I suspect it depends on the background and understanding of those who seek to understand and use economics and the findings of our research. The question is relatively simple and straightforward; the answer, if a unique one even exists, is far more complex! 

It is true that mathematics does not lie but people. Most failures that are due to mathematical models are because of humans' ill intent in screwing initial data and outcomes. People put wrong and faulty input data into a system not to predict a natural outcome from a wrong input but to read a predesigned and needed result which at the end kills the whole system.

If someone builds a 20 story building with shady foundations and materials but keeping the appearances and renting to people as if it is as normal and regular high rise as other buildings, then the people will one day be buried in it, every roof will collapse on them. That is what happened to economy in the last crises.