Economists continue to use quantitative methods, becayse they are possible to manipulate the information in consistent and reproducible ways, combining figures, comparing data, examining rates of change, etc.

Dear Mohammed, Economics deals with economic activities of all, individuals, groups and economies, and even the whole world. Though I am not an economist (my economist son specializes in game theory and industrial organization; and I interact with him, sometime). It deals with both, macro (all) and micro (individual) aspects. And, modelling is possible in both the broad areas. They do suggest, how best to overcome crisis. Like Keynes said, to fight depression, create jobs: if there are no jobs;: "just ask people to dig holes and fill them up," which leads to creation of demand. Now, the mathematical models have made improvement on this fundamental principle of fighting the recession.

Economics is a new, although non revealed Religion, since it argues that we have to do this and that in order to maximize our objective function (profit or social welfare). Of course there exists the Arrow's impossibility theorem:

http://en.wikipedia.org/wiki/Arrow's_impossibility_theorem

Personally, after studying an intensive MPhil program in Economics, I am sure that they simply don't care about the predictability of theory, they just care about conquering higher positions in the Bank sector, big multinational organizations like EU, IMF etc. In a few words: Every body knows that the Standard Model cannot predict anything, but they use it in a normative sense: If you cut the wages, then ... and finally ... the growth will start again and bla bla bla...

(See the failures of IMF in Greece recently.)

@Debi

Thank you Debi for your answer. These are only normative presriptions.

Economists have been able to explain things only ex-post, using historical data at times.

Applying economics to Industrial Management, the parameters to be measured are both in Quantitative and Qualitative forms....ie., Countable scale and descriptive scale.... There are certain outputs which are felt and cannot find a fitment to "within numbers", hence descriptive scales are also in vogue...

Quantity Scale - Production, Productivity, Utilization, Efficiency, Strength, Hardness, Temperature, Humidity.... etc.,

Qualitative Scale - Satisfaction, Empowerment, Effectiveness....etc.,

Models cannot predict the behavior of a specific person but sometimes they can predict overall trends (e.g. if demand will increase, prices will probably increase, but then, demand may decrease). Thus, this can be better than nothing.

I think the mathematicians who calculate "risks" are using the false mathematics or they are getting some money to conclude that the "products" have small risks! I checks the books of mathematics that they teach in economic departments. Nothing exists e.g of fuzzy logic, and non-classical mathematics. I believe that this is one basic reason for the situation that have been imposed on some countries, e.g. Greece!

The predictiive ability of models depends on (1) the accuracy of the assumptions to create the model, (2) the accuracy of the inputs for a specific case and (3) the completeness of the inputs. If the assumptions used do not (or cannot) account for a specific factor (or unknown factor), the model will be vulnerable to pertubations in that factor. If the model is using inputs (data) to make a prediction in a specific case, but the input data is incorrect, the model cannot make an accurate prediction. If the model is using accurate inputs (data) to make a prediction in a specific case, but the data are incomplete, there will be a greater level of uncertainty in the predicted result. Models make predictions of aggregate outcomes based on averages of anticipated behaviors, choices, and responses of thousands or millions of individuals. Some models have been highly accurate. Others have been less so. And politicians can always choose to ignore the predicted outcomes (and many do).

Philosophical principle of quantitative to qualitative changes in economic science has not been canceled.

http://en.wikipedia.org/wiki/Quantitative_analyst Quantitative analyst

http://en.wikipedia.org/wiki/Qualitative_economics Qualitative economics

We try to use quantitative researches for finding the qualitative changes in economics. But this is the very hard task.

@James Bowman

Thank your for your scientific answer. I would just like to add that the assumptions themselves are often qualitatively variant, so models take a snapshot of reality. As such, predictions present discrepancies between what really happens in reality and what the models says will happen.

Dear Miranda: Models can be analytical as well as normative or prescriptive. While the former are focused mainly on the causality of the occurrence of an event or a situation, the latter is a suggested solution to a problem. We can not say that all economic models are prescriptive.

Dear James, the Economics literature is full of endogenous and exogenous variables. The problem is not the accuracy of the data input, since every regression is a projection and given that, if errors have zero mean, we have no problems at all. The problem is that:

1)Either we have sticked with Standard Neoclassical Model, like living in 1870 where the inventions of Thermodynamics were the top knowledge

2)Or we are using Econometrics, tons of it, with so many sub-branches but an overall R-squared of 0.05!

So, probably the mathematics used in Economics are either not updated (1870) and false, as Costas wrote, or simply cannot be applied (since R^2=0.05)

At any case, Economists do exactly know their lack of ability and, they just continue to reproduce normative teachings.

The problem would be one more of a scientific debate, if they were not able to cut our wages and our living standards...

I agree fully with Respected @Kamal Eddin Bani-Hani that hese models should take socio-political factors in their equation, not only BLIND and predicted figures and numbers, perfect.

Dear Kamal,

Unfortunately the only parameter is "profit" no matter what!

That's true, unfortunately.

Demetris Christopoulos, agree, the best modern mathematical tools must be utilized.

Dr Costas Drossos, mathematical models do not have "intentions" or "motivations". Politicians will use the models and results for good or bad which is beyond the scope of whether the model itself is useful or not.

Dear friends, I tend to consider the importance of mathematical models to define public decisions. The important thing is to consider what types of models that criticism should be raised? I understand that the points raised out by our friend Mohamed are closely linked to econometric models (that are essentialy statistical models, not mathematical) and general equilibrium models. I have worked and considered the use of modified versions of economic modeling, to consider aspects of bounded rationality of agents (and consequently the absence of maximizing behavior), and lack of equilibrium (or at least the irrelevance of it). These models are called agent-based models and are very close to the consideration of more realistic behavior of human behavior. What do you think about that, friends?

Dear Thiago, did you find recognition for your (negative, according to orthodox theory) results? This is the key question, I think.

May I recommend Gary Becker's publications to you. His pioneering work on discrimination and his volumes on human behaviours and the famly all explain the behaviours of individuals. I understand sociologists read his works with great interests.

One obvious answer is that a government wanting to know what might happen if it changes it's economic policy only needs to know how people are affected on average rather than how each individual is affected. That is precisely what a standard econometric model does. Obviously, there are always alternatives and a lot of work in economics now looks at quantiles in the distribution so we understand more about people, firms or countries at the high and low ends of something interesting to measure. Getting back to my government example, if you read a bit around median voter theory then you will see why the average is often adequate.

Dear Demetris, I have not worked with evolutionary models for predicting crises (the focus of my work is another one), but evolutionary theory and in consequence evolutionary models has not been well accepted by orthodoxy yet. An interesting opinion article writed by Farmer and Foley (http://www.nature.com/nature/journal/v460/n7256/full/460685a.html) discuss the relevance of agent-based models (ABM) for predicting crises, and a presentation of Farmer (http://www2.econ.iastate.edu/tesfatsi/ABMForEconomics.TalkECB2014.JDoyneFarmer.pdf) is useful to understand the importance of ABM too. Some projects (as EURACE project) has tried to create an evolutionay model for whole world. Let´s follow how it will develop.

http://www2.econ.iastate.edu/tesfatsi/ABMForEconomics.TalkECB2014.JDoyneFarmer.pdf

http://www.nature.com/nature/journal/v460/n7256/full/460685a.html

A very interesting question indeed. Actually, economists have started to consider humans like intelligent robots or computers which always try to maximise profit and minimise effort. Not denying that to certain extent it is correct, but at individual level it is very hard to predict human behaviour as an individual very often behave according one's whims and wishes which are not likely to imitates by computers and intelligent robots who according to inbuilt logic to maximise profits and minimise effort. At the collective level it is almost impossible to predict human behaviour as psychology of crowd cannot be predicted because several variables are not constant throughout the globe as culture, social organisation, taste and preferences and philosophy of life (e.g., materialism and spirituality). If economic calculus works among a community, it is not necessary it works everywhere. A historical, soio-cultural economics may deal better the problem of people rather than reducing people to just numbers in economic calculus.

Economist formulate theories that tries to fit the data. If the empirical testable consecuences of a theory is rejected by the available data the theory must be dismissed since doesn't explain the quantitative facts. Hypothesis are rejected using econometrics which is based in the use of quantitative measures. Econometrics can accomodate heterogenous individuals and since the macro models dont't predict very well in same cases then there is an upsurge of microeconometrics methods to test hypothesis implies by models or theories. This is done in the sciences that can measure something and in my modest opinion is the way to reject implausible models or theories in economics. There is a need to measure the phenomenons or at least to try. This is very different for a "religion".

Dear Marcelo, the view you mentioned is a fraction of Economics. The mainstream says that: "we don't care about the validity of the results but only for the validity of the assumptions", so Economics is far from characterized as an experimental science. It is absolutely normative, even when Econometrics is involved in. That's the reason why all 'orthodox' articles involve an equilibrium state as an absolute requirement in order to be accepted for publishing.

Dear Demetris, Normative and empirical knowledge are totally different things as you certainly knows.Normative statements are judgmental whereas empirical statements are purely informative and full of facts. Normative statements pose questions, they desire, and explicitly say how things should be. On the other hand, empirical statements try to be neutral and state the facts as they are without passing any judgment or making any analysis that may be biased because of personal leanings of the individual or mainstream thought. In economics both normative and empirical theories are in vogue. Empirical statements are objective, laced with facts, and informative in nature. On the other hand, normative statements are value based, subjective and ones that cannot be proved. Over which type of knowledge it would be better to construct a science or give policies recomendations?

As economics is essentially about numbers, I do not really see a problem with the use of quantitative methods per se. Economic outcomes at the micro-scale are also data. However, I do find heterodox approaches which try to take a more qualitative approach interesting and worthwhile pursuing.

The two main strands of quantitative methods in economics are econometrics and economic models. I personally find the use of economic models such as CGE a little more problematic. Economic modelling is more an art-form than science and results should be interpreted with a great deal of caution. Very often, these models are based on strong assumptions and will show effects that have been theoretically implied anyway.

Econometric tools are used to find relationships in data. As I see it, findings provide evidence for hypotheses rather than uncovering the "truth". Undoubtedly, the quality of studies varies significantly. Also, some parts of the research community seem to be reluctant to adopt or even acknowledge new, and arguably more powerful, statistical approaches such as random effects modelling for panel data.

With regards to aggregation of behaviour, microfoundations research tries just that and with increased computing power it will be increasingly possible. For prediction challenges (see for example https://www.kaggle.com/competitions), machine learning approaches appear to be superior. At the moment, researchers try to evaluate the potential of large and messy data and new quantitative analytic approaches.

A community is made of individuals. Thus a social welfare function is the results of the aggregation of individual preferences about welfare. There are many models of a social welfare function according to the different moral values of a society.

Macroeconomists create models that describe the behaviour of economic systems in different situations. Econometrists have the task to estimate the parameters of economic models according to the data available. Policy makers, given a specific situation, should use the model which better represents that situation (for example that created according to the available statistical data by a central bank), and use it for pursuing social welfare aims.

No macroeconomic model can perfectly represents the real behaviour of an economic system, since an economic system is a dinamic system, thus error terms are always considered. Quantitave analysis is important, as it is qualitative analysis, and both have to be considered by a policy-maker.

When policy-maker behaviour is considered, it is important to be aware that the economic criterion is not the sole criterion of choice.

For individual behaviour we have the increasing work in behavioural economics. So the field is expanding. Economic models are rather rough, due to assumptions and limited data, and of course erratic behaviour of humans can also be a problem, we are not all perfectly informed nor rational, i.e. 'inhuman'.

Having said this, I think economic analysis with mathematical models is very important to find links between observable variables, but we should never kid ourselves that this is 'the truth' and 'the way things have to go'. Luckily humans are a bit more complicated. It is well know also that people may follow mass movements, a rumour, a hint can tip behaviours, hard to model.

Economic theory is still young, data is hard to assemble and we all should see mathematical theories as a simplification of relationships between big factors, but we also should not fall into the trap of think that decisions in economics should be taken without quantitative analysis, I do not think we would improve anything by shifting to a qualitative philosophical or psychological analysis of economics. We need both.

Models are only one tool to use, the mistake is to take it as 'the only' tool.

When we consider Economics we have to think that it is a complex science, more than 100 years old, today distinguished in many branches. The main branches are: microeconomics (which studies the rational economic behaviour of an individual (such as a consumer and an entrepreneur), macroeconomics (about the behaviour of an economic system) and economic policy (which study the rational behaviour of a policy-maker the task of which is to change the behaviour of the economic system in order to pursue specific social aims).

Therefore, when we consider a collective behaviour we are in the field of macroeconomics. The most used macroeconomic theory by policy-makers is Keynes' macroeconomics (conceived after the first world war). It is a theory conceived to be useful in practice and it takes into account measurable uncertainty (risk) and non-measurable uncertainty, bounded rationality and also animal spirits.

Central banks have good models which describe the normal behaviour of an economic system as result of the collective behaviour, and error terms are always considered.

Why economists are not able to predict deep crisis such as 1929 crisis or 2008 crisis?

Because they are similar to natural extreme events, since their probability cannot be predicted. Can a hearthquake be predicted? No!

This might help:

http://predragrajsic.blogspot.ca/2011/01/pitfalls-of-friedmans-positive.html

Economics is a science and as anyother science it is a work in progress, which starts by defining its concepts, objects, basic laws and procedures for measure. At the micro economic level this is done through accounting. Most of the people here do not realize the level of sophistication there is in the accounts of a big company, and the accounting system is as fair as possible a representation of what happens : when a company fails usually it is easy to see why. Economics do thesame at the marcoeconomic level, and now consider accounting for welfare, health, eductation,...All this endeavour gives a clear, and workable, representation of what happens. It can explain what happened, and this is still a considerable improvement : so many people do not understand that you must collect money before shedding it !

Now these data are used to build models with a predictive capability. Any well managed company have such model, and almost all developped countries have them. They work reasonably well, and are seen as indispensable tool for any government. For those who believe that the dismal science is always wrong, compare what happend in the 1929 crisis and what happened in the 2008 crisis : that big mistakes have been avoided is a proof that the conomists cn be useful.

Now economists, in order to improve their sciences, build theories which are morecontroversial, as it should be, and they must be checked, by measures. So quantitative models are the salt and butter of any economist.

By the way, economists try to understand what reality is, even with simple, crude, reasoning, but they are fully aware of their limits. When they meet a problem, they do not invent a "dark matter", a Higgs boson, or some other exotic concept.

Economists rely on quantitative methods because i this way their models are more easily put to a test (thus conforming to the requirements of scientific methods as developed in the 16th century and further refined by contemporary epistemology). There is no need to have a perfect model of the individual in order to model the behaviour of aggregates (firms, countries, cities, etc.) indeed the search for micro-foundations is the holy grail of the most extreme ne-classical orthodoxy we can live well without

Economics relates with subjective aspect of human behaviour which is difficult to predict so there is need for quantification of it. However, some economic theories/models such as development theoris have given right prediction for formulation of suitable policy or plan. Karl Marx theory of economic development predicts class-war/conflict if the wealth and income are not fairly distributed among nationals.

Karl Marx predicted that the class-war-conflict would start in the old industrial countries like UK, France and Germany. En vain, the unpredictable became full reality though Marx' predictions!

Indeed, that prediction turned out to be true, but aren't we trying to make a general case from singular exceptions? 

How many other predictions were wrong? 

Karl Marx was not an economist and marxism is not an economy theory, (actually Marx used what is called "classical economy" from A.Smith). This is a - sad - fact that some academics still mix some results in economy with some marxist statements,  Marxism is loaded with so much other discourses that it is better to keep the matter straight.

"How many other predictions were wrong?" : this is a common misunderstanding about economics. Almost all coutries, companies use models to forecast their activity. They are quite satisfying, at least for short term predictions. This is usually sufficient because politicians and managers are unable, or not willing, to see beyond that. For long range prediction they are quite good, for instance to assess the problems that countries face, and the possible solutions. For instance it is clear for any economist worth his salt that most Arab countries will face a very painful situation due to a too fast growing population. The trouble is not with models, it is with the understanding of their results.

I don't think it is important whether Karl Marx is considered an economist and his theory an economic one or not. He still contributed an immense insight into the working and issues of a capitalist society. His theory is much more valid today than many other valid economic theories expressed at a similar time.

With regards to  economic models, they are actually notoriously bad at predicting future outcomes. Economic models systematically fail at predicting crises and are outperformed by naive forecasts for medium range forecasts. I also think that it there is more value to try make sense of current economic systems than predict the future outside a reasonable horizon. Having said that, short term prediction still have a value and provide an essential baseline for budget estimates for example. However, economic predictions are definitely more an art-form than science. 

To Pavel,

About Marx : his theory, linking technology,economic organization, political power, is its specificity, and, without betraying it, this idea cannot be removed. It has its own merits, for instance to understand the USSR or China. But this is a fact that economists who criticize free market economies about inequalities (among others) suggest solutions which are politically oriented, and are themselves politically involved.  One can reasonably use some basic sociological or political reasoning without the need of the marxist mantra. To say that ologarchs grab wealth thanks to their relations with the political power is sensible, but it would be certainly wrong to define present Russia as a country where a new capitalist class has risen.

Models : from my personal experience, in the Administration as well in Companies, they are quite satisfying. The issue is that, because of their existence, governments and management take action, so one cannot check really the accordance between predictions and realisatons. Of course there are exceptional circonstances (such as the 2008 crisis) where they have failed. But this is not say that they are not perfectible. The big difference between Social Sciences and Natural Sciences is the role of experimentation, which is limited inEconomics.

Two quick answers: 1) The majority of economists do no recognise that collectives cannot be reduced to individuals and 2) who says that collectives cannot be treated quantitatively? This is what for Econometrics was invented in the 1930's...

Individual preferences justify collective preferences, therefore the important issue is how to pass from individual choices to a collective choice. Individual preferences can be known by observing individual behaviours or by asking to  individuals their own preferences (about environmental management, for example) through a questionnaire.

These individial data may be used for estimating the demand function for a specific environmental management, for example, through regression analysis.

Voting rule are real procedure which permit to pass from individual preferences to a collective preference. Policy-makers are generally elected through the majority rule.

Let us clear up a little bit the terms of the question. "collectives cannot be reduced to individuals". This it a these that there are "pluralities" that cannot reduced to "elements".  This is exactly the non-analytic approach to study things. However there is the analytic one: That a plurality can be reduced to elements. This is exactly Cantorian Set Theory. Non-analytic mathematics include Algebraic Topology, advanced algebraic geometry, Frames and locales, etc. Furthermore fuzzy sets, many-valued logics etc. fall more into no analytic staff.

Econometric research has helped us a lot to understand not only collective but also individual behavior. But it is obvious, that observing regular behavior is not able to predict unexpected deviations. If we could successfully predict a crisis, and inform the concerend, the crisis would not occur, but another crisis would show up. You should not blame econometrics for something no one can predict and should rather find the usefull aspects.

1. "none of these theories and explanations have been able to predict past and current crises" . It is necesary to come back to the efficiency of economics and models. Economics science can be studied from an academic point of view, but it is mainly used to provide advices for the management of companies or states. The models can forecast, quite well, the inbalances that can appear in a system, why, and provide solutions to avoid big troubles. This is done every day, and because corrective actions are taken what happens does not conform to what has been forecasted. Of course there are still some unexpected crisis, but because of the actions they do not become worse that what could be feared. One can disagree with the solutions taken, but one cannot deny that they work in that they correct the problems which have been evidenced:: the examples of Portugal, Spain, Ireland or even Greece are clear.

2. About collective / individual actions : the standard Pareto's model of general equilibrium, even very simplistic, shows at least how prices and market can work, and this is actually a big feat to rely Economics theory with the real world. But one can go further, and many studies have been done for instance showing the impact of transaction costs, or insufficient information, on markets. Moreover one can show how, the interactions of economic agents on markets lead to the apparition of typical behaviors (for instance in a given industry the companies tend to adopt a small number of business models and sizes).

Dear jean claude, I can ensure you that, at least for the case of Greece, your quote:

"...:but one cannot deny that they work in that they correct the problems which have been evidenced::..."

is not true.

As for the main question:

I think, that Economists cannot abandon themselves, so, despite their failures, "what they have is what they sell", to quote a popular trade phrase.

My problem is their arrogance and belief that they have explained the economic system by only a model (the neoclassical synthesis), so they are coming and cutting wages and welfare from all of us, for our long-term good (where according to Keynes, "we will all be dead").

Dear Demtris,

This is not really the place to discuss the issues facing Greece, but if you believe that without the actions taken Greece would have been better off, look at Argentina. The problem is simple : when your pocket is empty, you cannot purchase any longer. When the state is broke, cannot pay its debtors, everything stop, Greece could not import anymore, you would have no longer oil, electricity, ... And over all the aid package that hs been given to Greece is worth more than 300 b€ and it makes sense that the donors impose conditions : beggars cannot be choosers. This is sad, but even North Koea has to live in our world..

Economists also tend to look at results too narrowly–from the point of view of a business that can expand, or a worker who has plenty of money, even though these users are not typical. In real life, the business are facing increased competition, and the worker may be laid off because of greater competition.

I think this question has many IMF lovers, so goodbye (3 downvotes plus some more are enough)

PS Jean Claude, I simply disagree, but, as you correctly wrote, this is not the "the place to discuss the issues facing Greece".

Dear Demetris,

Sorry for the downvote, a practice that I stringly disprove.

The issue, on a scientif site, is "Can Economics pretend to be a science ?". Quite often when a thread is started about social or economics questions, some people do not aknowledge that there can be reliable, efficient, economic theories. And Economics begin with accounting. If one does not accept the basic facts as reported by the accounting systems (the national accounts are organized by international panels of independant experts - I have been one of them - and they do not take any order from the IMF or other bodies) there is very little place for any scientific discussion.

Of course not all notions can be reduced to quantitative norms, like happiness but we can quantify the surroundings of happiness like health, education, free of pollution, income etc.

Quantification is possible ,as good for micro-economics as for macro-economics.

I made applications in both fields, see my biblio.

Society has a structure, and commerce is a result of opposition and war. In 1713 England win a war to France and Spain and as consequence, England monopolize slaves commerce in America and enforce his control on maritme routes. Economy has limits imposed for war and politic. In 1720, in England was run a ponzi scheme where are involved the king and parlament aproves a law,  this bubble knowed as "South Sea bubble" cause a major breadown in commerce and industrie. Isaac Newton lose 20000 pounds in th bubble. Now, society represented by state is creating environment where commerce, industrie and finance are evolving,  But as state did create bussnes environment, also can newly recreate conditions for economic development. In 2008 bubble, crisis was gunned by banks associated with USA govern and were bailed out by govern. Economic theory has nothing to speak in political limits were economie live,

I don't like the idea of giving a real entity to the "collective". We observe individual behaviour, and we can measure variables beyond the individual, which are the result of the behaviour of many individuals (for example, the price of an asset / commodity, the bankruptcy of a firm). Economics is about individual decision making and about measurable variables that are beyond the individual. In this sense, economics would be a legitimate science. But is not physics, due to the complexity of human behaviour. Also, economics is about design (as Alvin Roth argues in his Econometrica, 2002 article).

Because the use of quantitative methods does not imply,of its own, a fundamental belief in reduction to individuals. It is rather the philosophy behind the methodology that should be called into question.Especially when a particular flavor of economic philosophy in the form of methodological individualism is still undergoing clarification.With some holding to the individual as an atomistic unit of analysis for the understanding of the macrostructure of the economy (solely and only in the individual).While others hold to a less restrictive belief that admits social interactions between individuals.

https://www.google.com/url?sa=t&source=web&rct=j&ei=yYVDVZnqHaSMmwXRw4HQBg&url=http://down.cenet.org.cn/upfile/57/20077315171180.pdf&ved=0CEUQFjAH&usg=AFQjCNGPtuD44Ohnle26c6XsmnA-FIandQ&sig2=KOWgFm9UIVI4HMvRS8LO9g

you are mixing a lot of things. Please consult some good handbooks on micro- as well as on macro-economics.

Without being egocentic, for instance consult my book: Optimization Methods for a Stakeholder Society, A Revolution in economic thinking by MOO, Springer, 2004.

Dear Mohamed , yours is a very Interesting but a little ambiguous questions.

In fact it contains a statement "that individual behaviour cannot be aggregated to collective behaviour" and a question "why using models and quantitative methods".

Very briefly my answer to the questions: models are different from relaityy since they are semplified versions of it in order to be dealt with quantitative models. Why are we (economists) using them? because a model is a logical tool through which you are compelled to state your hypotheses and follow a certified method of deductions (usually algebra or calculus). Thus if you are not convinced with a statement od someone other you can easily check whether his/her hypoteses are not convincing or if he/she has made a mistake. This is the way science works! (this also may explains why in other so called social sciences, which lack the use of models, e.g. sociology you have many competing explanations of the same phenomenon and there is virtually no way to distinguish between them).

The statement is turned upside out. it is not that individual behaviour cannnot be aggregated to collective but that we observe collective behaviour and we would like to know how this behaviour emerged form individual decisions and actions.

The 2005 Nobel Laureate in Economics Thomas Schelling has an interesting and easy to read booklet on how seamingly inpredictible collective behaviours can emerge for apparently very distant individual preferences and decisions.

You may obviously not agree with it, but I think you should give economics a fair chance!

ooops I forget to cite the booklet's title.

Its: Micromotives and Macrobehavious

There is a strategic difference between macroeconomics and microeconomics and your question does not allow for this. Quantitative and qualitative methods apply to both, but due to the different formulation of the various theories the quantities being dealt with by the two kinds of theory are completely different. Qualitative methods explain but are not scientific in the numerical sense and depending on the philosophy of the explainer will give varied and unsatisfactory results.

The reason why quantitative theories in macro have not been satisfactory in the past is because most of them do not properly include all of our social system. To do this properly one must allow for all of the functional aspects where the various parts interact. Most people see that is being too difficult to model it all, so they use only part of the whole system and it gives them the wrong results! In particular they include land with capital but the two effects are different.

My way of modelling does cover the whole of our social system, after making certain assumptions about taking average properties of each role-playing entity and for idealizing these entities to be as simple and unique as possible. Only 6 are strictly necessary and the resulting model is fully comprehensive, see "Consequential Macroeconomics--Rationalizing About How Our Social System Works" and for the diagram: wikimedia, commons, macroeconomics: DiagFuncMacroSyst.pdf (below) which needs enlarging to see all of its effects.

Dear David,

Thank you so much for your precious explanations. Indeed, it makes perfect sense. You have formulated my problem statement very clearly. However, in any case, we have to make assumptions about human nature; assumptions which concern something unknown (human nature) !!

I would be very interested by what your thought are in this regard.

Once again the subject should be treated here as an aggregate of all the different human natures, but applied to the various decisions that arise from the need to bring disturbances in the system back into a state of equilibrium. This matter is dealt with in my book in detail, it is a bit too much to explain it here but it boils down to the need to decide if an imbalance should be balanced back through an opposing entity or its effect should be reduced by substituting negative amounts relative to the disturbance, within the entity itself. This probably seems to be mysterious on first reading.

My book may be viewed for free if you send me a message to  [email protected]  where over its 320 pages a long section on decision-making provides the formal explanation about human nature within the system.

Thanks for the references and your time.

It seems to me that they continuo to use quantitative methods, since all these bubbles are for their profit! Under the motive: "Profits are ours, loses are yours"  they produce virtual money, which we have to convert to real money, by being "over-loaned" 

Quantitative Approach helps the researchers to draw economic inferences just near to reality. Man's individual behaviour is unpredictable but his average-behaviour is predictable, it needs quantitative approach.

Quantitative methods are used to prove the existence of economists. In other words, they do things that nobody can do because it is very complicated.