The Positivist Fallacy

There's a bizarre line of reasoning I often see when discussing issues of economics. It goes something like this:

"Well, sure, your theory says such and such, but that's all theory-- I'm looking at reality here. My political views are superior because I don't rely on theory to inform my beliefs-- I just look at statistics and go from there."

This thinking is really just a rehash of the positivism popular in the early 1900s. It fell out of favor because philosophers realized that it's impossible to derive knowledge from experiments without some kind of underlying theory. Paul Krugman sums up the problem in an essay criticizing William Greider (The Accidental Theorist), another naive positivist:

"I think I know what Greider would answer: that while I am talking mere theory, his argument is based on the evidence. The fact, however, is that the U.S. economy has added 45 million jobs over the past 25 years--far more jobs have been added in the service sector than have been lost in manufacturing. Greider's view, if I understand it, is that this is just a reprieve--that any day now, the whole economy will start looking like the steel industry. But this is a purely theoretical prediction. And Greider's theorizing is all the more speculative and simplistic because he is an accidental theorist, a theorist despite himself--because he and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day."

So why is this patently absurd thinking so common? And why is it especially common with economics?

Human brains have evolved to look for patterns. The world is supposed to make sense. To someone who hasn't studied academic economics, it's incredibly difficult to make sense of the economic world (speaking from personal experience). As a result, many people give up trying and resort to positivism. This approach is supposed to avoid the messiness of theoretical economics.

Ironically, economics isn't very messy if you take the time to learn it. It's odd that it's popularly viewed that way-- maybe this is because people don't like the idea that their behavior can be studied scientifically, or maybe it's because economists in the media usually don't agree on how to apply economics to current events. This is not something I'm prepared to try to explain yet-- maybe later.