Wrong In Theory Is Worse Than Wrong In Fact
Recently, Tucker Carlson has committed the all-too-common mistake of suggesting that evolution by natural selection is an unproven idea, because evolution is merely a “theory.” As he put it on Joe Rogan’s podcast, “Darwin’s theory’s totally unproven – that’s why it’s still a theory, almost two hundred years later.”
This is an elementary misunderstanding of what “theory” means in a scientific sense. In the minds of people who make this mistake, theories are as-yet unverified ideas that need to be proven through the accumulation of facts and evidence. But that is a mistake. Theories are explanatory frameworks that tell us what facts mean. To put it another way, facts are not what prove or disprove theories. Theories are what explain facts – and allow us to predict future facts and evidence we should expect to observe in light of that theory. To say that evolution remains a theory after two hundred years is to say that evolution has remained a successful framework in its explanatory and predictive power regarding the facts and evidence discovered over the last two hundred years. This is not the devastating criticism Carlson seems to think it is. It would be just as off-base to suggest that the germ theory of disease is an unproven idea, because it remains a “theory” despite being proposed as far back as the 1500s.
Just as facts of biology need a theory to be made intelligible, so too do facts about economics. Just like with evolution, it’s not at all uncommon to find commentators dismissing the importance of economic theory because it’s just theory – whereas they engage in the presumably more sophisticated practice of simply dealing in facts. Paul Krugman provided a wonderful explanation of how this goes wrong when discussing William Greider’s book One World, Ready or Not: The Manic Logic of Global Capitalism:
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.
Needless to say, I have little hope that the general public, or even most intellectuals, will realize what a thoroughly silly book Greider has written.
Some of the statements we make are factually wrong, others are theoretically wrong. It may sound like the former is the bigger error, but the latter is what really muddies our understanding. This is because, to repeat myself, we need a theory to tell us what facts mean. A mountain of correct facts interpreted by a bad theory will leave one badly confused about how the world works.
For example, Congresswoman Alexandria Ocasio-Cortez once made the following comments about the low unemployment rate:
Many people responded to this by pointing out that she was simply factually incorrect in her assertion that “everyone has two jobs.” At the time she made that statement, the percentage of workers who held more than one job was hovering at an all-time low. She claimed the unemployment numbers were driven down because the number of people working multiple jobs was going up – but that was factually incorrect, because the number of people working multiple jobs was not going up as the unemployment rate fell.
But her statement being factually wrong was, in my mind, less serious that the fact that her statement couldn’t have even theoretically been correct. The unemployment rate isn’t decreased by people working multiple jobs. If anything, people working multiple jobs would have the effect of keeping the unemployment rate higher than it otherwise would be, not lower. To see how, consider this highly simplified example.
Imagine a town with ten people in the labor force. To be in the labor force means either having a job, or not having a job, but actively looking for one. Suppose eight of the ten people are employed, and two people are unemployed and looking for work. In this case, the unemployment rate is 20%. Now, suppose a new job as a night watchman as a factory is created, and two people apply for that job. One of the applicants is unemployed, and the other applicant is employed but looking to take on a second job. If the unemployed applicant gets the job, the unemployment rate would fall from 20% to 10%. But if the already employed applicant gets hired and starts working a second job, the unemployment rate would remain at 20% instead of dropping. (Also, notice I chose my words carefully. It’s not strictly the case that working multiple jobs raises the unemployment rate – the rate here is unchanged at 20%. The idea is that working multiple jobs keeps the unemployment rate “higher than it otherwise would be,” and it certainly wouldn’t drive the rate down.)
The big problem with the Congresswoman’s claim isn’t that she got her facts wrong. The big problem is that even if she was correct on the facts, she still wouldn’t have understood what those facts actually meant regarding the unemployment rate. This is why it’s so important to have a good understanding of economic theory – because substituting incorrect facts with correct ones won’t do any good unless one has a proper theoretical framework to understand those facts.
For example, if I was challenged to explain why I thought the economy was doing poorly despite a low unemployment rate, here’s an answer I could give that is at least theoretically correct:
Yes, the unemployment rate is low. But that’s only because so many people have given up hope on ever being able to find a job. As legislators continue to pass regulations that make employees more and more expensive to hire, more and more of the lowest skilled and most vulnerable workers are being priced out of the labor market. Eventually, they give up on ever finding a job, and when they do, they’re no longer in the labor force, and no longer count as unemployed. So even though the unemployment rate is low, it’s not the good sign it might appear to be.
This explanation might be factually wrong – to resolve that, we’d have to look at labor force participation rate data to see if people have in fact been dropping out of the labor force. But this explanation is at least theoretically correct, which means finding out the factual claim is wrong can actually lead to an improved understanding of the situation.
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