When reading the works of great Austrian economics thinkers such as Henry Hazlitt or Robert Murphy. A lot of their work is theoretical and does not use much mathematics to defend their theories. As a result, a lot of people reject Austrian economics because of its lack of mathematical models. The critics of Austrian economics even mock supporters of Austrian economics by claiming they are afraid of mathematics. However, doing a deep dive into Austrian economics and their relationship with mathematics proves that the relationship is incredibly nuanced.
Modern Austrian Economists Using Mathematics
Modern Austrian economists in general are not afraid of mathematics. After all, there are many papers published in the quarterly journal of Austrian economics that use mathematics. A notable example would be this paper called “A Mathematical Version of Garrison’s Model.” Another paper is “Mr. Hayek and the Classics; A Suggested Interpretation of the Business-Cycle Theory in Prices and Production.” In both papers, these economists try to build a mathematical model for the Austrian boom and bust cycle. Those are just a few examples of Austrian economists using mathematics.
Famous Austrian Economists’ Relationship with Mathematics
Austrian economists like Ludwig von Mises and F. A. Hayek have not rejected mathematics. The economic philosopher Alexander Linsbichler reviewed the history of Austrian economists. He points out “the most prominent representatives of the Austrian School including Carl Menger, Ludwig Mises, Friedrich Hayek, Israel Kirzner, and Peter Boettke neither provide a justification for a wholesale rejection of formalization nor actually reject it.” Alexander Linsbichler gives examples such as Ludwig von Mises praising the mathematical works of Karl Menger. Another example would be F. A. Hayek did not object to mathematics in economics, instead calling mathematics “absolutely indispensable” for certain tasks in economics.
Why Does Austrian Economics Not Heavily Use Mathematics
Even though there are modern Austrian economists using mathematics. Austrian economists praise mathematics instead of rejecting it; this raises this question: Why does Austrian economics get the reputation of rejecting mathematics?
The reason Austrian economics is not big on mathematics is that it is more philosophical in thinking. According to economist Peter Boettke,
. . .from Menger onward, the Austrian economists were not content to build logically valid theories, but to build logically sounding theories. Theories are not falsified by the data but challenge based on their logic and their relevance to the questions considered vital, and the empirical analysis is a form of illustration rather than an effort at falsification of predictions as Machlup subtly points out the criterion is intelligibility not predictability.
This is a logically valid statement because economist Peter T. Leeson argues that, “Economic analysis is a theoretical approach, not an empirical one. It is a way of thinking, not a way of testing.”
Mathematics Is Overrated in Economics
Mathematics may seem to be an important academic value, especially in a field like economics. However, mathematics has limitations in a field like economics. Economist Antony Davies points out problems with mathematical modeling in economics. Examples include measuring the economy, treating all spending as equal, or modeling human behavior. However, there are some benefits of mathematics, such as that it leaves no ambiguity. Even though mathematics has a lot of value in economics, at the end of the day, mathematics suffers from the Gödel incompleteness theorem. Under the Gödel incompleteness theorem, there are mathematical logic limits that cannot be explained in this world. As a result, Austrian economic thinking can fill some of the gaps that mathematics cannot fill in economics.
The Relationship Overall
Austrian economics has a nuanced relationship with mathematics. Modern Austrian economists use mathematics, and well-respected figures in Austrian economics do not outright reject mathematics. Instead, Austrian economics focuses on logically-grounded, theory-based economics that is still consistent despite changes in data. While complementing mathematics by filling in the gaps, mathematical models do not explain the economy.
