Why is prediction in social sciences like economics more difficult than in physical sciences?
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To be precise, it is easy to make predictions in economics and social sciences. What is hard making accurate predictions and knowing whether the predictions you have made have actually been accurate. There are two major reasons for this.
First, it is very hard to make accurate predictions because there are all sorts of variables that are involved in economics. For example, if we raise taxes and we predict that this will hurt the economy, there are many other things that can influence the economy. For example, what if, just as we raise taxes, a major new technology like the internet or 3-D printing is invented. The economy might boom even though taxes have been raised.
Second, it is hard to know if predictions have been accurate because we cannot run controlled experiments as is possible in some physical sciences. If you want to know what happens when you mix two chemicals together, you simply mix them together and see what happens. If you think that changing the temperature will affect the reaction, you simply run another experiment. This is not true in economics. For example, let us say that we believe that the financial crisis of 2008 would not have happened if there had been more regulation of the financial sector. We cannot simply go back, put regulations in place, and run another experiment.
For these reasons, it is very hard to make accurate economic predictions and it is hard to know whether they are correct when you do make them.
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