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Science, Faith, and the Mortgage Crisis

April 3rd, 2008 · 4 Comments

Chemist and statistician George Box said, “All models are wrong, but some are useful.” Scientists like Box don’t believe models, but use them.

On the other hand, New York Times columnist Nicholas Kristof writes, “’Then there’s this embarrassing fact about the United States in the 21st century: Americans are as likely to believe in flying saucers as in evolution….President Bush is also the only Western leader I know of who doesn’t believe in evolution, saying “the jury is still out.’” Unlike scientists, folks like Kristoff believe models, and are embarrassed when other people don’t.

Such naive faith in scientific models is dangerous. People who believe models are uncritical when they should be very critical. They fail to acknowledge that models and theories can never fully reflect reality, but only provide a more or less useful simulacrum. As a result, they believe impossible things. Why is this harmful? Physicist-turned-banker Riccardo Rebonato explains in his recent book, Plight of the Fortune Tellers: Why We Need to Manage Financial Risk Differently, how blind faith in models led to financial crisis. The designers of the models were, often enough, former scientists who discovered that Wall Street would pay them more than any university. The models applied the principles of natural science to the markets, but, like all models, they did not fully reflect reality. Part of the reality that they failed to reflect was the fact that human beings aren’t as predictable as stars and subatomic particles. The failure of the models gave us the present mortgage crisis. Former Federal Reserve Chairman Alan Greenspan’s recent editorial in the Financial Times makes a similar point.

Faith in science is unscientific. We should probably approach each and every scientific model, theory or conclusion with doubt and questions — especially those that seem most certain.

As Artemus Ward said, “It ain’t so much the things we don’t know that get us into trouble. It’s the things we do know that just ain’t so.”

But do schools teach doubt when they teach science?

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Tags: Faith · Finance · Science

4 responses so far ↓

  • 1 Linda Grilli Calhoun // Apr 8, 2008 at 8:54 pm

    Do religious people teach doubt when they teach ANYTHING?

  • 2 Richard C. Kreutzberg // Apr 8, 2008 at 10:26 pm

    I took a course recently on evolution and the professor explained that the theory as it stands cannot explain the order in the universe and in nature. He said he believes that there must be an undiscovered natural law that produces order from disordered chemical building blocks - hence a scientific explanation for the creation of life. Given this admission I see no reason to deny the creationists their day in the classroom in our schools. Evolution won’t work without some sort of ordering force - call it the work of God or the work of an undiscovered natural force, either way there is a design and there is a designing and therefore intelligent force.

  • 3 Lillim // Apr 11, 2008 at 9:09 pm

    I think this is an interesting observation. Ms. Calhoun, I don’t think that the writier is saying science isn’t important or valuable, but that a real understanding of its worth requires a broader “questioning” frame of mind. Most students I have spoken to only focus on facts and systems, but never really understand what it takes to get to those facts or systems because they don’t really know how to question the status quo.

  • 4 don // Apr 15, 2008 at 3:22 pm

    “But do schools teach doubt when they teach science?”

    Yes. Doubt is an inherent part of science. Without doubt, science would not be science. With the exception of mathematical proofs, science can never “prove” anything because we never know what evidence is yet to be discovered. That is why postulates like evolution are still described as a “theory” even when a they are supported by ample evidence.

    And as for Mr. Kreutzberg’s statement “Evolution won’t work without some sort of ordering force” - the theory of evolution does have an ordering force. It’s called natural selection, and is what Darwin described described 150 years ago. Our understanding of it has changed since then, because of ongoing scientific research.

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