Next week, the Swedish Academy starts handing out Nobel Prizes, which guarantees for the recipients a wave of international publicity and attention. Since the late 1960s, economics has been included among the fields for which the Prize is given. And without a doubt, the field of economics has gotten a lot of mileage out of the fact that it is the only social science field in which there is a Nobel Prize, which puts economics right alongside real sciences like physics and chemistry.
Economists tend to take the scientific status of their field for granted, while those outside the field are more skeptical. There's a large popular literature, of course, on the preposterously bad track record of predictions by economists (the December 2, 1996 essay by John Cassidy in The New Yorker may be the best-known, though it's not, as far as I can tell, on-line), but philosophers (notably Daniel Hausman at Wisconsin and Alexander Rosenberg at Duke) have developed substantial theoretical accounts of the problems that afflict economics and that account for the poor predictive track record.
A good sampling is found in Hausman's contribution to SEP on philosophy of economics. Hausman there writes, for example, regarding Milton Friedman's famous defense of unrealistic assumptions in economic theories:
In other words, Friedman believes that economic theories should be appraised in terms of their predictions concerning prices and quantities exchanged on markets. In his view, what matters is 'narrow predictive success' (Hausman 1994b), not overall predictive adequacy. So economists can simply ignore the disquieting findings of surveys. They can ignore the fact that people do not always prefer larger bundles of commodities to smaller bundles of commodities. They need not be troubled that some of their models suppose that all agents know the prices of all present and future commodities in all markets. All that matters is whether the predictions concerning market phenomena turn out to be correct or not. And since anomalous market outcomes could be due to any number of uncontrolled causal factors, while experiments are difficult or impossible to carry out, it turns out that economists need not worry about ever encountering evidence that would disconfirm fundamental theory. Detailed models may be confirmed or disconfirmed, but fundamental theory is safe. In this way one can understand how Friedman's methodology, which appears to justify the eclectic and pragmatic view that economists should use any model that appears to "work” regardless of how absurd or unreasonable its assumptions might appear, has been put in service of a rigid theoretical orthodoxy.
But this is fairly gentle (as befits an encyclopedia article), by comparison to some of the other philosophical verdicts; for example: John Dupre, writing in the Philosophical Review 104 (1995): 151: "[e]conomic theory [is] one of the more dismal empirical failures in the history of science." Daniel Hausman, writing in his important book The Inexact and Separate Science of Economics (CUP, 1992), 139:
The justification for a particular paradigm or research program, like the justification for the commitment to economics as a separate science, is success and progress, including especially empirical success and progress. Since economics has not been very successful and has not made much empirical progress, economists should be exploring alternatives....
No one has been more damning, though, than Alexander Rosenberg, in both his widely anthologized "If Economics Isn't Science, What Is It?" and his book Economics--Mathematical Politics or Science of Diminishing Returns? (University of Chicago Press, 1992). A sampling from the article:
microeconomic theory has made no advances in the management of economic processes since its current formalism was first elaborated in the nineteenth century.
the twentieth-century history of economic theory certainly does not appear to be that of an empirical science.
Economists would indeed be well-advised not to surrender their...research program, if only they could boast even a small part of the startling successes that other [similarly structured] research programs have achieved. But two hundred years of work in the same direction have produced nothing comparable to the physicists' discovery of new planets, or of new technologies by which to control the mechanical phenomena that Newton's laws synthesized. Economics have attained no independently substantiated insight into their domain to rival the biologists' understanding of macroevolution and its underlying mechanism of adaptation and heredity.
There is, of course, a vast literature on why economics has so little in the way of predictive content, and on how a theory so dependent on idealizations and factually false assumptions as microeconomics can nevertheless constituted a respectable scientific enterprise....The only two things clear about this literature are that economists have found it almost universally satisfying and legitimating, and noneconomists have consistently been left unsatisfied, insisting that methodological excuses are no substitute for attempting to do what economics has hitherto not done: improve its predictive content.
Economists, of course, take the existence of a Nobel Prize in their field as an indication of the closeness of their field to real science. But perhaps the best rationale for a Nobel Prize in economics is its proximity to literature?