Some people have claimed that because Fama and Shiller have opposing models of the market, economics can not be a science, on the grounds that Nobel prizes in physics are not awarded to conflicting models.

But this is not true.

In my view (see my book Models.Behaving.Badly), models are merely analogies that describe a system in a partial way. Two different models can work in two different regimes. And, in fact, this is true in physics, where the complexity of the nucleus at the core of an atome is modelled in two different way.

There is a nuclear model called the shell model, that treats the nucleus as an analog of an atom with magic shell numbers filling up with nucleons, and another model, the liquid drop model, that treats the nucleus like a continuous drop of water. Both of them have some validity, both explain some things, none explain everything. And both of them received the Nobel prize, though at different times.

The existence of conflicting models doesn’t make economics a non-science. Whether economics is in fact a science I will leave to a later post.