I think too much of modern empirical economics is the economics-free application of sophisticated statistical techniques that does little to actually advance our understanding of the social world. It's not just that it isn't about trade-offs or incentives, the role of trade-offs and incentives are ignored. I also don't think we've made "massive progress" in understanding the social world. We've made massive progress in publishing papers on the social world. But understanding? Not so much. We treat the natural world as if the sophisticated tools of statistics can turn reality into a natural experiment. But the world is usually (always?) too complex for the results to be reliable.You won't get an argument out of me on this one. I have often thought that a lot of empirical economics these days is just applied stats. Roberts continues,
I continue to ask the question: name an empirical study that uses sophisticated statistical techniques that was so well done, it ended a controversy and created a consensus—a consensus where former opponents of one viewpoint had to concede they were wrong because of the quality of the empirical work.A good question that I'm willing to bet no one can answer.
Larry Summers argued in his paper, "The Scientific Illusion in Empirical Macroeconomics", Scandinavian Journal of Economics, 1991, v. 93, iss. 2, pp. 129-48, that formal econometric work, where elaborate technique is used to apply theory to data or isolate the direction of causal relationships when they are not obvious a priori, virtually always fails. He went on to argue that the only empirical research that has contributed to thinking about substantive issues and the development of economics is pragmatic empirical work, based on methodological principles directly opposed to those that have become fashionable in recent years.