S-Space College of Social Sciences (사회과학대학) Institute of Economics Research (경제연구소) Seoul Journal of Economics (SJE) Seoul Journal of Economics vol.04(4) (Winter 1991)
Why Economists Ignored the Method of Least Squares
- Kim, Jinbang
- Issue Date
- Seoul Journal of Economics, Vol.4 No.4, pp. 331-343
- The method of least squares was proposed in 1805 and soon became a standard tool in astronomy and geodesy. But it is not until the mid-twentieth century that the same method could be found in the ordinary toolbox of economists. The delayed adoption is explained by the intended scope of application of the method in relation to the nature of economics as the nineteenth century economists understood it. Given a parametric relation between a few variables and their inaccurate measures, scientists employed the method to obtain the "most probable" value of parameters. By contrast, it was believed that an economic relation contained so many variables and would never be deduced in a parametric form. As long as economists adhered to the Newtonian deduction, they would not adopt the method of least squares which they considered only as a way of combining inaccurate measures.