If the Modifications Needed to Accommodate New Observations Become Too Baroque ...

The New Keynesian model is fairly pliable, and adding bells and whistles can help it to explain most of the data we see, at least after the fact. Does that mean we should be more confident in it its ability to “embody any useful principle,” or less?:

… A famous example of different pictures of reality is the model introduced around AD 150 by Ptolemy (ca. 85—ca. 165) to describe the motion of the celestial bodies. … In Ptolemy’s model the earth stood still at the center and the planets and the stars moved around it in complicated orbits involving epicycles, like wheels on wheels. …

It was not until 1543 that an alternative model was put forward by Copernicus… Copernicus, like Aristarchus some seventeen centuries earlier, described a world in which the sun was at rest and the planets revolved around it in circular orbits. …

So which is real, the Ptolemaic or Copernican system? Although it is not uncommon for people to say that Copernicus proved Ptolemy wrong, that is not true…, our observations of the heavens can be explained by assuming either the earth or the sun to be at rest. Despite its role in philosophical debates over the nature of our universe, the real advantage of the Copernican system is simply that the equations of motion are much simpler in the frame of reference in which the sun is at rest.

… Elegance … is not something easily measured, but it is highly prized among scientists because laws of nature are meant to economically compress a number of particular cases into one simple formula. Elegance refers to the form of a theory, but it is closely related to a lack of adjustable elements, since a theory jammed with fudge factors is not very elegant. To paraphrase Einstein, a theory should be as simple as possible, but not simpler. Ptolemy added epicycles to the circular orbits of the heavenly bodies in order that his model might accurately describe their motion. The model could have been made more accurate by adding epicycles to the epicycles, or even epicycles to those. Though added complexity could make the model more accurate, scientists view a model that is contorted to match a specific set of observations as unsatisfying, more of a catalog of data than a theory likely to embody any useful principle. …

[S]cientists are always impressed when new and stunning predictions prove correct. On the other hand, when a model is found lacking, a common reaction is to say the experiment was wrong. If that doesn’t prove to be the case, people still often don’t abandon the model but instead attempt to save it through modifications. Although physicists are indeed tenacious in their attempts to rescue theories they admire, the tendency to modify a theory fades to the degree that the alterations become artificial or cumbersome, and therefore “inelegant.” If the modifications needed to accommodate new observations become too baroque, it signals the need for a new model. …

[Hawking, Stephen; Mlodinow, Leonard (2010-09-07). The Grand Design. Random House, Inc.. Kindle Edition.]