“One is almost forced to the conclusion that to be economically sound, a man has to be an idiot.”
“Economics is not only a science, it is a genuine science…”
“The heterodox ideas found here and elsewhere have had no impact on economics as a whole….”
What economics needs to lose is a lot of metaphysical baggage, plus a lot of needy f-type personalities.
The tragedy of this is that there is, within the bloated corpus of economics, a perfectly nice slimmed-down little science struggling to get out.
This confusion disappears if you make sure to remember that the “ist” at the end of the word “economist” should be taken not as analogous to “scientist”, but rather to “Trotskyist”.
(The opinions on this page are my own and have not been endorsed by D^2, Edward Lazear, Steven Durlauf, or Henrik Shipstead).
For about five years now I’ve been asking whether economics is a science at all, and not just a weakly systematized area of policy studies and advocacy dazzling laymen with complex math. People seemed to be getting tired of my ranting and trollery and I retired from the field for awhile. But gradually the question became a hot issue in the field (Google, DeLong 1, DeLong 2, Thoma), mostly because economic true believers had succeeded in throwing us into the worst recession since 1937. So I’ve collected the more amusing and presentable of my rants below.
My summary answer is that the question “Is Economics a Science?” is not as important as people think. Foucault’s answer to that question would be “Sure, economics is a science, but it’s a moderately crappy one — though not as crappy as, for example, Criminology or Education Administration.”
Pragmatism judges sciences by their success and power, and economics does not have the power that physics has. The philosophy of science developed by Russell, Popper and the logical positivists was utopian — they all assumed that science would save us, if it was real science. (Read the last 50 pages or so of Russell’s History of Western Philosophy). The joke was that that they thought that science would save us by making itself non-normative and objective, but that’s crap. It makes no sense at all. You can’t start off by bracketing out the questions you need to answer.
Meeting the minimum standards for being a science doesn’t mean as much as people think it does. Even scientific power is not enough, if the questions science answers aren’t the ones we need answers too. Science isn’t going to save us. Maybe economics is a science, maybe it isn’t, we still have to ask how good its answers are in terms of what we need to know. And, as it turns out, it hasn’t been good enough.
There’s probably some kind of congruence between excessive formalization in economics, fraudulent claims to scientific power, ideological claims surreptitiously sneaked in, and mercenary dirty work done for the market. Once detached from the execrescent growths that seem to have taken over, much of the empirical part is probably OK.
What’s really at stake here is the surplus authority economics claimed based on its scientific status. That was fraud and mystification. Economics is not nothing — there are a lot of things there that you need to know. Think of it as a useful craft or art, or as a form of knowledgeable advocacy like law. There are times when you need the best economists you can afford, because otherwise you’ll be at the mercy of the bad guys’ economists.
Is the power of economics like the power of physics, or is it primarily a persuasive power, like the power of alchemy, astrology, or phrenology? My belief is that to an unfortunate extent it’s the latter, and that the immediate future of economics is a salvage job.
Is Economics a Science?
(Nov. 29, 2010)
People have become tired of my rant about the scientific status of economics, so I’m putting it at the bottom. If economics were a science rather than just a wad of assorted hypotheses, could this most recent collapse have happened? Shouldn’t there have been some mechanism within the profession to prevent this? Instead Fama was on the short list for the Nobel Prize. Those of us who are not economists do not find this reassuring.
Alternatively, next time a school of economics asks for a chance to test their hypotheses on the global economy, shouldn’t we tell them no? Certainly something will end up being learned from this big experiment (though probably not until the experimenters are dead or emeritus), but will it have been worth it?
I’ve devised three mental-experiment tests for whether something is a science or not. First, the veil of ignorance test. Suppose that you were knowledgeable about economics and all you knew about someone was that they were a new summa cum laude PhD from an unnamed top-twenty school. How much confidence would you have in the guy? Are there some schools whose graduates you would be doubtful about?
Second, is it possible to write a test which would accurately select competent economists, with few false positives or false negatives? You don’t have schools of physics or chemistry; these scientists disagree on the frontiers of their sciences and often are fairly ignorant of subfields distant from their own, but you don’t have never-ending controversies about the most fundamental issues.
Third, the professionalism test. Is it possible for an economist to be disbarred or defrocked? Is there some level of error, incompetence, misconduct, or public dishonesty which would require that an economist be drummed out of the profession? Is there any internal discipline within the profession? Are there even any possible ways of knowing that an economist is wrong? Or is the PhD a license to say whatever you want to say about economics, no matter how ridiculous, and still be called an expert?
My guess is that economics passes none of these tests, though it is probably closer to doing so than psychology. I would guess that physics and chemistry pass the first two without being much concerned for the third. As for the third, medicine and law have rather low standards of ethics, but economics seems to have none. (Like law and medicine, but unlike physics, on the whole, economics is an applied science, which is why the ethics question is necessary).
My claim is that economics, like most social sciences, is too ill-formed, inconsistent, incomplete, and unempirical to be a real science in the sense that economists themselves use the word, and that it is for this reason that you have warring schools of economics, and it is for this reason that economist political hacks are able to get away with saying pretty much anything. (Brad DeLong claimed that Mankiw’s professional reputation was destroyed during his tenure with George W. Bush. Is there any real evidence that this actually happened?)
Due to the complexity and indeterminacy of the material studied, it strikes me as impossible that any social science will ever attain the level of scientificity and success that they hope for (and, whenever they think they can get away with it, brag about.) This isn’t really a failure; it’s just the way things are. I would actually be willing to renorm the definition of science enough to allow economics in, but that would defeat the economists’ purpose, since their goal is to become a magical science like physics, a science which can solve all the world’s problems, a science that will make them heroes, the only real social science and not just one of several. And the renormed definition (“a science that has a lot of interesting things to say and provides valuable rules of thumb”) isn’t what they want.
Probably, soon enough, the profession will dig up someone who got The Great Moderation right, thus proving once again that economics is too (in Lazear’s words) “a real science”. The problem is that , while economics may have all the right answers there on the shelf somewhere, they’re still mixed in indistinguishably with all the wrong answers. They say that Popper’s falsificationism has been refuted, but it’s my understanding that physics, for example, (unlike economics) has two different shelves, and has definite procedures and practices making it possible to move things from the right-answer shelf to the wrong-answer shelf, procedures that do not entail ruining everything for everyone.
(The reader might ask: much of what has been written above is valid? My response is: “Probably some of it is and some of it isn’t, but who cares? At least I didn’t destroy the world economy.”)
So now an other school of economics lies in the rubble, if anyone cares. Another voodoo economist will show up sooner or later. All they will have to do is prove that you can cut taxes, maintain military spending, and balance the budget all at the same time.
Economics is too ill-formed, inconsistent, and incomplete to be the rigorous formal science it pretends to be. What it is instead is a bag of tricks, many of which work most of the time.
It’s generally true that physicists, chemists, and biologists have been unimpressed by the accomplishments of the social sciences, and my belief is that they are right, ecxcept that many of them have the idea that if they had been the ones doing social science, they would have done it right. What I think is that the social sciences will never get the kinds of results that the “hard” sciences get, and it’s not because they’re doing it wrong but because that goal is inappropriate.
Burke, Veblen, Foucault, and others talk about the built-in stupidities of methodological paradigms.
Review of Deborah Redman. Economics’ self-serving misuse of philosophy of science, starting with Friedman’s preface to Positive Economics.
Professionalization creates self-policing lackeys who can only work within professionally assigned limits. All real decisions are made non-professionally by powerholders who may or may not be professionals.
Many of the supposed virtues of academic disciplines make them mostly useless for anyone trying to understand the actual world.
The problem with academic philosophy is the crowding-out. The academic space it takes up could be more beneficially filled. (This is not about economics but several points it makes are relevant.)
The Psychology of Economics
Today’s mess of futurology, prosperity gospel, self-help, investment couseling, Chicago school economics, New Age spirituality, management buzz words, personal affirmation, and sociopathy was diagnosed long ago by Veblen and Melville. (More on Melville).
“At his peak in 1990, [Madame Nui's]oad controlled more than $10 billion in financial investments, making its owner the world’s largest individual stock investor.”
The point is this: once you try to figure out what’s going on you risk getting sucked into the game. You’ll think you’ve got the game figured out, and the guy sitting across the table from you will let you win a few hands, but in the end BOOM! you’ve lost everything. Unfortunately I haven’t figured out a way of staying out of the game.
In the good old days the 2011 economy was booming and we are all rich now.
The land of sagas, glaciers, geysers, fish, ponies, hakarl, and Bjork is going through a rough patch these days. It used to be the libertarian paradise.
Wall Street should have been pee-tested — a level of euphoria that high is hard to reach by natural methods. Probably it was just legally prescribed anti-depressants and amphetamines. It couldn’t have been cocaine. (I suspect Palin and Bachmann too — Jesus can’t do it all by himself.)
Tyler Cowen defines five or six different kinds of rationality, which you just swap in and out according to your needs at any given place in the argument. I’ve always thought that for economists sociopathic rationality is a goal to be aspired to and was never meant to be descriptive. Economics’ pidgin psychology of “the rational man” certainly wasn’t very useful for those trying to figure out what was going on, though most economists weren’t trying to figure anything out but were just cheering things on and pigging out themselves.
At first I really liked Sen’s book — it was nice to read an economist trying to reduce the sociopathy of his field. That’s when I realized that I had been spending too much time around economists. Sen was just trying to undo seventy years worth of criminal stupidity and bringing economics back to zero.
Economics takes another small step in the direction of sanity. Ev Psych tells us that people are not naturally “economically rational”.
Becker began his career in the 50s by proving that racial discrimination is economically impossible. His economics of the family is equally persuasive. He’s the best example of the Chicago School’s “irreverence”, which is a smarter version of Rush Limbaugh’s liberal-baiting. Families are factories producing children, who produce child services and have some sort of relationship to the something called a child market, though it’s impossible really to say what that market is.