Amateur Economics: Uses and Abuses
Two recent blog posts get at an idea I've been thinking about. Steven Levitt has a post about interesting ideas that are misleading in terms of policy choices. Matt Yglesias has a post about the necessity of sophisticated economic analysis.
Ultimately both posts are about the same thing: theory can be misleading when it is insulated from data (Levitt) or when it ignores more sophisticated economics (Yglesias). The posts converge even more when you understand that sophisticated economics is often very empirical.
This consideration should feed into economics education, but too often it doesn't. I can't count the times I've encountered obnoxious college students who know the right policy because of something they learned in introductory economics. On occasion I've been such a student. The problem is that on some level this is inevitable: you can't teach people a method of reasoning and then expect them not to use it. You can't give them a powerful tool and then tell them only grown-ups can use it safely.
Luckily, I think there's a way out of this dilemma. It's a matter of putting economics in perspective. The whole point of economics is to abstract away from the overwhelming richness of the world to the manageable austerity of mathematical models. To take the conclusions back into the world, intensive empirical work is needed. Students should see examples of economic theory failing in its application because of the facts on the ground. Good economics education already does this, but obviously plenty of introductory economics doesn't instill quite the sense of humility we should aim for.
Another way to put this is that someone who has taken introductory economics should be able to poke holes in bad arguments about minimum wages, for instance, but shouldn't try to reach a conclusion on the basis of theory alone.
Part of the problem is that this is not an apolitical subject. At various times in history various ideologies have benefited from the misuse of amateur economics. Marxism is one example, but today I think conservatives and libertarians have the most to gain. Treating introductory economics as a conclusive indicator of good policy tends to favor right-wing economics. That actual economics often points in the opposite direction need not bother conservatives. Most students won't progress to the higher levels of economics, and many students don't understand the limitations of low-level theory.
So conservatives and libertarians lead by example, proclaiming the manifest rightness of their policies and the ignorance of their ideological enemies while largely ignoring the actual implications of higher-level and empirical economics. For economics education to be useful, it has to alert its students to the dangers of this attitude. Otherwise economics will become something it need not be: a discipline useful to the experts but misleading to the casual student.
Ultimately both posts are about the same thing: theory can be misleading when it is insulated from data (Levitt) or when it ignores more sophisticated economics (Yglesias). The posts converge even more when you understand that sophisticated economics is often very empirical.
This consideration should feed into economics education, but too often it doesn't. I can't count the times I've encountered obnoxious college students who know the right policy because of something they learned in introductory economics. On occasion I've been such a student. The problem is that on some level this is inevitable: you can't teach people a method of reasoning and then expect them not to use it. You can't give them a powerful tool and then tell them only grown-ups can use it safely.
Luckily, I think there's a way out of this dilemma. It's a matter of putting economics in perspective. The whole point of economics is to abstract away from the overwhelming richness of the world to the manageable austerity of mathematical models. To take the conclusions back into the world, intensive empirical work is needed. Students should see examples of economic theory failing in its application because of the facts on the ground. Good economics education already does this, but obviously plenty of introductory economics doesn't instill quite the sense of humility we should aim for.
Another way to put this is that someone who has taken introductory economics should be able to poke holes in bad arguments about minimum wages, for instance, but shouldn't try to reach a conclusion on the basis of theory alone.
Part of the problem is that this is not an apolitical subject. At various times in history various ideologies have benefited from the misuse of amateur economics. Marxism is one example, but today I think conservatives and libertarians have the most to gain. Treating introductory economics as a conclusive indicator of good policy tends to favor right-wing economics. That actual economics often points in the opposite direction need not bother conservatives. Most students won't progress to the higher levels of economics, and many students don't understand the limitations of low-level theory.
So conservatives and libertarians lead by example, proclaiming the manifest rightness of their policies and the ignorance of their ideological enemies while largely ignoring the actual implications of higher-level and empirical economics. For economics education to be useful, it has to alert its students to the dangers of this attitude. Otherwise economics will become something it need not be: a discipline useful to the experts but misleading to the casual student.
posted by James | 6:26 PM
6 Comments:
Aww...
Gottlieb to the rescue. Oh shit:
"Shit, I mean from what I can tell from my cursory research, the modern usage of "libertarian" is recent -- maybe entirely post-1950 -- and embraced a variety of approaches from the beginning. Ayn Rand rejected the label libertarian (and libertarians) -- I'm not sure why, but to me that strengthens the case against limiting "libertarian" to the wackos.
"I would call myself a classical liberal or a 19th century liberal if those terms didn't suck independently.
"OH SHIT! So the thing with the axes that you always refer to? Called a "Nolan chart," because it was invented by David Nolan, who also founded the Libertarian Party in the US. I actually think that's reasonably good authority that your usage is correct.
http://en.wikipedia.org/wiki/Nolan_chart
"James's argument seems to be, like, I met a libertarian and she was dumb."
I was almost content to put the terminological debate to sleep, but I did a little last-minute research to figure out whether the claims about the "true" and "original" meaning of "libertarian" were accurate. It appears not.
"James's argument seems to be, like, I met a libertarian and she was dumb."
Hahaha! Right on target. But why a "she"? Your true sexist nature is coming through, Gobbles.
But then again, we know libertarian women like kinky sex. That should be enough for you.
Nolan apparently is an Ayn Rand follower. Ooh.
Gottlieb may use "she" because he knows the whole story. It was a she, although it might be unfair to pin it all on her. Let's face it, there are more than enough crazy libertarians capable of causing severe allergic reaction.
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