Pur Autre Vie

I'm not wrong, I'm just an asshole

Tuesday, April 03, 2012

Much To Be Humble About

In an NY Times "Room for Debate" on rethinking the way we teach economics, Jeffrey Miron titles his contribution "A Little Humility Would Help."

I think this is a case where the title is better than the post. Miron writes about a kind of predictive humility: we are not as good at predicting the future as we might have thought. I suppose economics could use some humility along these lines, but honestly it seems to me that economics was already reasonably humble when it came to predicting business cycles, financial booms and busts, etc.

Where economics has gone off the rails, I think, is its lack of humility about its methodology. Economics ignores vast areas of human knowledge and makes only token acknowledgment of the limitations of its models. I can't count the number of times I have heard people deploy economic arguments as though they are decisive, as though the only reason you would ever support, say, unionization is because you are untutored in economics.

That's the arrogance that needs to be purged from economics. Economists need to stop colonizing other disciplines, retrench, and seize the commanding heights of their own territory. Then they can tell themselves that they never had it so good.


Blogger David Joerg said...

Well put. Speaking of humility, you need to revisit your post about winter in July in Buenos Aires.

9:15 AM  
Anonymous C. L. E. said...

Southern hemisphere, you dumbsh*t

9:43 AM  
Blogger Grobstein said...

From my outsider's perch, it seems like economics has become much less humble about big-picture macro issues since the start of the recession. Voices that are skeptical about our ability to predict (and control) business cycles are blasted in the mainstream -- presumably because in a time of crisis it is unpatriotic to be for anything but action. Likewise, a number of previously unknown economists have built reputations around claiming that they predicted the crisis. Now, this cultural shift could be completely correct. But it raises the question of what Miron thinks he's saying.

As to your actual point, I don't think I agree. Economics is the social science discipline that makes an attempt to evaluate policies and institutions in terms of welfare. That seems like a pretty important lens through which to view many questions. If there's a good argument for unionization, I expect it to be translatable into the language of economics. If the case is based on historical observation, that should be translatable into economic stories. If it's political, it should be explainable with an "economics-y" politics. I don't think this covers literally everything but I think the "colonization" of nominally other subject maters by the tools of economics has basically been great.

11:15 AM  
Blogger James said...

On your first point, here's my analogy: doctors might be humble about their overall understanding of the human body, but that won't stop them from confidently prescribing vitamin C to treat scurvy (and blasting doctors who resist this prescription on the grounds that the body is poorly understood, or that vitamin C causes autism or something).

On your second point, I agree and disagree. Of course economics provides an important perspective, and economic illiteracy is frustrating. If you think of economics as a language, then I agree that it's a useful second language for lots of disciplines.

But problems arise when economists are sloppy about labeling their normative arguments. There's an implicit "if you are trying to maximize wealth" in front of a lot of economists' policy prescriptions, and wealth maximization is not the only ethical or political value. (I also suspect that wealth maximization itself would not withstand much scrutiny, at least in the casual form in which it is usually deployed in economics.) Economists are often very good at hiding their assumptions and disguising their personal policy preferences as objective results from a social science.

So take the example of unions: the econ 101 position is that they are bad because they are basically a cartel. This aspect of unions is important for everyone to grasp, but it is not, without more, an argument that unions are bad on net.

Good economists can integrate insights from other disciplines into economics, or can translate sophisticated arguments into the language of economics. So in a sense it's not economics that's the problem, it's a particular brand of economics. But that brand is pretty damn prevalent.

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