Two questions: is it good or bad that professional athletes earn 400 times what nurses do, and is string theory a dead end? Each question goes to the heart of its discipline. Yet while you probably answered the first, you’d hold an opinion on the prospects of string theory only if you’ve studied physics.
That annoys economists, who wonder why everyone feels free to join economic debates instead of leaving them to the experts, as they do with physics or medicine. What economists don’t usually admit is that, on a range of topics they examine, they often had an answer to the question before they began their studies. Scientists are supposed to reach their conclusions after doing research and weighing the evidence but, in economics, conclusions can come first, with economists gravitating towards a thesis that fits their moral worldview.
Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity. Change the social context – in economic parlance, change the incentive structure – and people will alter their behaviour to adapt to the new framework.
The last paragraph is particularly interesting.
Given this willful blindness, the current reaction against economists is understandable. In response, a ‘data revolution’ has prompted many economists to do more grunt work with their data, while engaging in public debates about the practicality of their work. Less science, more social. That is a recipe for an economics that might yet redeem the experts.
6 comments:
Good article - thanks. I think Economics will have to drop its pretensions to science, mainly because of the 2007/8 financial crisis. It's a bit like Physicists not predicting a bloody great asteroid wiping out half the planet. As the Queen asked a bunch of economists at the LSE, "Why did nobody see it coming?".
It could, as suggested, change and become more multi-disciplinary and restrict itself to more general questions about money and production and trade. There are some nice insights to be had here, and a few books (like the "Freakonomics" phenomenon) show that people will pay for this. But not a lot, though. Most economics rightly earns its title as "The Dismal Science". It's dreary and anxiety-provoking at the same time. My economics prediction is that there might be a lot of unemployed economists around before long.
I can't be certain, though.
Making economics a pseudo-science as we knew.
The idea of a beardy weirdo such as Simon Wrong-Lewis, accredited falsely to Oxford University, interacting with people whose salaries are not underwritten, regardless of work, by someone in Saudi Arabia, expressing an opinion worth listening to, makes me want to read more Kafka
"is string theory a dead end?" It must be two dead ends and much depends on how long it is . . .
The question is the data, the sources of the data and the attempted analysis of the data. There is a lot that can go wrong as the first men to attempt flight might have said.
Sam - I agree, it could usefully become more multi-disciplinary and restrict itself to more general questions. There are rules of thumb which seem to work and correlations which seem to be worthwhile, but not enough questioning humility to inspire much confidence.
James - yet I'm sure it could be better, or at least more coherent.
Graeme - I don't know much about him, but he seems somewhat opinionated.
DCB - yet it still supports many careers.
Demetrius - the data seems fine, although I'm not always sure what is being measured. GDP for example.
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