BACK WHEN I WAS STUDYING ECONONOMIC AT UNIVERSITY, I BECAME VERY SCEPTICAL OF THE TREND TOWARDS MATH MODELS OF AN ECONOMY AS BEING CAPABLE OF PROVIDING THE ANSWERS
IT SEEMED TO ME CRYSTAL CLEAR THAT ECONOMICS SHOULD BE MUCH MORE CONCERNED WITH HUMAN BEHAVIOR—AND THE PRAGMATIC SEARCH FOR WHAT WORKS.
I still hold to that view—and am delighted to see that it is becoming more widely accepted (after a modest delay of 50 years).
Why is the self-evident such a mystery to so many people—including so-called experts!
Don’t get me wrong. I’m not against number-crunching as such—it is highly desirable, indeed essential, to quantify where you can—but am merely making the point that there is a great deal about the human condition, and its behavior, that we cannot quantify as yet—and possibly ever.
Anyway, I was both amused and pleased when I read the following in a piece entitled How Stanford Took On the Giants of Economics in the New York Times of September 10 2015. The following is merely a short extract, but it made me chuckle.
But the recent recruiting success of Stanford shows something broader about how the economics profession is changing. The specialties of the new recruits vary, but they are all examples of how the momentum in economics has shifted away from theoretical modeling and toward “empirical microeconomics,” the analysis of how things work in the real world, often arranging complex experiments or exploiting large sets of data. That kind of work requires lots of research assistants, work across disciplines including fields like sociology and computer science, and the use of advanced computational techniques unavailable a generation ago.
I have never practiced as an economist, so am reluctant to call myself one, but after 55 years studying it with zeal and dedication, I guess you could say I have learned a thing or two. In truth, I find it fascinating—and fun.
My focus is pragmatic. I am in search of what works—in the sense of yielding the greatest economic advantage for the population as a whole, with the least negative environmental side effects. I’m interested in quality of life rather that any particular “ism.” When people talk about “freedom” when it remains an abstract ideal without wealth, I tune out. Though I think everyone should be as personally responsible as their abilities and circumstances allow, I am not a believer in “rugged individualism.” We live in a world where cooperation isn’t just desirable—it is essential. I don’t believe anyone accomplishes anything worthwhile entirely alone. They are always helped—directly or indirectly—along the way. We don’t necessarily build on “the shoulders of giants”—though I like the concept. We build on what others have done, flaws and all.
That said, I remain decidedly uneasy about the economics profession which seems to focus far too much on developing arguments to support ideologies and not nearly enough on identifying what works. If you work in a Right Wing think-tank, for instance, your findings had better support Right Wing ideology or you will lose your job. Quite how that is compatible with intellectual honesty is a good question. I don’t think it is.
All too many economists have, in effect, been bought. It’s a great pity, because increasingly we have enough data to identify what works—and with Big Data, the necessary tools to monitor, store, and analyze it.
Whether we will or not is another matter entirely. Data have a disturbing tendency to be corrupted by ideologies—and all the computing power in the world is of scant benefit if some zealots are fiddling with the figures.
We have Taliban in the West too—under other names—and they are just as fanatical and dangerous.
I’ll expand on that thought some other time.
QUOTE OF THE DAY
"The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself." -John Kenneth Galbraith