It is my Friday Lay Day blog and it is going to be relatively quick. There was an article in the Wall Street Journal (December 23, 2015) – Economists Say ‘Bah! Humbug!’ to Christmas Presents – that says a lot about how my profession struggles to appreciate reality in all its dimensions. Every year, it…
Its the Friday lay day blog and today I briefly discuss economists. What a topic! There is an interesting article just published in the Journal of Economic Perspectives that examines the way economists think of themselves and other social science disciplines. It is a horror story really. Having been immersed in the profession for many years now, I sometimes forget how bad it is. Here is what the study found. The title is a deliberate double entendre. It is more about the way economists think they are superior rather than any absolute finding of superiority.
The full reference: Fourcade, M., Ollion, E. and Algan, Y. (2015) ‘The Superiority of Economists’, Journal of Economic Perspectives, 29(1), Winter, 89-114.
The researchers find “an implicit pecking order among the social sciences, and it seems to be dominated by economics” but that is mostly a perception that the economists have of themselves. Tickets on themselves!
Economists think that “economics is the most scientific of the social sciences” which is a joke when you appreciate the Philosophy of Science literature. The concept of ‘science’ is contestable as a starting point – see the work of Paul Feyerabend, particularly his – Against Method.
Economists think that because they use more “powerful analytical tools” like mathematics they are superior to other social sciences.
Of course, real mathematicians laugh at the attempts by economists to use mathematics. Economists even breach standard mathematical rules regarding what should go on the x-axis and y-axis in graphical depictions of relationships. It is a standing in-joke how stupid economists are with respect to mathematical usage.
You might like to read these three blogs:
1. GIGO … (October 2009)
2. OECD – GIGO Part 2 (July 2010)
3. A continuum of infinitely lived agents normalized to one – GIGO Part 3 (February 2012)
The research paper investigates the substance to the feeling of superiority that mainstream economists exude.
They note that:
1. Economists have a Nobel Prize, which is not a real Nobel Prize anyway. Please read my blog – Nobel prize – hardly noble – for more discussion on this point.
2. Economists are the highest paid among the US social scientists.
3. “economists have the opportunity to obtain income from consulting fees, private investment and partnerships, and membership on corporate boards”. Yes, remember the Iceland scandal – Please read my blog – Wrong is still wrong and should be disregarded – for more discussion on this point.
And remember the film documentary – the Inside Job – which showed how many highly ranked US economists were swanning around the world earning huge consulting contracts to justify some abhorrent deregulation or another while being paid by organisations that benefits from their so-called ‘independent’ research papers.
The researchers note that a lot of the pay differentials can be explained by the overwhelming male domination of economics departments relative to other social sciences:
Thus, cross-disciplinary relations are inevitably permeated by broader patterns of gender difference, stratification, and inequality.
Economics graduate schools are macho-type environments which women, typically, find to be offensive. Only about 20 per cent of doctorates in Economics go to women whereas 70 per cent go to women in Psychology and around 60 per cent in Sociology and Life Sciences.
Economists create an air of superiority by maintaining strong Groupthink discipline. The profession is extremely insular and heirarchical – the latter which maintains discipline within the ranks, filters career progression, maintains control over research grants, publications etc.
The authors also find that as neo-liberalism became more dominant and financial market deregulation accelerated, the role fo finance schools in universities became more dominant. Within that context, they find that:
… transformations within higher education (most prominently the rise of business schools) and the economy have contributed to a reorientation of economics toward business subjects and especially finance.
Many economics departments have closed and been merged into these horrific business schools.
I am proud to say I have never been a member of a business school. While the University of Newcastle, where I hold a chair in economics, collapsed its Economics Department, I had already negotiated a deal with the Vice Chancellor where I was placed outside the Faculty of Business and Law and operated exclusively out of my stand-alone research centre – the Centre of Full Employment and Equity (CofFEE). The other economists were absorbed into the Business School, sadly.
So the superiority that economists claim is related according to the research to:
… far-reaching scientific claims linked to the use of formal methods; the tight management of the discipline from the top down; high market demand for services, particularly from powerful and wealthy parties; and high compensation. This position of social superiority also breeds self-confidence, allowing the discipline to retain its relative epistemological insularity over time and fueling a natural inclination towards a sense of entitlement.
1. Insularity – economists rarely cite or value research from other social sciences despite its obvious relevance to the study of human society.
Mainstream economists have their own (puerile) theory of human behaviour – we are all maximising, selfish and rational beings – so there is no need to consult pyschologists who specialise in understanding human behaviour. Economists just adopt these rigid assumptions that countless research projects have found to be ridiculous and errant.
2. The use of mathematics is to give an impression of formality and precision. It is to claim the high scientific ground. It also “permits economists to strip away complexity” which might complicate the ideology that is being perpetuated.
The researchers quote “an eminent professor” on this topic:
If you don’t follow certain rules, you are not an economist. So that means you should derive the way people behave from strict maximization theory … The opposite … [to being axiomatic] … would be arguing by example. You’re not allowed to do that … There is a word for it. People say ‘that’s anecdotal.’ That’s the end of you if people have said you’re anecdotal … [T]he modern thing [people say] is: ‘it’s not identified.’ God, when your causality is not identified, that’s the end of you.
I have noted this observation by American (Marxist) economist Paul Sweezy before. In 1972, he wrote in the Monthly Review Press an article entitled Towards a Critique of Economics that orthodox (mainstream) economics:
… remained within the same fundamental limits … of the C19th century free market economist … they had … therefore tended … to yield diminishing returns. It has concerned itself with smaller and decreasingly significant questions … To compensate for this trivialisation of content, it has paid increasing attention to elaborating and refining its techniques. The consequence is that today we often find a truly stupefying gap between the questions posed and the techniques employed to answer them.
When I was in graduate school, the rage at the time was the “Economics of Marriage”, the “Economics of Slavery”, the “Economics of Sex” and we had to sit through highly mathematical derivations of when a person went from petting to heavy petting to intercourse – each step being the result of a complicated evaluation of the marginal costs and benefits (optimised over a life-time) that moving from one state to the next would involve.
If anyone followed this logic, they would wonder how anyone “got it on”.
For any one who had studied mathematics previously (such as me) the classes were a joke. But the lecturers were able to beguile most of the students into thinking the material was complex and meaningful. In fact, it failed at the first hurdle to understand any of the essential characteristics of human behaviour as subsequent studies in experimental behavioral economics have revealed.
I also love the following quote which resonates strongly in this context. Post Keynesian economist Paul Davidson [in the book by Bell and Kristol The Crisis in Economic Theory, Basic Books, 1981, p.157] describes how mainstream economics uses methods and approaches that renders it unable to embrace real world problems:
There are certain purely imaginary intellectual problems for which general equilibrium models are well designed to provide precise answers (if anything really could). But this is much the same as saying that if one insists on analyzing a problem which has no real world equivalent or solution, it may be appropriate to use a model which has no real-world application. By the same token, if a model is designed specifically to deal with real-world situations it may not be able to handle purely imaginary problems.
Post Keynesian models are designed specifically to deal with real-world problems. Hence they may not be very useful in resolving imaginary problems that are often raised by general equilibrium theorists. Post Keynesians cannot specify in advance the optimal allocation of resources over time into the uncertain, unpredictable future; nor are they able to determine how many angels can dance on the head of a pin. On the other hand, models designed to provide answers to questions of the angel-pinhead variety, or imaginary problems involving specifying in advance the optional-allocation path over time, will be unsuitable for resolving practical, real-world economic problems.
Note that I am not against simplified (abstract) modelling. Clearly, it is essential if you want to gain some traction on a real-world problem that is complex. But the models have to be capable of capturing real-world dynamics.
For example, a model that claims central banks control the money supply via the money multiplier will always be false and provides no relevant information to the user no matter how many complex mathematical equations are used.
So economists who develop the highly technical models of the economy which are internally elegant (sometimes) and which allow them to conduct very complicated exercises all aimed at counting “how many angels can dance on the head of a pin”, with all sorts of variations on how large the pinhead might be or the constraints the angels might be facing at any point in time – may exhibit a highly advanced intelligence and creativity.
But once they think that these models are capable of saying anything about the monetary system we live within – then they immediately demonstrate how dumb (or venal) they are.
It is in that context that I argue that my profession largely has failed to be clever.
The Finance/Economics professors in mainstream schools had very complicated models of this and that (option pricing etc) but couldn’t see the GFC coming even when it was upon them!
3. “Hierarchy Within” – there is typically a rigid hierarchy in the profession. It operates like a Mafia cabal – which is typically of a well-developed Groupthink structure – a sort of mob rule is how one social psychologist referred to these patterns of behaviour.
Economists departments barely tolerate non-mainstream economists. So a pattern of uniformity emerges which is reinforced by the Groupthink control structures. Other social sciences tolerate pluralism more easily.
Phd course work programs in economics tend to be very rigid – formality, theory, topics etc. It is hard to deviate. To become a Marxian scholar, you have to learn all their stuff plus find time to read Marx.
Fortunately, their stuff is relatively easy if you come with a mathematics background. Trivial in fact. But most students struggle because they do not have that formal background.
As Sweezy says – the substance doesn’t develop like other disciplines over the 9 years or so of study leading to a doctorate. Just the techniques get more complex. But even the most complex techniques are scorned by real mathematicians.
The researchers conclude that:
On the control side, economists manage their field tightly. Scholars have long noted that top departments in economics exert a remarkably strong influence over the discipline’s internal labor market …
Hiring is very controlled. Promotion is controlled. Access to funding is controlled.
A non-mainstream economist has to do much more to get on and so few get to the rank of full professor.
I was at a meeting the other day and it was noted that most of my research income (which keeps my centre going etc) comes from my work in regional science and economic geography. When I have gained large grants within economics it is for technical work using very sophisticated (in the eyes of the mainstream) econometric tools etc.
Don’t mention Marx! is the lesson for young progressive economists who want to attract research money – and make sure you are good at mathematics and econometrics.
Then you can cross subsidise your radical work with the money you get. And if you get enough research money, you will get to professorial level (that is, Level E in the Australian setting) irrespective of the views you hold, given that these positions are appointed at University levels rather than department levels.
That is how you can get through the within-department control processes. But few do.
The research study documents hiring processes across the social sciences and concludes that “the range of possible options is more tightly defined and determined much earlier.”
Interestingly, the research paper finds that economists hold views that are contrary to public opinion. Sociologists, for example, are much more likely to express generally accepted views.
They give an example “For example, two-thirds of sociologists say that corporations make too much profit, but only one-third of economists and virtually no finance professors think so.”
Is that a problem? The paper says that:
This growing social distance of economists from the public at large would be irrelevant if economists were not making it their mission to maximize the welfare of ordinary people. Economics as a profession is prominently intertwined with public administrations, corporations, and international organizations; these institutions not only provide economists with resources and collect their data, they also foster a “fix it” culture-or, as sociologists would put it, a particular “habitus,” a disposition to intervene in the world.
In other words, economists dominate the policy making process yet have little empathy with the targets of the policy.
Hence, we get the nonsensical conclusions that the unemployed are obviously lazy because they are idle. They must, according to the mathematical models and behavioural assumptions built into them be rationally choosing this state.
A shortage of jobs doesn’t enter their minds.
The paper concludes by asking whether economists are really “humble, competent people?”.
This was in relation to Keynes famous quote:
If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!
The research finds that “Human life is messy, never to be grasped in its full complexity or shaped according to plan: people act in unanticipated ways; politics makes its own demands; cultures (which economists do not understand well) resist.”
Blyth to their shortcomings and blinkered viewpoints, economists adopt an unjustified self-confidence, which allows them to appear “decisive” and accurate in their predictions.
But as the research concludes:
That confidence is perhaps the greatest achievement of the economics profession-but it is also its most vulnerable trait, its Achilles’ heel.
With which we can all agree.
Comedy and Offense
The other day I deleted a reference to Shylock because an American reader objected to its use, given the possibility that it could be interpreted as an anti-Semitic remark. That connotation is far-fetched in the context that the word was used used but I took the point. The aim of this blog is not to cause trivial offense.
I received a lot of E-mails about that and some pointing out that it seemed to be at odds with my Political Comparison location, which is left and libertarian (lots).
They further pointed out that I thought John Cleese’s goosestep with his Hitler moustache imitation to be funny. Why go easy on the Jews and then pillary the Germans was one question I received?
There is no contradiction. Having libertarian tendencies does not negate having basic respect for each other. Indeed, it enhances that requirement.
The blog was a serious narrative there was no comedic element. In serious discourse, the intent to win the argument or enlighten the reader.
But in comedy/satire I believe almost anything goes and the concept of cultural offense is not applicable. I understand that the targets and topics of comedy can be culturally specific – what I find funny might not be the same thing as an American.
In fact, do Americans find anything funny? (joke!).
But all cultures understand comedy in their own way. So if a particular group doesn’t like a particular form of comedy then turn it off, stop reading, or whatever. They cannot, in my view, say it offends their religious idol or whatever. It is comedy. Comedy is about laughing.
That is the difference. We can target the most precious things in comedy including the most precious of them all – ourselves!
And that is why I also said – Je ne suis pas Charlie!
Recall, that they sacked a – cartoonist – in 2009 for daring to satirise Jean Sarkozy’s conversion to Judaism in Charlie Hedbo’s Magazine. He was told that satirising the Jews was banned and he was sacked. He won a large court settlement for wrongful dismissal. He was also subject to a death threat from a Jewish organisation.
In other words, Charlie Hebdo amounts to outright hypocrisy.
If it is funny and intended to be funny then almost anything is a legitimate target. What is the ‘almost’ excluding? For example, jokes about children being forced to have sex with predatory adults is never funny.
Corkie, anything to say on that?
And what I have been listening to this morning which you might also like
Its Friday so we can kick back a bit.
This is the great (and sad) jazz guitar player – Emily Remler – the white Jewish girl from New Jersey who thought she was a big black bloke like Wes Montgomery and nearly played like him.
Sadly, she died (while in tour in Sydney in 1990 – I remember the day) at the age of 32 after a heart attack. She had also been addicted to heroin for many years.
But play she could.
Here she is with another great player – Larry Coryell – who is, fortunately, still playing well.
This is Track 7 taken from the Larry Coryell And Emily Remler Together” Album from Concord Jazz. One of my favourites (although I have stacks of favourites).
It was recorded in San Francisco during August 1985.
The Saturday Quiz will be back again tomorrow. It will be of an appropriate order of difficulty (-:
That is enough for today!
(c) Copyright 2015 William Mitchell. All Rights Reserved.