Tuesday, April 05, 2016

A new age of econ imperialism is coming


Much of the discussion about econ methods these days revolves around the "credibility revolution", and the broader rise of empirics in general. Despite scattered protests from various quarters of the discipline, there looks to be no stopping the transformation of econ into an empirical, evidence-based field.

But the shift isn't just healthy - it's also a golden opportunity for economists to do what social scientists love best, which is to go on a giant raid and conquer the other social sciences! The new empiricism is the amphibious assault ship that will carry hordes of Econquerors (heh) to the vulnerable shores of sociology. 

The first big econ raid on sociology came from Gary Becker and other theorists in the 70s and 80s, who applied rational choice theory (partial equilibrium optimization, game theory, etc.) to issues like crime and marriage that had traditionally been the domain of sociology. By the turn of the century, economists were brashly trumpeting their dominion over their sister field. This earned the undying animosity of sociologists, of course, since social scientists tend to guard their intellectual "territory" quite jealously.

But the attack on soc-land was ultimately repulsed. Sociologists were basically free to ignore the incursion by A) not learning anything about econ models, and B) not publishing econ models in their journals. That was quite an effective tactic. Since university administrators and other dark overlords of academia (not to mention the general public) also don't understand optimization models, economic imperialists found themselves mostly talking to each other. 

The conquest was also a lot more difficult than economists predicted, since the defenders got an assist from Extant Reality. A lot of the imperialists' models were just flat-out wrong. A spectacular (and spectacularly tragic) example was Gary Becker's prediction that harsh sentencing could substitute for consistent law enforcement. Oops.

And in the end, economists had to pull back their occupying troops to fight battles closer to home. The financial crisis and Great Recession showed that economists didn't really understand the economy, which made a lot of people wonder why they were going off and trying to explain the division of household chores. (Of course, there's a good reason for this; it's a lot easier to test theories about household chores than it is to understand the business cycle...but hey!) By the 2010s, economic imperialism was kind of a joke.

But now the empirical revolution, especially the Credibility Revolution, is giving econ a second chance to conquer the neighbors. The new techniques - regression discontinuity, difference-in-difference, synthetic controls - are mostly pretty easy and quick for any smart person to grasp. The results of these sorts of studies are also usually very easy to interpret, unlike the output of many optimization models. And most importantly, the techniques can be applied to any social science subject.

That means that if empirical economists feel like writing a paper, it's really easy to go pick a soc topic. Want to study education policy? Just pull out your empirical econ toolkit! The relationship between crime and poverty? Go for it! 

The new econ imperialists will succeed where the first wave mostly failed, because they're armed with better weapons. Back then, it was basically a war of theory against theory, and the fights looked like:
Economist: [optimization model no one except economists understands] 
Sociologist: [slew of jargon no one except (possibly) sociologists understands] 
Public: Hmm, let me go with my political priors on thi - Hey, look, CNN is talking about Monica Lewinski! Sorry guys, gotta go.

Now, when empirical economists come with actual evidence, sociologists will be in a bind. See, the public doesn't get theory, but it gets empirical results. "X causes Y" is easy to understand, even for the most distracted of university administrators or Quartz columnists. That means empirical economists will soon be treated as experts on sociological topics.

In order to rebut economists, both in the public sphere and in the court of their own intellectual consciences, they will either need A) empirics of their own, or B) a good understanding of empirics AND the ability to clearly explain their own theories in order to use theory to question economists' interpretations of their results. 

Sociologists will have at least two barriers to doing this. First, many sociologists aren't nearly as proficient at stats and math as economists. That's not a huge problem, because Credibility Revolution techniques are actually not nearly as hard to learn as stuff like structural econometrics or Bayesian time-series methods. So sociology will have to beef up its grad students' quant skills, but it's hardly an insurmountable task.

Second, sociology is much more closed-off than econ, since few sociologists publish working papers. Soc is going to have to become a lot more open if it's going to hold off against the coming econ onslaught, both in the court of public opinion and in the general intellectual world.

Even if sociology does this, it's going to have another problem - many sociology theories will be found to be "not even wrong". As empirical evidence becomes the gold standard for social science arguments, jargon-heavy non-mathematical theories will just be less and less useful. That's probably going to make some soc theorists even angrier than it made econ theorists - at least econ theories, being quantitative, can often be tested with data. 

(Political scientists, meanwhile, will just keep doing what they always do, which is to cheerfully copy techniques from anyone and everyone.)

Anyway, in the end, I expect the new age of econ imperialism to be a good thing, for the world and for social science in general. It's time for the siloes to come down, for the borders between the arbitrary domains to be erased. Econ hordes: Conquer, pillage, burn!!

49 comments:

  1. Perhaps the economists can just start doing sociology using all their math and stat and the sociologists can start doing econ because even if they don't understand enough math or stat to run econ models, no one will know the difference because econ models never get anything right to begin with, except retrospectively of course.

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  2. Right now, we are seeing a fair number of replication failures in many empirical social sciences, like psychology. Even some well known effects that have been tested for decades aren't panning out with larger trials.

    Given the inherent data limitations of natural experiments,etc, how do we prevent focusing on noise rather than signal? Psychology found it's problem because it could run bigger experiments, this often isn't an option in the natural experiments I'd imagine applying econometric tools to.

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  3. Anonymous11:14 PM

    "Econ hordes: Conquer, pillage, burn!!"

    Genghis Kahn-like genocidal depredations are hardly guaranteed to win hearts and minds. The Mongols apparently enforced a policy of no circumcision on their subjugated peoples. So perhaps Noah's complete battle cry should read:

    "Econ hordes: Conquer, pillage, burn, prepuce preservation!!"


    Henry

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  4. Any hope for anthropology? :-D

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    Replies
    1. Anthropology is like Greenland; no one conquers it because no one wants it. ;-)

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    2. Lol! Yes, that would explain it.

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    3. Nathanael1:48 AM

      Anthro has positioned itself firmly with history and archaeology, methodologically. It'll do fine.

      These three are much more scientific than the rest of the "social sciences" already, largely because they do not attempt to make grand predictive theories, and instead focus on the question of "so, what was going on" -- which is a hard question!

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  5. Economists were making falsifiable claims before we had the empirics for them. Sociologists don't seem to have any interest in this, there is almost no distinction between modern sociology and political priors.

    I would guess that if you did a similar thought experiment to 'when has economics changed your mind', sociologists would never change their view unless it was good for their career. This is most obvious in today's feminism circles, those who dissent are ostracized.

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    1. Anonymous1:55 PM

      Actually, there is, for example, when people used to think women couldn't be intelligent enough to be scientists, mathematicians, from a biological standpoint, that "biotruth" got falsified, same for them being too "emotional" to be judges. Similarly for the intelligence of black people.
      It might hold true from a statistical stantpoint which might be influenced by the base biology to some extent, which interacts with many variables of the social context, but such statistic difference seems to vary depending on it.
      About the feminism circles, I dunno how that could be falsifiable, for example, as one could name manospherian circles which also orstracize the dissent with terms like "mangina", which doesn't contraddict your claim, but sure it's not less frequent, but some "anti p.c." people call it argumenting, while calling it ostracism is the "adverse" field does it, which also applies to some feminists or people concerned with social justice.
      It's also falsifiable, of course the more radical feminist social stance that everything is socially constructed, as well as the biotruth abuse of part of the "manosphere" so lets see both sides.
      Mind also that some of the hate and division in sides comes from both of them hating on eachother strawmen idea which have of them, equating all of them with extremists.

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  6. Some good points but a lot of silly shit - intentional and non- intentions!

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  7. It seems a lot less imperialistic when economists are just using the fact that they know statistical tools to do sociology. Unlike applying econ theories to sociology, it sounds like this "imperialism" doesn't have much to do with economics besides the fact that the people doing it are economists. More like high-skill immigration than imperialism.

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    1. More like high-skill immigration than imperialism.

      Hehe, nice one.

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  8. The biggest problem is when economists without any real grounding in the substance of an issue starting getting involved. I've noticed a number of occasions where they exclude pretty important contextual information or are totally ignorant of potential confounders. Statistics is a tool, not a substitute for knowing what you're talking about.

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    1. Economics models start out with a spherical cow assuming the existence of a can opener. Any sociologist who took an undergrad Reasoning class will be able to simply reply, "you're not modelling anything that actually exists".

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  9. Anonymous9:30 AM

    Lolz
    Economics is just a pseudo-metaphysics and its goal is mostly ideological far from understanding how world and capitalism work.
    So they abuse of junk math to try to get some credibility, better they learn what is math and how to use it in real science and not as anti-scientific tool.
    Maiko

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  10. The imperialism part is a good joke - I hope people get past it and read your last paragraph, which is the real point. I'm all for this empirical turn - but I won't be putting away my Oscar Lewis or Immanuel Wallerstein (intruders on sociology from anthropological and historical angles, respectively) just yet. it's just as true that theorizing from other disciplines can suggest directions for economic research.

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    1. Which part of the last paragraph? Down with silos? Or "pillage"? ;)

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    2. I meant the down with silos. I take "pillage", in this sense, to mean helping yourself to subject matter usually associated with another discipline. John Wesley, liked to steal ideas from non-theological authors, and he called this "plundering the Egyptians" (after a passage in Exodus). I guess this makes Noah one of the great minds of the eighteenth century! :-)

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    3. Wallerstein is junk.

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  11. Sociologist here. There are many jargon-heavy page-long paragraphs in sociological journals that are quite difficult to operationalize in a falsifiable way. That's perfectly true. Plenty of ideas are "not even wrong."

    There are also plenty of cool ideas that are falsifiable but have stringent data requirements. And the difference can be hard to tell (I have trouble sometimes, there really is too much jargon in soc).

    For an example of the difficulty of testing hypotheses, see Salganik, Dodds and Watts (2006), and take a look at the experiment they had to build. In my opinion, the best sociology is experimental, which isn't mentioned by the author.

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    1. I just want to jump in here and point out that "see Salganik, Dodds and Watts (2006)" is a thing you can actually do! I googled it and a full 19-page .pdf file came up as the first result. (I assumed it would be paywalled for us non-academics....)

      Quite wonderful to find it accessible. Thanks!

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  12. Anonymous11:00 AM

    Decades ago, when I was a graduate student in Geography at UCLA with an interest in what theoretical biology could contribute to agricultural science, I used to attend a monthly seminar for economist and theoretical biologists. Both groups used similar models and methods, but the theoretical biologists had to put up with empirical (field) biologists who could publish their results in respectable journals. Economists would benefit greatly from the same constraint.

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    1. Yeah, that's happening now! In most econ fields it has already happened a while ago.

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  13. The funny thing is that what Noah is proposing or predicting looks somewhat like what the econophysicists have recently been pulling in economics. Generally more mathematical, they have invaded to apply tests from physics on various data sets to study phenomena that economists have tended to ignore for theoretical reasons, such as fat tails in financial returns, and so forth. A major complaint of the economists has been that these unwelcome physicists do not know their underlying economic theory, so how dare they come and bother us with all these facts that do not fit out our theories (they have committed some genuine sins, such as claiming they are finding "universal laws" that do not appear to be there upon closer inspection, among other things).

    So we see sociologists complaining (see George Barry above) that economists come in but do not properly appreciate the "stringent data requirements" and so forth, or more generally the nuances and subtleties that the jargon-laden sociologists appreciate, but the bare bones mathy economists with their tool kit of handy dandy econometric techniques do not understand or appreciate. I, at least, see some irony here.

    Barkley Rosser

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  14. Sounds like statistical physicists taking on to economy with more or less the same results :)

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  15. I don't get how you can talk about sociologists engaging in impenetrable jargon when you just published a column criticizing economists' use of confusing jargon:

    http://www.bloombergview.com/articles/2016-04-06/economics-profession-has-built-a-tower-of-babel

    Also, if you actually took the time to read the main journals you'd find that though there's some confusing jargon, there's also lots of careful, statistical analysis used alongside well-defined technical terms.

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  16. A slight empirical flaw with this argument is that sociologists are much more likely to cite and use economics research than vice versa

    Still it's nice to see economics doing its 'excited toddler reinventing the wheel' act as it catches up to the rest of the social sciences ;)

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    1. Heh. Economics hasn't even experienced the empirical revolution of the social sciences yet, much less the postmodern revolution. I predict they get whooped like a red-headed stepchild.

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  17. hey noah, have you seen the "the new astrology" article about the (mathematical) economics profession? a response from you would be very interesting.

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  18. Anonymous8:50 PM

    "As empirical evidence becomes the gold standard for social science arguments"

    Here's the problem with empiricism in the social sciences that physicists and mathematicians don't seem to understand. It would appear that the laws that govern physical systems are invariant across time. The same cannot be said for the social sciences. What works today, may not work tomorrow.

    Henry

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    1. That's okay: economists don't understand that either.

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    2. Anonymous7:18 PM

      "That's okay: economists don't understand that either."

      Most don't - that's because they have been trained as mathematicians.

      Henry

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    3. "Mathematicians" assumes they went beyond 2nd- or 3rd-year undergraduate math. Most economics profs have less competence in math than community college engineering graduates.

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    4. Anonymous7:13 PM

      That may or may not be so, but mathematical rigor is paramount and economic insight eschewed.

      Henry

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    5. I'm sorry, but you're simply trying to defend a very indefensible position. It is simply not true that humans and societies are not governed by laws akin to the laws of physics, they might be highly probabilistic and incredibly complex and tough to approximate, but arguing that they don't exist is basically impossible...

      To argue that they don't exist is to argue that anything, literally anything, can happen.

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    6. Anonymous5:35 PM

      " It is simply not true that humans and societies are not governed by laws akin to the laws of physics..."

      I didn't quite make that argument and your point is as much assertion as is mine.

      Henry

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  19. It wasn't too long ago that you chided Cochrane for arguing on behalf of growth-oriented policies. IIRC the gist of your post was, in all of your snark, we'll keep trucking right along a predictable growth trajectory as a result of steady technological growth.

    Now you claim empiricism holds new keys. So, if policy has little impact on growth, aside from the North Korea crash 'n burn scenario, what good is empiricism?

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  20. Anonymous3:39 PM

    nothing economic about this imperialism. this is just Don Rubin statistics invading additional social science fields, having successfully colonized most of applied econ already.

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  21. Oh man. RCTs have only recently taken off in recent years among in terms of econ lit share. And sociology isn't exactly stuck in the 1970s debates about functionalism etc anymore, though every time someone points that out...another econ blogger and/or asst prof without a RePEc listing hinthint lists the same Fourcade paper as proof that they're just jealous relics who can't appreciate their hella rad regressions. It's like an econjobsrumors post up in here!

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  22. From mathiness to empiriness: forget it!
    Comment on Noah Smith on ‘A new age of econ imperialism is coming’

    Since Adam Smith, economists are too incompetent for science but smart enough to borrow manners and tools from successful disciplines. The result comes as no surprise : “Suffice it to say that, in my opinion, what we presently possess by way of so-called pure economic theory is objectively indistinguishable from what the physicist Richard Feynman, in an unflattering sketch of nonsense ‘science,’ called ‘cargo cult science’.” (Clower, 1994, p. 809)

    Pure economic theory in all variants from General Equilibrium to RBC and DSGE, and from Keynes to post-Keynesianism, is a failure. Yet, science consists of TWO elements: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant, 1994, p. 31)

    Eureka! there seems to be a way out of the impasse: fact-free model bricolage has not worked, so let us try the theory-free application of sophisticated statistical tools. True to form, economists mess it up again, because the ONLY way to get out of a failed approach is a paradigm shift.

    But, the fact of the matter is: “A new idea is extremely difficult to think of. It takes a fantastic imagination.” (Feynman, 1992, p. 172) Economists lack scientific imagination since Adam Smith, but they are just smart enough to use tools that have been developed elsewhere.

    Economists have no clue at all about what the new paradigm could look like: “There is another alternative: to formulate a completely new research program and conceptual approach. As we have seen, this is often spoken of, but there is still no indication of what it might mean.” (Ingrao et al., 1990, p. 362)

    To apply the latest powerful statistics package on the latest powerful hardware is NOT a paradigm shift. It is just another dog and pony show for the general public, signaling ‘we are at the forefront of research’. This is tried and tested crisis communication since the gold makers: Yes, sadly, the last big idea exploded into our face as all the others before, but NOW the breakthrough is just around the corner.

    For everybody who is aware of economists’ track-record of consistent failure Noah Smith’s hallucination of future triumph is an empty promise/threat that can merely serve as pep-talk for disoriented losers.

    The economics paradigm shift will not come from scientifically retarded people who expose themselves with “most of what I and many others do is sorta-kinda neoclassical because it takes the maximization-and-equilibrium world as a starting point” (Krugman).

    Dear sociologists, you have nothing to fear. Economists cannot tell until this day how the economy works and you can beat them on their own turf before they get their new age pants on (2015).

    Egmont Kakarot-Handtke

    References
    Clower, R. W. (1994). Economics as an Inductive Science. Southern Economic Journal, 60(4): 805–814.
    Feynman, R. P. (1992). The Character of Physical Law. London: Penguin.
    Ingrao, B., and Israel, G. (1990). The Invisible Hand. Economic Equilibrium in the History of Science. Cambridge, MA, London: MIT Press.
    Kakarot-Handtke, E. (2015). How the Intelligent Non-Economist Can Refute Every Economist Hands Down. SSRN Working Paper Series, 2705395: 1–6. URL
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2705395.
    Klant, J. J. (1994). The Nature of Economic Thought. Aldershot, Brookfield, VT: Edward Elgar.

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  23. Why stop at the other social and behavioural sciences? The biological and geosciences could do with a dose of economic rigour too.

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  24. "harsh sentencing could substitute for consistent law enforcement."

    If harsh sentencing, and the death penalty in particular, worked then we would see serial killers and per-meditated murder re-locate or commute to states that do not have the death penalty.

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  25. The best known work by economists in the last quarter-century or so is Freakonomics, and most of the topics are sociology. They have nothing to do with money. Teachers changing students' test answers, race and class in the choosing of names for kids, sumo wrestlers taking a dive, parenting and education, abortion and crime. The authors may call themselves economists, but is this economics?

    As from fields outside of economics has shown, stereotypes are hard to extinguish -- confirmation bias, availability bias, etc. Hence persistence of the economists' stereotype of sociology as all jargon. If you think sociologists don't create models and run regressions, thumb through an issue of the ASR.

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    1. Over 90% of all American sociology Ph.D.s work as sociometricians because the world only needs a few dozen social theorists. Thing is, in sociology, the theorists actually read the sociometricians, while apparently no economics prof has ever bothered to look at data.

      Sociologists also have a comprehensive exam based on the 100-200 most important books and articles in their field: meanwhile, no economist has ever even read Ricardo, otherwise he'd realize Ricardo didn't actually believe in that Ricardian equivalence nonsense.

      One of these is a scholarly field and the other is Republican nonsense.

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  26. New age economics in ten bullet points

    • Economics is a failed science. It consists actually of political and theoretical economics. Political economics is scientifically worthless.

    • Psychology, sociology, behaviorism, political science, geopolitics, history, anthropology, evolutionary theory, institutionalism, law, ethics, philosophy are NOT economics. The valid results of these independent disciplines are taken into economics by way of multidisciplinary cooperation if needed.

    • Economics is NOT about human nature/behavior/action but about the evolution of the economic system as a whole.

    • Partial analysis is of extremely limited value and in most cases runs directly into the fallacy of composition. Microfoundation will therefore be replaced by macrofoundation.

    • Systemic (= new) economics determines first of all the objective Profit Law because it is pivotal to all of economics. Who does not understand what profit is has no idea how the actual economy works.

    • Walrasianism, Keynesianism, Marxianism, Austrianism — all four got profit wrong. These approaches are scientifically worthless.

    • Economics has nothing to offer to other disciplines because it has produced not much, if anything, of scientific value since Adam Smith. The representative economist cannot even tell the essential difference between income and profit.

    • The ongoing paradigm shift consists methodologically in the move from the behavioral axiomatic foundations of the four failed approaches to structural axiomatic foundations.

    • People who have not realized in the old age that maximization-and-equilibrium is scientific garbage will not be admitted to the new age because of proven scientific incompetence.

    • Scientific imperialism will put an end to economics as cargo cult science.

    Egmont Kakarot-Handtke

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  27. Nathanael1:46 AM

    What's actually winning is biology. Biochemistry, epidemiology, ecology...


    Biology is the actual science here, and it's eventually going to overtake all the "social sciences".

    It already destroyed most of criminology, though criminology hasn't admitted it yet, along with destroying theories by economists and sociologists:

    I refer, of course, to the lead poisoning - crime link.

    http://www.ricknevin.com/


    Enough of psychology is actually serious neurobiology that it's going to be well ahead of the rest of the social sciences. Economics... will take a while.

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  28. This is a very frustrating blog post as it completely mischaracterizes much of current sociology. Firstly, sociology is very empirical. Open up any of the flagship sociology journals and you will find without pretty much any exception the articles will be empirical. Second, I think even most economists proceed cautiously with experimental evidence (issues of external validity etc). Third, do not forget it was sociologists who championed the social survey now widely-used by economists (and others), not to mention social network analysis - so please give sociologists at least SOME credit. I agree perhaps sociological theory could improve since it could be in danger of atheoretical p-value hacking, but I think this is common across all (social) sciences.

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  29. Interesting response by Fabio Rojas on the org theory blog.
    https://orgtheory.wordpress.com/2016/05/18/economics-and-sociology-part-cdlxvii-comments-on-a-blog-post-by-noah-smith/

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