BUT, it's Econ Nobel season, and so someone needs to do the job of standing up and repeating all the old disses. This year, it's Joris Luyendijk in The Guardian. Here are a few of the tired old chestnuts that we see trotted out from time to time (chestnuts can trot because they're horse chestnuts, so shush).
1. "Econ isn't a real science."
And yet on Monday the glorification of economics as a scientific field on a par with physics, chemistry and medicine will continue.
The problem is not so much that there is a Nobel prize in economics, but that there are no equivalent prizes in psychology, sociology, anthropology. Economics, this seems to say, is not a social science but an exact one, like physics or chemistry – a distinction that not only encourages hubris among economists but also changes the way we think about the economy.Are the Nobels glorifying peace and literature, and setting these fields up as "on a par" with the natural sciences? If so, it's just one more reason why Nobel prizes are silly. If not, then shush.
Sure, econ is (mostly) empirical instead of experimental. It relies mostly on real-world data and natural experiments instead of laboratories. So what? The same is true of ecology and astronomy. I don't see people writing articles every year saying that these aren't real sciences and shouldn't get big gold medals.
2. "Social science isn't science."
A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths.Um...almost all theories in all disciplines are imperfect. Newton's Laws don't describe all motion. The Germ Theory of Disease doesn't describe all disease. Our understanding of almost any subject is incomplete, and our leading ideas flawed.
And where is this law of the Universe that says that the human world can't be modeled like the world of particles or the world of cells and DNA? Does anyone have evidence to back up that contention? How the heck do you know that human behavior doesn't lend itself to modeling? If humans are so unpredictable, tell me why Google auctions get so much money from advertisers, or how economists can predict how many people will ride a train before the train is built. If you think social science can never be science, explain to me why these successes were possible.
3. "Economics caused the financial crisis."
To illustrate just how dangerous that kind of belief can be, one only need to consider the fate of Long-Term Capital Management, a hedge fund set up by, among others, the economists Myron Scholes and Robert Merton in 1994...Markets, it seemed, didn’t always behave like scientific models.
In the decade that followed, the same over-confidence in the power and wisdom of financial models bred a disastrous culture of complacency, ending in the 2008 crash. Why should bankers ask themselves if a lucrative new complex financial product is safe when the models tell them it is? Why give regulators real power when models can do their work for them?
Someone doesn't know the difference between econ and financial engineering! The kind of neoclassical econ, based on rational agents and utility maximization, that gets so much grief on the blogs was not even involved in the models that brought down the financial system. Financial engineering is more applied math than econ - no assumptions of individual rationality, just a bunch of assumptions about statistical relationships. Yes, an unjustified belief in market efficiency helped people get complacent and ignore the gathering risks. No, economists were not the only, or even the loudest, voices telling people not to worry.
4. "Econ uses too much math."
Over the past decades mainstream economics in universities has become increasingly mathematical, focusing on complex statistical analyses and modelling to the detriment of the observation of reality.
Complex statistical analyses, eh? What do you think they are analyzing? Data. And what is data? Systematic observation of reality.
5. "Economics tries too hard to be value-neutral. In fact, it's always ideological."
Perhaps the most pernicious effect of the status of economics in public life has been the hegemony of technocratic thinking. Political questions about how to run society have come to be framed as technical issues, fatally diminishing politics as the arena where society debates means and ends. Take a crucial concept such as gross domestic product. As Ha-Joon Chang makes clear in 23 Things They Don’t Tell You About Capitalism, the choices about what not to include in GDP (household work, to name one) are highly ideological.
So everything economists do is ideological, and instead of trying to pretend to be objective, economists should embrace the ideological nature of their discipline and try to have an ideology of Good instead of one of Evil. How many times have I heard this one?
There's just a small problem with that. If you embrace ideology, people won't take your ideas seriously unless they buy into the same ideology. If you discard objectivity in favor of activism, people will know that you are not an honest broker of ideas and evidence.
Sure, it's impossible to eliminate all ideology from science (any science!), but you should at least try.
The same applies to inflation, since there is nothing neutral about the decision not to give greater weight to the explosion in housing and stock market prices when calculating inflation.
Lujendijk, you don't have any idea what that even means. You want to say that the value of your retirement portfolio going up is the same as the price of milk going up at the grocery store?? Seriously?? Or did you just hear from someone that QE was causing "asset price inflation", and that this was Dangerous and Bad, and so you decided to toss that out there??
Before you criticize technocracy for hiding its politics, you should at least have a working understanding of what those politics are.
Anyway, this litany of critiques, repeated ad infinitum since the crisis, strikes me as mostly pretty lazy. There are good critiques out there. These are not they.
That said, I like Luyendijk's idea of adding a general social science prize to the Nobel roster. Nobels are silly anyway, so why not have one for every field? While we're at it, how about one in math and computer science, and one in psych/neuro/cognitive science? And one in visual arts? And one in writing snarky point-by-point rebuttals in blog posts?