Second Thoughts on Economics
Just in time for the annual meetings of the American Economic Association, Russ Roberts writes,
modeling economic behavior using the tools of the physical sciences in hopes of attaining the holy grail of a full-blown, accurate, model that can track the ups and downs of a complex modern economy is not just a fool’s quest, but a dangerous one.
Read the whole thing. No single excerpt can capture what he has to say. My own thoughts:
1. As you proceed deeper into economics courses, the mathematical difficulty increases at what seems to me a steeper rate than the extent of insight.
2. The project of turning economics into a mathematical, quantitative-empirical discipline is difficult, if not impossible, to stop. My email today included the table of contents of the AEA macroeconomics journal. I looked at some of the articles, including the lead article by he eminent Michael Woodford, and I thought they were pretty worthless. But there is no way for the emperor to be overthrown, even if he has no clothes.
3. When I worry about the impact that government funding has on scientific research, I have economics in mind. Government funding serves to entrench the incumbents in any market, and the impact in economics is clearly visible. Maybe “real” science is less susceptible to being captured by cliques, because failure is easier to demonstrate. I don’t know. But what I see happening in economics does not make me want to sign any petitions for more government funding of science.
4. I can sometimes see cases of inverse relationships between scientific pretension and good economics. Exhibit A would be the folks who think that regression analysis tells them whether or not government workers are overpaid, rather than considering simpler behavioral evidence.
5. With all that said, I think that enough useful insights have been developed over the past fifty years that I am not ready to say that we should blow up the current graduate economics curriculum and replace it with one that just studies the classics. What I would like to see is less homogeneity among the top graduate schools, so that top students are not all allocated to programs that worship at the mathematical altar. The top grad schools produce a monoculture, and I think we would be better off if there were diversity.