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May 30, 2007

More on Heterodox Economists

A commenter writes:

I am an Econ prof and the I think the answer to the question depends on the topic. The reaction of my colleagues to Blinder's WSJ editorial was: "isn't that just what we teach our students?" And it is. But it isn't what Economists typically say in the paper because there is this idea that "the public" can't be trusted with a subtle argument and therefore the old "classical" verities, which are often counter-intuitive, need to be emphasized even though "we" understand their limitations.

Recall that Aklerlof, Stiglitz, etc. all got published very easily. And it would be hard today to publish a paper on true classical trade theory, whereas in the "new" standard theories it is easy to show problems with trade. So, the problem is about "public statements", not research.

On the other hand, a lot of self-labeled "Heterodox Economists" are folks who don't want to learn math and who want to lecture folks on the moral correctness of left-wing politics, without doing much research. When journals don't publish their op-ed pieces, they say there is a conspiracy against them. Bah.

That distinction between public statements and research is, i think, an important one. This conversation is often marred by conflations between the two. There is much remarkable work going on within economics, even as there's an odd homogeneity in the profession's public representation. This is partially because its most enthusiastic public outlets are hack shops like The Wall Street Journal editorial page, and half because, as the commenter writes, "there is this idea that "the public" can't be trusted with a subtle argument and therefore the old "classical" verities, which are often counter-intuitive, need to be emphasized even though [economists] understand their limitations."

May 30, 2007 in Economics | Permalink

Comments

There's also the matter of money. Most private money for economic research comes with right-wing strings attached. Much of the money to endow chairs in economics and the like, comes from a business community with very definite ideas. A lot of economics faculty are at business schools, which are very sensitive to the sensibilities of business.

Consider the case of Glenn Hubbard. No one imagines that he's going to win the Nobel, or light many intellectual bonfires. But, he's been on the Council of Economic Advisers -- chairman, actually. Couple of Olin fellowships -- taking one of those and not ruining your scholarly reputation is an intellectual achievement in itself. Dean of the Columbia Business School and Russell L. Carson Professor of Finance and Economics at Columbia. Did I mention that the eponymous Russell L. Carson is Chairman of the Board of Overseers at Columbia Business School, and a major venture capitalist? Professor Hubbard has spent much of his free time lately serving as co-chair of theCommittee on Capital Markets Regulation, which has made many earnest recommendations for "improving the competitiveness of U.S. capital markets" that just happen to coincide with Mr. Carson's interests.

I am sure Professor Hubbard's enthusiasm for interests of the very wealthy is sincere. And, he would never be so boorish as to look askance at a member of the Columbia faculty, who drew ill attention from Mr. Carson.

Posted by: Bruce Wilder | May 30, 2007 2:48:20 AM


You know that conventional wisdom among publishers is that every equation cuts the potential book sales in half?

Posted by: joel hanes | May 30, 2007 3:52:20 AM

This sounds an awful lot like Straussianism to me. Feed lies to the lower orders to keep them in line, and let only the Initiated know what the truth is. I don't care what the justifications are - this is rotten to the core. The entire economics "profession" needs to be abolished. Regardless of what is done at the graduate level, the fact remains that Econ 101 (a required course at most universities) generally consists of simplistic laissez-faire indoctrination, and the public statements of economists have destroyed our industrial base and are eating away at our middle class. Time for it to end.

Posted by: Josh G. | May 30, 2007 10:13:49 AM

"On the other hand, a lot of self-labeled 'Heterodox Economists' are folks who don't want to learn math and who want to lecture folks on the moral correctness of left-wing politics, without doing much research. When journals don't publish their op-ed pieces, they say there is a conspiracy against them. Bah."

I can't speak to this. All I know is that VAST majority of people who make "economic" arguments in the public sphere are people who want to lecture us on the correctness of right-wing politics, who don't know economics very well, and who have definitely failed to do their math and research. And the press does publish their op-eds. Of course, that's true in every field (see, Middle East, Law, Etc.), but it's particularly annoying with economics because they often implicitly depend on "econ 101".

Posted by: MDtoMN | May 30, 2007 10:20:30 AM

On the other hand, a lot of self-labeled "Heterodox Economists" are folks who don't want to learn math and who want to lecture folks on the moral correctness of left-wing politics, without doing much research.

I can speak to this. A tremendous amount of published "theoretical" work in economics is math with assumptions unanchored in reality, which therefore rigorously lead us from somewhere we aren't to somewhere we would be if we had in fact started from where we don't.

There may be some heterodox economists that don't want to learn math ... but them, my second degree as an undergraduate was in Math, so I certainly would view it as a convenient stereotype that excused orthodox economist from responding to heterodox critiques.

On the other hand, it is very clear that orthodox economists do not want to pursue scientific reasoning, since its harder than just doing the math. And given the example they provide of "doing the math", its not surprising that those who wish to pursue economics as a social science do not want to follow that example.

Posted by: BruceMcF | May 30, 2007 12:07:42 PM

Hilarious, let's destroy the profession of economics. That's certainly the key to a brave new liberal utopia, isn't it?

Posted by: Korha | May 30, 2007 12:19:55 PM

Posted by: Korha | May 30, 2007 12:19:55 PM

Hilarious, let's destroy the profession of economics. That's certainly the key to a brave new liberal utopia, isn't it?

In what sense is a call for more economists to start pursuing scientific cause and effect reasoning an effort to "destroy the profession of economics"?

Posted by: BruceMcF | May 30, 2007 12:28:35 PM

Over at TPM Cafe there's an impassioned piece by Galbraith which gives the lie to the words of your commenter. The fact is that the "journals most associated with a good reputation at the prestigious schools" (aka "top journals") systematically police the orthodoxies of the profession. Does this mean no interesting work gets done? No, because humans are persistent and creative. It does mean that little of the interesting work gains the status in the profession it would need to make it's way into "public pronouncements."

Posted by: Meh | May 30, 2007 12:34:12 PM

I'm confused. Bruce Wilder posted - in the very first post of the thread in which ol' EconProf made his contribution - a nice list of all the idiocy that undergirds neoclassical theory.

The basic notion of homo oeconomicus - a single, discrete, hermetically sealed self driven by a transparently knowable self-interest - undergirds neoclassical theory. It is, anthropologically, the stupidest idea that anyone has ever had.

And yet those who criticize this model get termed "folks who don't want to learn math and who want to lecture folks on the moral correctness of left-wing politics, without doing much research." And then, when that calumny gets posted, it gets jumped to its own blog post. What is it, exactly, in the neoclassical model that's so important to you? Why do you think we need to keep giving it the benefit of the doubt, rather than the huge multiplicity of other possible systems, systems which don't underpin, say, the destruction of social security?

Posted by: DivGuy | May 30, 2007 12:49:44 PM

"All I know is that VAST majority of people who make "economic" arguments in the public sphere are people who want to lecture us on the correctness of right-wing politics, who don't know economics very well, and who have definitely failed to do their math and research."

That maybe applies to the WSJ, which regularly showcases supply-side nutjobs, but not to, say, the FT's Martin Wolfor with bloggers like DeLong, or even, bad as it is, the Economist. And it's certainly not the case with Nobel Laureates like Akerloff, Stiglitz, Arrow, or Solow. And B-School economists are, if anything, more likely to focus on imperfect markets (more $$$$ to be made where you have barriers to entry, etc.), than many econ professors who want to make the discipline into physics.

Posted by: Sock Puppet of the Great Satan | May 30, 2007 2:10:12 PM

Posted by: Meh | May 30, 2007 12:34:12 PM

Does this mean no interesting work gets done? No, because humans are persistent and creative. ...

It should also be born in mind that the critical question is not whether the inner core of neoclassic marginalist utilitarian modelling or the outer belt of orthodox economics in general is complete enough for the competencies that it claims.

And it certainly is not. For example, the utilitarian model of human behavior repeatedly relies on assumptions that have either been repeatedly shown to be fallacious or which limit their scope to a very narrow range of questions. One common defense of that fact is to argue that while the assumptions are invalid, people behave in ways that can be modelled as if the assumptions were valid.

However, that is not scientific explanation, it is mere emulation. And while a successful emulation might be useful as a device for predicting outcomes, it is useless in making arguments about human welfare ... in saying whether one policy alternative, for example, is superior to another. After all, if people do not really incorporate utility maximization, then the estimated utility function does not actually encode people's preferences ... but rather, only provides the programming for a device that emulates behavior.

On this argument, given that the assumptions are not valid, and therefore that utilitarian comparisons based on a utility maximizing model are not a valid basis for welfare comparisons, utilitarian analysis is not usable as an input for such things as cost/benefit analysis.

And that inability to use utility maximizing models to inform any welfare conclusions is an awfully big hole to fill.

That is one hole in the orthodoxy ... there are others, but that's a pretty big one.

Posted by: BruceMcF | May 30, 2007 6:06:32 PM

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Posted by: judy | Oct 6, 2007 4:48:27 AM

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