A dose of David Hume

David Hume, A Treatise of Human Nature, Book 1, Introduction:

“’Tis evident, that all the sciences have a relation, greater or less, to human nature; and that however wide any of them may seem to run from it, they still return back by one passage or another. Even Mathematics, Natural Philosophy, and Natural Religion, are in some measure dependent on the science of Man; since they lie under the cognizance of men, and are judged of by their powers and faculties. ’Tis impossible to tell what changes and improvements we might make in these sciences were we thoroughly acquainted with the extent and force of human understanding, and could explain the nature of the ideas we employ, and of the operations we perform in our reasonings …… If therefore the sciences of Mathematics, Natural Philosophy, and Natural Religion, have such a dependence on the knowledge of man, what may be expected in the other sciences, whose connexion with human nature is more close and intimate?”

In other words, understanding human nature is the foundation of all knowledge. And science needs social science.

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All the way from the Stone Age and back again?

There’s a growing genre of books, the long sweep of human history from a social science perspective. The ur-text must be Jacob Bronowski’s The Ascent of Man (the DVD of the series is still available and, I think, still fascinating despite being so old-fashioned.) I suppose the recent wave started with Jared Diamond’s Guns, Germs and Steel (1997), and more conventional economic histories such as David Landes in the Wealth and Poverty of Nations (1998). More recent contributions have come from Ian Morris, with Why the West Rules – For Now (2011) and The Measure of Civilization (2013), and Diamond again with Collapse (2005).

The latest is Yuval Noah Harari’s Sapiens: A Brief History of Humankind, just published in the UK with a lot of publicity razzmatazz. I’ve not read it, just this extract in The Guardian. It touches on how we measure progress, and is happiness a better aim than GDP. It isn’t entirely clear to me what the conclusion is – that we were happier in the Stone Age? To which the answer is surely the economist’s sceptical revealed preference argument: see how many voters want to revert to a hunter-gatherer society. Or is Harari instead arguing for giving evolution a bit of a boost?

“Humans are not adapted by evolution to experience constant pleasure, so ice‑cream and smartphone games will not do. If that is what humankind nevertheless wants, it will be necessary to re-engineer our bodies and minds. We are working on it.”

The state and the energy market

Dieter Helm knows more than most people about the UK energy market. His website is packed with useful papers, and I really enjoyed his recent book The Carbon Crunch. He has another one due out next year, Natural Capital: Why It Matters – Prof Helm chairs the Natural Capital Committee.

This week I read through one of his older books, Energy, the State and the Market: British Energy Policy Since 1979, published in 2003, having only dipped into it previously. It’s an excellent, detailed account which intertwines economics, history and political analysis – as any rounded understanding of energy markets would require. Energy is so fundamental to the economy that it will always be a political issue, and private ownership simply changes the role of the state from producer to regulator.

Although obviously written long before the recent concern about prices and market structure, now being scrutinised by the Competition and Markets Authority, the book makes plain the inevitable trilemma: efficiency, affordability and sustainability. The political debate has got no closer to acknowledging the unavoidable trade-offs in the 10 years or so since the book was written.

There is, by the way, a good comment here on the University of Manchester Policy blog on the market reference by Martin Stanley, former Chief Exec of the Competition Commission.

The other thought prompted by reading the book it is how terrifically complicated the markets for gas and electricity are – and how constrained the future choices are by past investments and institutional structures. I thought I knew this already, as I’m a member of a stakeholder advisory panel for EDF Energy in the UK, but seeing all the detail set out in one place has really underlined it. It is striking in Helm’s account how frequently major, disruptive structural decisions have been taken on the basis of assumptions about oil prices and growth that have proven massively wrong. Not a very cheering read after news this week that the National Grid is seeking emergency supplies because it expects electricity shortages this winter.

The Worldly Philosophers – the better half

Yesterday’s post on the women problem in economics prompted a comment asking who would be included in a female version of Robert Heilbroner’s classic The Worldly Philosophers. A Twitter conversation later, here is my curated version of the suggestions.

Harriet Martineau

Harriet Taylor

Clara Collet

Rosa Luxembourg

Beatrice Webb

Barbara Wootton

Joan Robinson

Phyllis Deane

Anna Schwartz

Elinor Ostrom

There were also Twitter suggestions about women economists living and working now, including: Anne Kruger, Dambisa Moyo, Ngozi Okonjo-Iweala, Emily Oster, Esther Duflo, Helene Rey, Deirdre McCloskey. But I can think of many others and I think a Worldly Philosophers-type collection would need to stop short of modern times. One needs a bit of hindsight to judge lasting influence, although I’m sure many of those on the list will qualify in time.

Economics and women

Economics has a women problem. It’s obvious enough just looking at the talking econo-heads who appear on TV, but the data confirm the impression. Studies by the Women’s Committee of the Royal Economic Society have found that in academic research and employment, women are in a minority in economics departments, and the proportion declines the higher the level – women are under-represented as professors in particular. The latest report also finds a decline in the proportion of undergraduate economics students who are female (although numbers overall of economics students have been rising).

A new working paper (pdf) by Mirco Tonin and Jackline Wahba of the University of Southampton finds that the gender gap precedes university: despite the relatively high pay and the potential for an influential career offered by an economics degree, in the UK only 27% of students enrolling for economics degrees are female, compared to 57% of all students enrolling for university. (They use the UCAS data on acceptances for the 2008 round.) They find no evidence of universities discriminating against would-be female economists; the gap lies in the fact that girls are less likely to apply to do economics, even after controlling for individual characteristics, type of school and region. A large part, but not all, of the gap is due to the differences in girls’ A level choices at school, as they are less likely to have chosen maths and economics at 16.

The paper therefore urges better maths preparation for girls in high school, so that more of them choose to study it for longer. Some people, of course, would urge economics to become less mathematical, but I’m not one of them, although it should never be only about the mathematical models. In many ways, a more ‘real-world’ economics would need more proficiency – think, for example, about network theory, or the use of non-linear dynamic systems in macroeconomics.

The paper landed in my email in the wake of the arrival of a new book, Why Gender Matters in Economics, by Mukesh Eswaran. It’s fascinating.

There are three sections, covering: whether women and men behave differently in economic situations (more or less altruistic, risk averse etc) and their power within households when it comes to economic decisions; gender in markets, which covers the labour and credit markets and globalization; and finally a section on the institution of marriage looking at questions such as access to birth control and fertility rates. It’s a non-technical book, having grown out of an undergraduate course. It discusses these questions in the setting of both poor and rich countries. Of course, it does not summarize all the empirical literature on these questions, but it gives readers the analytical tools to think about them, and enough of a flavour of the state of evidence on the answers.

The book ends on a sombre note, reporting the evidence of a decline in the subjective well-being of women, either absolutely or relative to men, in recent data for developed and developing countries.

We certainly need more women economists for its own sake – there is likely to be distortion in the questions addressed by any subject which is only a quarter female, and an odd sociology. To give just one example, the absence of data on unpaid work in the home makes it hard to evaluate lots of policy proposals concerning (paid) labour force participation; the economists and statisticians who concluded unpaid domestic labour should be outside the GDP production boundary were men.

Beyond this, though, Tonin and Wahba are right to say that a career in economics is potentially influential. Economists wield great influence over public policy, including policies affecting the lives, economic power and ultimately the well-being of women. There is lost ground to make up. Girls, women, brush up on the maths a bit if you need to, but above all come and study economics!