Tag Archives: economics

This is how little I know

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It’s terrifying how easy it is to be blithely unaware of the intellectual history of economics, even if you read a lot, as I do. History of thought is one of the glaring gaps in undergraduate and graduate courses, alongside economic history per se.

Last week, when I was speaking at the Manchester Statistical Society, my discussant, Dr Richard Pryke, mentioned the work of Ian Little. At the weekend I looked him up and found this fabulous obit written by Professor Peter Oppenheimer and this by Robert Skidelsky.

It turns out that Prof Little’s [amazon_link id=”0198281196″ target=”_blank” ]A Critique of Welfare Economics[/amazon_link] of 1950 was hugely influential and was reissued in 2002. I’m not at all proud of knowing nothing about it, and will try to fill the gap.

[amazon_image id=”0198281196″ link=”true” target=”_blank” size=”medium” ]A Critique of Welfare Economics[/amazon_image]

Is economics leaving Wonderland?

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Bill Easterly’s [amazon_link id=”0465031250″ target=”_blank” ]The Tyranny of Experts[/amazon_link] and The Idealist, Nina Munk’s book about Jeff Sachs’s Millennium Villages project in Africa, [amazon_link id=”0385525818″ target=”_blank” ]The Idealist[/amazon_link], were reviewed in an interesting article by Andrew Jack in the Financial Times yesterday. The books – neither of which I’ve yet read – seem to be part of the big shift that has occurred in development economics in recent years. That shift reflects a welcome shedding of the belief, at least on the part of many economists, that a single conceptual approach will deliver a ‘silver bullet’ solution or method that can be applied everywhere.

[amazon_image id=”0465031250″ link=”true” target=”_blank” size=”medium” ]The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor[/amazon_image]   [amazon_image id=”0385525818″ link=”true” target=”_blank” size=”medium” ]The Idealist: Jeffrey Sachs and the Quest to End Poverty[/amazon_image]

This is obviously far from a universal view, or Easterly and Munk would not have written their books. However, a number of the OECD economists I was lunching with on Friday were discussing exactly this subject. One said that he thought the RCTs approached, as so brilliantly described in Duflo and Bannerjee’s [amazon_link id=”1586487981″ target=”_blank” ]Poor Economics[/amazon_link], would turn out to have transformed the field when we look back in a few years’ time. He was keen to see the developed economies scrutinise their own policies as rigorously as some aid interventions are scrutinised now.

[amazon_image id=”1586487981″ link=”true” target=”_blank” size=”medium” ]Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty[/amazon_image]

As well as the methodology question, though, there is the tendency so widespread among economists to assume away the importance of historical and geographic specificities. One of the reasons I so loved Jeremy Adelman’s biography of Albert Hirschman, [amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher[/amazon_link], was its emphasis on this aspect of Hirschman’s development work, the crucial importance of the specific context.

The reductive turn in economics that dominated our subject from the 1970s to the 2000s is tenacious, but it seems to be on the retreat. Development economics is one of the straws in the wind. Perhaps I’m overoptimistic, but I do think economics is returning to the real world from its surreal Wonderland.

[amazon_image id=”1853260029″ link=”true” target=”_blank” size=”medium” ]Alice in Wonderland (Wordsworth Classics)[/amazon_image]

Economists out to lunch?

Economists and our responsibilities to society

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Do social scientists (including economists) have a responsibility to engage in public debate? Yes, said Nicholas Kristof in the New York Times. Academics have become too marginalised and – with honourable exceptions – he said: “Ph.D. programs have fostered a culture that glorifies arcane unintelligibility while disdaining impact and audience.”

Paul Krugman weighed in specifically on economics: “In my field there is indeed a problem with abstruseness, with the many academics who never even try to put their thoughts in plain language.” He concluded that economists who can’t explain what they’re doing probably don’t understand what they’re doing. Krugman supports the use of mathematical models but – echoing many great economists of the past like Marshall and F.Y. Edgeworth – argues that what we always call ‘intuition’, or non-mathematical explanation, matters too.

I like Edgeworth’s analogy best: the maths is like the scaffolding essential for putting up a building. You have to have it, and you have to take it down at the end.

Of course I agree with the general point that academics – especially social scientists! – have to engage with society. Not just engage with as in discuss one’s research in intelligible language, but understand how academic research and teaching interact with society, influence it and are influenced by it. (This was the theme of my 2012 Tanner Lectures, The Public Responsibilities of the Economist (link near the bottom of the page), which looked at the role of economics in the formation of modern financial markets, among other things.)

In the UK, this issue is now described by the shorthand of ‘impact’, with universities required to demonstrate their impact as part of the 2014 Research Excellence Framework, which will determine the allocation of funding. I’m playing a small role in the assessment exercise.

What impact do economists and other social scientists actually have? Is it by being ‘public intellectuals’? Or are there more ‘impactful’ channels? I’ve been reading a very interesting new book, [amazon_link id=”1446275108″ target=”_blank” ]The Impact of the Social Sciences: How academics and their research make a difference[/amazon_link], by Simon Bastow, Patrick Dunleavy and Jane Tinkler.

[amazon_image id=”1446275108″ link=”true” target=”_blank” size=”medium” ]The Impact of the Social Sciences: How Academics and their Research Make a Difference[/amazon_image]

It analyses in some detail evidence from data collected on hundreds of UK-based social scientists and researchers in the ‘STEM’ subjects (science, technology, engineering and maths). The first surprise is how many more students and researchers (and funding) there are in STEM subjects than the social sciences, which in turn dwarf the humanities and the creative arts and design: in the UK, the STEM subjects get 80% of total research funding, social sciences 14%, humanities 4% and creative arts 2%. Student and staff numbers are slightly less skewed, but the figures still make one doubt the often-made (by scientists) claim that STEM needs more.

On the impact question, the book argues that the tide has begun to turn on the inward-looking shift in academia, and on disciplinary silos which , the books says, were ‘concreted in’ by the late 1960s. This must be a good thing. What’s the point of fabulous climate science research if social scientists are not fully engaged in analysing how society might or might not change? Surely scientists – and research funders –  do appreciate that people do not necessarily believe what they’re told by academics? Trust in scientists and researchers is high but that isn’t the same as accepting them as legitimate decision-takers.

Using the data set on academics’ channels of influence built for the research, the book assesses the character of the ‘outputs’ of the academics (which varies quite a lot between disciplines) and looks at two arguments about academics’ impact. One is that there are ‘popularisers’ who can communicate but do little valuable research, and academics of course tend to sneer at this group. Another is that there are superstars who do the best research and are brilliant communicators. The truth is in between – most of the group are middling at both research output and public communication.

In general, though, social science research has a big influence on government, think tanks, civil society and business. The book traces many channels of engagement. The area where there is perhaps less influence – certainly less than the natural sciences – is in the media and social media. If Nicholas Kristof thinks the US lacks public intellectuals, he should feel sorry for the UK: the book suggests Stephen Fry as our leading public intellectual at least in terms of number of Twitter followers – a brilliant polymath but not a social science academic. Academics, in my experience, are often either reluctant to engage with the media (for several valid reasons such as time, deadlines, simplification…); or lack understanding of the conventions and constraints.

One example of highly effective collaboration cited here is the Great British Class Survey, between an academic team of sociologists and the BBC. There was huge public engagement and interest internationally, and it was a successful ‘co-production’ of social science between academics and the public. But no doubt there are some academics who see this as excessive popularisation.

The book ends with a discussion of what the authors call a ‘dynamic knowledge inventory’, a constantly updating repository of our current understanding of society. They commend ‘broad front’ social science and integrating social science with the STEM disciplines. I like the quotation from [amazon_link id=”0571270123″ target=”_blank” ]Tom Stoppard[/amazon_link] in the final chapter: “I don’t think writers are sacred but words are. They deserve respect. If you get the right ones in the right order, you might nudge the world a little.”

[amazon_image id=”0571270123″ link=”true” target=”_blank” size=”medium” ]The Real Thing[/amazon_image]

The LSE website link to the podcast of the launch event is broken but there are some slides available here.

Update: podcast link is here.

Pursuits, grand and lesser

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Sylvia Nasar’s [amazon_link id=”1841154563″ target=”_blank” ]Grand Pursuit: The Story of the People who Made Modern Economics[/amazon_link] was published in 2011, but I only picked up the paperback in the holidays and have just finished. It’s a rattling good read, as you would expect from the author of [amazon_link id=”0571212921″ target=”_blank” ]A Beautiful Mind[/amazon_link], and also very thoroughly researched. But I was disappointed, perhaps due to overly-high expectations. Some of the chapters are simply excellent, but the book doesn’t add up quite to the sum of its parts.

[amazon_image id=”1841154563″ link=”true” target=”_blank” size=”medium” ]Grand Pursuit: The Story of the People Who Made Modern Economics: A Story of Economic Genius[/amazon_image]

I did pick up lots of delightful new facts, always a pleasure to my magpie mind:

– Alfred Marshall was a feminist, to the extent that he financed an essay competition for female students and contributed a significant sum of £60 to the construction of Newnham, one of the first women’s colleges in Cambridge;

– Beatrice Webb influenced Winston Churchill to say at one stage (1906): “I should like to see the State embark on various novel and adventuresome experiments,” and went on to advocate nationalisation of the railways, a job guarantee and a minimum standard of living;

– a visit to a Carnegie Steel plant persuaded Beatrice Webb that technology would replace human labour;

– Keynes did not like the Webbs, especially in their pro-Soviet phase. On being asked to contribute an essay celebrating Beatrice’s 80th birthday, he said: “The only sentence that came to my mind spontaneously was that, ‘Mrs Webb, not being a Soviet politician, has managed to survive to the age of 80.'”

– Joan Robinson does not emerge as a likeable character either, but this comment of hers is amusing: “We cannot be recommended to overthrow anything merely because economists have talked nonsense about it.”

– the number of economists working in Washington rose from 100 in 1930 to 5,000 in 1938;

– Isaiah Berlin was in the British Embassy in Washington during World War 2, writing dispatches on the various activities of Keynes, on the one hand, and Milton Friedman, on the other. One of Friedman’s policy innovations was introducing the withholding of income tax at source by employers. It was, wrote home Berlin, “A tax bill of unprecedented dimensions.”

There is a lot of interesting material here. I think the problem for me is that it doesn’t hang together to tell the story of modern economics as promised. This is partly due to the selection of characters: was it really for reasons of gender balance that Beatrice Webb and Joan Robinson feature so prominently? But the others are obvious – Marx, Marshall, Hayek and Schumpeter, Keynes and Samuelson. I think Mill and other Victorians are a big omission – the book leaps straight to Marshall.

There is also so much good storytelling about the individuals that the big picture on the ideas front is lost in detail. It never quite emerges as either a linear history of thought or a clash of ideas (which [amazon_link id=”0393343634″ target=”_blank” ]Keynes-Hayek: The Clash That Defined Modern Economics [/amazon_link]did very effectively). Nor do you get the sense of a whole intellectual milieu, as in the brilliant [amazon_link id=”0571216102″ target=”_blank” ]The Lunar Men[/amazon_link] by Jenny Uglow (one of my all-time favourite books); the individuals are too prominent. Nasar has much more on the historical context of the ideas than does Heilbroner’s [amazon_link id=”0140290060″ target=”_blank” ]Worldly Philosophers[/amazon_link] but the links between the personal experiences of her subjects and their work don’t quite come off.

This is picky because it’s a good read and would be informative for students or newcomers to the history of economics. Looking back at a few reviews, it was obviously very well received when first published. I was just hoping for something better than [amazon_link id=”068486214X” target=”_blank” ]The Worldly Philosophers[/amazon_link], and it doesn’t live up to my hopes. [amazon_link id=”0691148422″ target=”_blank” ]Economics Evolving[/amazon_link] by Agnar Sandmo is the best recent book I’ve read on the history of economics, a really excellent account but perhaps too hard for newbies. Put it down to Seasonal Affective Disorder.

 

Back to the future in economics

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As I was clearing out some stuff, I came across a January 1991 special centenary edition of the Economic Journal. The editors invited 22 distinguished economists to speculate about the next 100 years of their discipline.

It’s fascinating to see the similarity of the points made about the changes under way, or needing to get under way, in economics then and now. Will Baumol warns that there is too much mathematics for its own sake in economics. He welcomes the new research in behavioural economics but says it is disappointing to see how slowly it is being incorporated into economists’ everyday work – he suggests this is because behavioural economists have spent too little time researching when people (or animals) act rationally and when instead their behavioural biases take over. Andrew Oswald was encouraged by the growing use of microeconomic data sets to do empirical work. Frank Hahn predicts that evolutionary theory will contribute more to economics, and Charles Plott says that in general economics will move closer to the life sciences, with particular focus on how people’s preferences are formed. Richard Schmalensee says economists will have to pay more attention to the effects of technology in service industries, and the importance of R&D and intellectual property.

So you could end up feeling pessimistic that the debate – and the subject – has moved on little since 1991. Or optimistic that the encouraging current trends to use maths more sparingly and psychology more often, to look at evolutionary models, or big questions like technology and jobs have such long and deep roots among economists – perhaps economics will actually develop in this way.

The one constant that is truly depressing is the low proportion of women included in this high-profile special issue – zero. But I fear that the same exercise now would result in only 1 or 2 women being invited to contribute. The problem isn’t that there are not enough good female economists, for there are plenty. It’s in the social construction of careers in economics and the definition of what makes an economist ‘good’.