Thursday, August 27, 2015

Why Am I Attacking Economists -- Almost ALL Economists?

by Neil H. Buchanan

The first several paragraphs of my most recent Dorf on Law post made clear (once again) that my general attitude toward what passes for modern economics might best be described as poorly contained contempt.  The title of the post itself -- "Why Am I Defending Economists -- Especially THESE Economists?" -- expressed my discomfort with the idea that I was taking the side of some prominent economists who had recently been wrongly criticized for being politically naive.

That two of those economists -- Martin Feldstein and Greg Mankiw -- are among the economists whose views I generally find least credible (and often ridiculous) made it ever so much worse.  Fortunately, an op-ed that was published in The New York Times that same day reminded me of the fundamental reason why economics (as it is currently practiced nearly everywhere) is so damaging.  I am back in my comfort zone.

In "The Case for Teaching Ignorance," an author named Jamie Holmes describes how scientists overstate how much they know and understate how much they do not know.  Focusing mostly on medical science, the op-ed noted that students can come out of science courses believing, for example, "that we understand nearly everything about the brain."  The author points out that this can deaden students to the thrill of intellectual inquiry, because it makes them think that the point of learning is to absorb existing knowledge, rather than to become aware of the limits of knowledge, which is the only way they will become excited about trying to answer interesting and important questions.  In the author's words, "focusing on uncertainty can foster latent curiosity, while emphasizing clarity can convey a warped understanding of knowledge."

Interestingly, the op-ed opens with a story about a surgery professor who wanted to teach a class called "Introduction to Medical and Other Ignorance."  The professor was ultimately able to teach the class, but it was evidently a struggle to have it approved.  The background assumption against which she was operating was that students need to told what we know (and that we know a lot), rather than being let in on the dirty secret about how little we actually know in many areas of inquiry.

As a graduate student in economics, I frequently taught the Principles of Economics course (which some Dorf on Law readers will know as Ec10).  The lead professor in that course was none other than Martin Feldstein, who gave the opening lecture or two of each semester, before turning over the actual teaching of the course to graduate students like me.  In those lectures, Feldstein did everything possible to convince our students that economists know a lot of truths about the world, and especially that we now know that some foolish things we believed in the past are not true.  Students could thus confidently absorb what he was about to tell them as the established truth about economics.  He then offered a series of highly dubious claims that supported conservative policy views.

In some ways, that conservative slant (and the insistent pose that he was not being at all political) was the less disturbing aspect of Feldsteins' performance (which was repeated annually in front of about 800-900 students).  I found myself much more annoyed by the pretense of scientific certitude.  Per Feldstein, economics is a science that accumulates knowledge and never retraces its steps or moves in different directions.  How could it, when there is one truth, and we are moving directly toward it?  The NYT op-ed captures the problem with this attitude, noting that "many scientific facts simply aren’t solid and immutable, but are instead destined to be vigorously challenged and revised by successive generations. Discovery is not the neat and linear process many students imagine."

Admitting as much, however, would undermine the political agenda for someone like Feldstein.  Interestingly, but not surprisingly, it was Mankiw who eventually took over teaching Ec10 from Feldstein.  Mankiw's conservative political slant has been so extreme that he has been the subject of protests from students, who are begging for some balance in the class.  But for Mankiw, and Feldstein before him, such protests are silly, because students are simply supposed to accept that the course offers them the opportunity to absorb What We Know about economics.

Such an attitude is hardly confined to two of Harvard's leading conservative economists.  (Harvard's reputation for liberalism aside, the Economics Department also houses Robert Barro and Alberto Alesina.  And the History Department is home to Niall Ferguson.)  In my last gig in an economics department, I was approached by an older professor who was involved in a project to teach economics in high schools.  He was developing a model curriculum for use nationwide.  What was he teaching them?  "I just want them to know the things that all economists know are true.  Minimum wages are bad.  Money growth always causes inflation.  You know, the scientific facts."

The larger problem here is not just that economists think that they know a lot more than they know.  It is that they -- much more than the surgery professor who wanted to teach a course about ignorance -- find it of surpassing importance for the world to believe that economics is a science.  If even "real doctors" encounter hostility to the idea that they should acknowledge where their realms of knowledge end, it is easy to see why pseudo-scientists like economists insist on presenting their field as a "neat and linear process," lest their views be "vigorously challenged and revised by successive generations."  It is too terrifying even to contemplate admitting the truth.

There are, of course, instances in which conservatives will admit that we do not know things.  A talking point has emerged among conservative economists, for example, that there are simply no good economic theories to explain how to deal with the aftermath of the Great Recession, in both the U.S. and Europe.  This is what drives Paul Krugman crazy, and understandably so, because that move simply ignores the excellent track record of even the simplest Keynesian economic model in explaining persistent sluggishness, the failure of inflation to emerge even in the aftermath of massive monetary stimulus, and low interest rates in a world with relatively high government deficits.  "Well, no one really knows nuthin', anyway," is thus a useful dodge when the conservatives' supposedly True Scientific Knowledge fails.

In a Dorf on Law post last year, I offered a different reason that scholars might resist admitting ambiguity.  A biologist who specializes in evolution and climate science had contacted me, describing how he had tried to teach a course at his university which would allow students to explore the boundaries of what we know about evolution.  Even the scientists who fully understood the pedagogical value of such a course resisted having it taught, because the people who want to pretend that "the science is still out" on climate change and evolution would surely grab onto any news that a Real Scientist was admitting that those theories are incomplete.

The difference between real science and modern economics is not that the former possesses unchallengeable truths, while the latter is unmitigated mush.  The problem is that economists are so deeply invested in the scientific dodge.  (An MIT economist, defending her conservative conclusions on education policy, once told an interviewer that she was not concerned with politics, because "I'm a scientist.")  More than almost any other field, economists cannot admit that their worldview is unscientific -- even though they could do so (as Krugman does) and still at least have the opportunity to show that their non-science can contribute to the policy debate.  For far too many, their professional self-image is too fragile to allow them admit the truth.


Shag from Brookline said...

I earlier read that NYTimes OpEd which focused on medicine and science and felt it also applied to law, which like economics is not a science. Teaching a course in law school on ignorance might be a good idea, starting with interpreting/construing the Constitution.

Joseph Simmons said...

My exposure to the study of economics was Macroeconomics taught by a Hungarian professor whose accent was as thick as goulash. I was able to make sense of very little. I agree with much of what you say on the value of appreciating ignorance and recognizing the limits of scientific/economic study. I think you really hit the nail on the head regarding the biologist who specializes in climate science and evolution. However, there seems to be a supposition that scientists are merely guarding science against the heathens at the gate. That notion makes little sense to me as scientific inquiry should proceed regardless what is popularly believed and poor science rebutted for its particular errors, not repressed wholesale.

That brings to mind the idea in works of fantasy that use of black magic is to be avoided by even the most virtuous for the best of reasons because it would inevitably corrupt the heroes. The limits of scientific knowledge (and the doubt cast on conclusions thereby) cannot be treated like black magic!

This only proves your argument, although suggesting that other scientific fields (as practiced) are little better than economics. Your quoted examples ("Minimum wages are bad. Money growth always causes inflation.") appear to contain gross simplifications (although in context, that was not entirely unreasonable) that I think are on par with statements like "Global warming is bad. CO2 always causes warming."

As an economist, what faith do you think should be put into economics by the lay people?

Neil H. Buchanan said...

Thanks to both Shag from Brookline and Joseph Simmons for their comments. The anecdote about the Hungarian professor tracks nearly every undergraduate's experience, it seems (with different nationalities, of course).

Re Joseph Simmons' description of "Minimum wages are bad" and "Money growth always causes inflation" as gross simplifications, I would instead describe both statements as deliberately misleading political statements masquerading as economics. My point was that the economist who made those statements to me couldn't even imagine that they were not true, or that they merely reflected his political druthers.

All of which makes Joseph Simmons's last question so difficult: "As an economist, what faith do you think should be put into economics by the lay people?" No matter how critical I might be of the field of economics as it is currently constituted, it would be crazy for me to say, "Ignore all economists. They don't know what they're talking about." I also would never say, "They're all making stuff up, so you can believe whatever you want to believe." The fact is that some economists have very good track records and use evidence to support their theories in an honest way. Krugman is the leading example of this, even though I occasionally differ with him on various matters. The most prominent dishonest/persistently wrong economists include Mankiw, Hubbard, and pretty much every other economist who has advised Republican presidential candidates in the last decade or so.

So, what faith should people put into "economics"? The better question is which economists people should trust. It turns out that this is another area where it is NOT true that we can put a pox on both houses. Krugman, Stiglitz, DeLong, etc. are "partisan," but they have also been demonstrably correct on the substance.