7
Seeing the world through a realist lens
Andra Ghent
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TEXT OF COMMENTARY
KAI RYSSDAL: This week we're going to be asking three future economists a simple question: Why? What drives an otherwise bright, curious and ambitious young person to take up a discipline also called the dismal science? For Andra Ghent it's because, in a world full of idealists, economists are the hard-boiled truth-tellers.
ANDRA GHENT: The way economists see the world just makes a lot of sense to me.
Economists don't actually think that people sit down with pen and paper to figure out whether the utility of eating an apple is really higher than that of eating an orange, but as Milton Friedman once said, the world sort of behaves "as if" we performed all these calculations. And I think this view of the world has very wide-ranging implications, for everything from climate change to financial market regulation.
What sort of distinguishes economists is the way we approach these social issues. We have this distinctly realist lens that we try to stick to. Too many public policy debates start from false premises about how people behave. And no matter how well-intentioned people are, the policy outcomes are going to be lousy if you start with a view about how the world should work instead of accepting how it does.
Also, I think public policy tends to confuse the ends with the means of policy. And that's something most economists are extremely careful to avoid.
I mean, there are reasons why economists have increasingly been researching areas traditionally dominated by other social scientists -- stuff like the marriage market, education, terrorism, religion: People just find the way economists view the world, and the rigor of our analysis, refreshing.
And our insights are often quite different than those other social scientists might come up with. I think our heavy use of mathematical modeling makes our analysis really quite precise.
And at the end of the day, we can take any public policy issues -- subprime, oil prices, anything really -- and tell a thousand different stories. But it's good economic analysis that lets us distinguish between wishful thinking and what's actually going on in the world.
RYSSDAL: Andra Ghent recently completed her PhD at the University of California San Diego.
I really enjoyed this short piece. I think her argument of why Economists are "refreshing", is right on the ball. It often seems like as a society we are bombarded by "theories" of why things happen. When she says the mathmatical aproach is convincing, I could not agree with her more.
I listened to this piece two days ago with some indignation on behalf of my fellow social scientists who are not economists
Dr. Ghent makes a case that economists are uber rationalists, accepting the world as it is, not as it should be. I wonder what role economic history plays in the study of economics. I say this because it seems to me that many of the economic realities we currently face, in particular the sub-prime mess, are a direct result of a deeply held, Friedmanian if you will, belief about how the world should be, not how it is.
Adam Smith held a chair in moral philosophy so I find it a truly ironic development that a social science is lauded for the preciseness and rigor of the mathematical analysis it brings to bear. Elliott Aronson, the social psychologist, suggested humans are rationalizing creatures. We create stories to explain actions and circumstances. I think this installment could serve as an illustration of that very human tendency.
Lastly, with all due respect to the modeling abilities of economists, the political scientists and sociologists who have developed modern survey techniques have provided us with tools that use higher mathematics and that are better at predicting outcomes while explaining contexts than anything I've seen from the economists.
The self-congratulatory tone of this future economist's commentary is alarming. What economists can measure or mathematically "model" so precisely are the kinds of things for which precise economic numbers are available. The most basic ways in which human beings live their lives are often ignored or mismeasured by the tools on which economists rely. For example, the GDP, almost universally trumpeted as one of the standard measures of the health of "the economy," essentially measures how fast the wheels are spinning on those aspects of economic activity that economists find it convenient to measure. It doesn't tell us much about whether most people are well-fed, well-clothed, healthy, comfortable, and secure, with satisfying and useful work to do, or whether the way that we use available resources can sustain human happiness, comfort, and security over the long haul, the very things that the science of economics, "household management," ought to concern itself with. So don't write off the other "idealistic" social sciences (history, sociology, political science, psychology, geography, ecology, etc) quite so fast.
I think it's a welcome change if economists start actually measuring human behavior under specifiable conditions, and analyzing the results without prejudgment. As Dr. Brown points out, this is far from the dominant school in economics today. Until it is, 'dismal science' will be about half correct.
Meanwhile, we psychologists have been collecting data in laboratory and field for a century and a half, and applying a huge range of mathematical tools as well. Other social sciences have been at it nearly as long. Yes, we've made quite a few mistakes, and progress in predicting human behavior is very slow, but those are just two good reasons why economists might want to really examine what we've been doing, and not dismiss it out of hand.
It is striking that an future economist who aspires to be a truth-teller should assert that the profession's use of mathematical modeling is "quite precise". In a sense, the "science" of Economics IS amazingly precise in that it can explain to five or six decimal places what has happened up until the close of business yesterday, but cannot get within a factor of five when predicting what will happen next month or even extrapolate through the close of business tomorrow. (If it could, they would long ago have acquired all of the world's wealth and would have done so while producing no material goods.)
Andra implies that economists base their work with rigor on how people really behave, and the other social sciences tend to start from false premises. However, only with the relative recent development of Behavioral Economics, has the discipline even considered the issue of actual behavior and motivations, and much of the profession still does not have a high regard for this approach. Instead the vast majority of economic research simply assumes, without testing, that our material behavior is almost entirely based on maximizing self-interest. Many people find this assumption silly based on their only daily experience. It is the other social sciences, especially psychology and anthropology, that have actively examined the basis of our behavior. Of course, the other social sciences also have their silly aspects. I say this as a Ph.D economist.
