20 Oct 2009

Economics FAIL

As I mentioned last week, the economics Nobel prize went to people who were far from the neoclassical, theoretical, math-heavy mainstream of economics and close to the "relevant" side of the profession.

Although some economists have expressed surprise (or a lack of enthusiasm) at the prize, the comments on this discussion board (via AC) among PhDs who are now seeking jobs as professors are particularly revealing of the "autistic" side of my profession. Although I could be ashamed, I am not, since I do not associate with these folks.

Among the many statements of misogyny, ignorance and snobby shallow egos are these "interesting" comments -- and retorts by wiser heads:
"If she [Ostrom] is so big and important how come there isn't a theorem that is named after her? huh? tell me, smart ass!"
"This is a reality check for these morons who think that mathematical exercises, that often do not advance our knowledge of the real-world by a single dot, is the only way to be relevant in the discipline."
"Some of the stuff I see on this forum reminds me of reasons why I really do not want to ever be at a highly competitive or high, or even mid, ranked department in any subject, not for graduate school nor for any job... I'm about 99.99% certain that I would strongly hate being at Harvard or MIT, no matter what my reason was for being there. But, I did once enjoy taking courses at a community college. The people teaching those courses seemed happy, didn't seem stressed out, they didn't have to do research, and they were great teachers who really helped students understand things, rather than just meet a teaching quota and try to get back to research."
"While Social Sciences might be about understanding the world, this is not necessarily true for doing research at a university. Doing research at a university, is about publishing articles in the 'right' journals to get tenure. But to get published in the top journals you usually have to follow the latest fads in your area, even if you think it is all rubbish."
"Yes you whiny-ass titty babies are famous. I dropped in here once before and saw a similarly pathetic display over some other issue. Wassily Leontiev called your lot, including your heroes who actually have jobs, idiot-savants. That assumes you know any math at all. The savant part may be a misnomer. Best part of this is that the "prediction markets" failed on this award, big time. Very efficient. You are ignorant, anti-intellectual, reactionary punks and the privileged caste of elite economists to which you aspire should die, to be replaced by genuine, humane social science. I strongly urge some career revision; you aren't going to get jobs. Any functioning adult can see your kind a mile away. Just be sure when I order a bacon egg and cheese biscuit you don't give me an Egg McMuffin."
"In the past two years, mainstream economics has demonstrated its utter inability to either predict or provide coherent remedies for economic crisis, arguably the most important goals of our profession. I think we could use a bit of "out of the box" thinking about now..."
Bottom Line: People are more than willing to lie, distort and just yell at ideas and people that do not reaffirm them or their ideas. This is only a tragedy when those people thereby discard better ideas in their quest for self-esteem. Sadly, this tragedy is widespread in economics research (discover what I discovered!) or teaching (learn what I learned!), which limits economists' ability to serve the common good.


  1. Totally agree, but I wouldn't limit this attitude it to econ.

    For example, As an ecological economist and NIE fan thrilled with Ostrum's win, I am amazed at the anger over the existence of a Nobel in Economics expressed by sociologist and political scientist classmates of mine.

    These classes focus on international development, and it seems like there is a rejection of the very idea that economists have any place in the conversation, even those who fall outside of the stereotype. It's like the whole field is Samuelson.

    All that being said, reading the comments on Econ Job Rumors made me a little depressed last week.

    BTW, great blog

  2. This is one of the most common rants of my Ph.D. boyfriend, a "crack birder" and wildlife ecologist who we will call E. One of his most common rants is that today's "ecologists" never leave the lab to actually observe their subjects, instead relying on satellite images, data other people collected, or filling in incremental, boring holes in the research just to get a publication. E believes there is a severe lack of researchers in his field (or at least his lab) willing to actually sit and watch their research subjects until an original idea takes hold. Sounds like a similar problem.

    Call it nature deficit disorder, if you want.

    I'd rant about my field, but I don't know enough about it yet to be discerning :-)

  3. (David, I'm cross-posting this at env-econ too)

    These kinds of diatribes always strike me as attempts to garner attention for a smokescreen. In my experience, attacks on the status quo usually result in a rewording of the status quo--a rearrangement of the furniture with a few new accessories. While at first it may look like a new room, in the end, we're still looking at the same foundation.

    The problem with economics is not the status quo. The framework of economics works. Establishing a common framework in graduate school gives everyone a common base from which to argue. Without this common base, you end up with a discipline founded in case-by-case studies without the generalizability afforded by rigorous modeling.

    This may sound like I've drunk the Kool-Aid and fall in the camp of Ostrom-deniers on the grounds of lack of rigor. That would be the wrong interpretation. Ostrom's work is valuable and changes the way economists think about common pool resources. But the value of Ostrom's work doesn't end with Ostrom's case studies. Ostrom's work doesn't provide specific answers, rather it raises important questions. Just as Coase's work before her, Ostrom presents economic arguments that are readily incorporated into the classic economic framework--with modification and creative thinking.

    Coase didn't propose a theorem and had no intention of such. He made arguments. Economists' used those arguments to modify and solidify the classical framework in light of Coase's arguments. Coase's writings--while not mathematically rigorous--provided clarity of thought for economists within the context of the classical framework. Coase's arguments were critical in understanding the workings of markets and the pitfalls that may arise in the practical application of economic principles to real world environmental problems. Ultimately, an understanding of Coase's arguments and some of the practical limitations of the classical model resulted in the implementation of arguably the most successful environmental policy ever implemented: the Sulfur Dioxide market.

    But Coase's lack of rigor didn't render the status quo obsolete, just as Ostrom's work will not. The lessons from Ostrom's work--social and regulatory institutions matter in common pool management--raise questions about the classical model. But just as observing a ball stop rolling doesn't render Newton's Laws of Motion obsolete, observing common pool outcomes inconsistent with the classical economic framework doesn't render the classical model obsolete. Rather it raises a call to revisit the assumptions of the model to see if the framework can handle the new observation. If it can, then the framework is further validated. If it can't then we need to step back and ask where does the framework fail?

    But abandoning a common framework in favor of individual observation and interpretation is not progress. Economics has an advantage over other social sciences in the commonality. While we may sacrifice some of the ability to explain every specific situation, as a discipline we gain generalizability and a framework for debate. Without that, we are just--WARNING: unwarranted disciplinary attack coming--sociologists (lighten up sociologists, it's a joke).

  4. @Tim -- nice comment. Here's my cross-posted reply :)

    ...I agree with your comment (a common base), but call for breaking -- and remaking -- the Core. I have no idea if it would be called "neoclassical," but it would NOT fly in the face of reality or pretend to explain *everything* as it does not.

    The first step, of course, is to dump Mas-Collel et al. and get some new textbooks that laid out the neoclassical case and THEN tempered/updated that case to reflect non-math ideas that are found in experimental (no closed form solution!) and institutional (endogenous preferences that change over time) methods.

    The problem is that we are getting PhDs who claim to know everything but only know about the rear of the elephant -- and you know what comes from that side of the beast.

  5. I am exploring agent based biological economics in which a few basic rules and a lot of computation predicts the observed outcomes.
    'Predicts' is a key part. I have to get bubbles and other non intuitive things right.
    The approach is 'closed form' in the sense that I can write out the governing equations, but is not satisfying to many because there are thousands of equations.

    Systemic risk and externalities provide instructive improvements in the model.

    Conceptually, the developing model is looking more and more like an ecosystem, one that cannot be captured in a few differential equations. Instead of traditional power series expansions of physical reality in which all the terms after the third one can be ignored, biology and, apparently, economics, need more than 100 terms in order to get the answer right. As a friend said, 'Biology is pathologically complex.'

  6. David:

    It is interesting that some on the profession would turn up their noses at the Ostrom-Williamson prize. It does not surprise me at all that the kinds of candidates who spend their time on econjobrumors chats are probably those who are disillusioned after tooling up in math and now are realizing that they understand little about human behavior and likely have diminished job prospects.

    That said, I have thought a fair bit about this topic since part of my job is teaching quantitative methods to master's students. It seems to me that there is a slim likelihood that the profession benefits from a corner solution. So we need some math and some not math. The right combination is not obvious, even to those within the profession. It is already obvious that the general public has no idea what economists can, should, or do do. After all, I know little about the stock market, didn't predict financial armageddon, and am unlikely to get an theorems named after me. I do think I have some non-pedestrian insights into human behavior and choice under scarcity. Furthermore, I hope I can convey to my students some of these same insights while also demanding that they master the Kuhn-Tucker formualtion.

    My guess is that the pertinent change in the profession is marginal--we're not going to scrap the core. Quite frankly, none of us who suffered through MWG would really know how to evaluate a non-marginal change anyway.;) As a few instructors decide to use their class time talking about non-mathematical factors (I do this even while teaching mathematical economics). At the same time, the use of mathematics in formulating precise testable hypotheses and deriving nonapparent results distinguishes from other social sciences. Of course, Ostrom and Williamson just proved that you don't have to use math to win the Nobel Prize in economics, as Coase, Buchanan, Fogel, North... have previously shown.

    Tim fitzgerald


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