Sociology

by Russ Roberts on June 11, 2009

in Data

My colleague Bryan Caplan at EconLog on how economics is evolving:

I've studied economics for over twenty years.  The more I think about
it, though, the more I realize that I don't know what "economics" means
anymore. 

Textbooks may say that economics is about "incentives" or "trade-offs."  But you can publish papers in econ journals about the effect of birth weight on educational attainment.  I don't see any incentives or trade-offs there.  Or take Emily Oster's early research
arguing that hepatitis, not infanticide or selective abortion,
explained a lot of Asia's gender imbalance.  Some economists asked,
"How is this economics?"  But if some economists argue that the gender
imbalance is driven by incentives, how can you object if other
economists say that the real explanation is medical?  Or consider
happiness research.  Economists like Justin Wolfers are in the vanguard; but the connection to incentives or trade-offs is unclear.

You
could deplore all this as a loss of focus.  But I see massive
progress.  Economics has grown hard to define because we now focus
primarily on real-world problems, not "literatures."  If we want to
understand income determination, we don't waste time with topological
proofs.  We still think about supply and demand, but we also think
about policy, psychology, behavioral genetics, and much more.  As a result, we come to understand the world, instead of solving unusually difficult homework problems.

He goes on to say that what economists do, might best be called "sociology" the word we already have to describe the study of the social world, which is what Bryan is arguing economists increasingly study.

I am reminded of what George Stigler said: "There is only one social science and we are its practitioners."

Having noted that, I have to disagree with Bryan on a few things. I think too much of modern empirical economics is the economics-free application of sophisticated statistical techniques that does little to actually advance our understanding of the social world. It's not just that it isn't about trade-offs or incentives, the role of trade-offs and incentives are ignored. I also don't think we've made "massive progress" in understanding the social world. We've made massive progress in publishing papers on the social world. But understanding? Not so much. We treat the natural world as if the sophisticated tools of statistics can turn reality into a natural experiment. But the world is usually (always?) too complex for the results to be reliable.

I continue to ask the question: name an empirical study that uses sophisticated statistical techniques that was so well done, it ended a controversy and created a consensus—a consensus where former opponents of one viewpoint had to concede they were wrong because of the quality of the empirical work.

When I asked Ian Ayres that question, someone who advocates increased use of statistical techniques in various aspects of life, his answer was the Levitt and Donahue study of abortion and crime. A strange answer as it is highly controversial and widely dismissed by skeptics.

My example used to be the Monetary History of the United States by Friedman and Schwartz that created a consensus that the Fed and the money supply play a crucial role in inflation and business cycles. But The Monetary History is a collection of facts rather than the use of the fancy techniques so in vogue today. I'm not sure there's anything sophisticated in the empirical work. Is there even a single regression in it? I don't know. But the point is that I'm not saying that facts are irrelevant to our understanding of the world. I'm saying that attempts to use statistical technique to tease out causation in a complex world is incredibly un-credible.

I am open to other suggestions. I'd like one example, please. One example, from either micro or macro where people had to give up their prior beliefs about how the world works because of some regression analysis, ideally usually instrumental variables as that is the technique most used to clarify causation.

One example. There should be dozens. Or hundreds. But I'll take one.

Be Sociable, Share!

Comments

comments

Add a Comment    Share Share    Print    Email

{ 50 comments }

EvanM June 11, 2009 at 2:52 pm
Daniel Kuehn June 11, 2009 at 2:56 pm

Gah – I hate to comment first after that scuffle the other day, but once in a while is fine I suppose.

I think I'm across the board – I'm with Bryan that economics has gotten a lot broader, that that is a good thing, and that a lot of good work has been done in these newly annexed fields. I'm with Russ in his skepticism of what we can take away from any single empirical work. But I depart from Russ in that I don't really see that as a problem with the empirical work being done in economics. As for his challenge, I can't really think of an example, but I'll consider it. I think more often than not, a broad collection of empirical work simply tempers preconceived notions. Because of the work of Friedman and others we know that the multiplier is not up in the stratosphere (say, 4 or so) like a lot of the early Keynesians thought. In micro, Borjas and Card may not be able to agree but together they've both closed the book on the idea that immigration has large negative effects on native wages. Borjas finds smallish negative effects, Card finds smallish positive effects. We know WHY they find different effects, because of the differences in the technique they use. But the big picture is that that thrust of work has dismissed the idea that immigration substantially drags wages down. Of course, sometimes Borjas and Card themselves are completely oblivious to this "big picture" – but I think that's what empirical work offers us, not an "end of discussion" result that closes an argument.

Same sorta thing goes with the returns to schooling. There is no single estimate… but there's a pretty reasonable range that the field has settled on.

And I think that's what's valuable about empirical work in economics – not that it conclusively decides anything – I'm not sure if this is the job of empirical work in any science that I know of. But the preponderance of evidence moves us away from big-multiplier-demand-management Keynesianism, or it moves us away from being scared of immigrants over time, etc. The constant back and forth over the believability of IV's is incredibly frustrating – but I think that's more of a cultural thing in economics circles. We like to pick each other apart. And the skepticism is very healthy so that we don't run too far with any single conclusion. But IMHO, I don't think it's a demonstration of the paucity of the methods – simply of their limits.

Apologies for the length and the initiative.

Russ Roberts June 11, 2009 at 3:07 pm

EvanM,

No gun control proponent that I know of has publicly disavowed his previous policy position because of Lott's work. Similarly, no opponent has been convinced by his detractors.

Daniel,

I don't think we need econometrics to understand that schooling raises your income. You'd think the econometrics would be good for measuring the magnitude. But it isn't. One reason is that "schooling" is a very heterogeneous variable. So we're left with a wide range of estimates that imrpove our knowledge but without much precision. But I will accept your point that econometric measurement can narrow one's priorts or expand them. But in any area of controversy, (see EvanH above), very little from the econometric work dents the priors.

Robin Hanson June 11, 2009 at 3:13 pm

I'd distinguish the empirical turn from the broadening turn. It is great that we are looking at more kinds of phenomena, but not so great that we are so enamored of cute statistics relative to deeper models.

Michael F. Martin June 11, 2009 at 3:26 pm

This one goes back a long time and is due for another look, but Varian on the generalized axiom of revealed preference.

Actually, I think GARP is probably what distinguishes economics from sociology.

Michael F. Martin June 11, 2009 at 3:28 pm

While I'm at it, I'll throw in that I think sociologists are ultimately on the better side of that one. There is a vicious circle built right in to the foundations of empirical micro. Read Samuelson and see if he still sounds reasonable.

LowcountryJoe June 11, 2009 at 3:33 pm

Professor Roberts, you seem to be suffering from a mid-life intellectual crisis. Where you've come to realize that what you're teaching – at least while blogging and away from the classroom – is much more about philosophy and explanatory sociology than anything else. Much better to have an understanding of deep-seated motives and human interaction/exchange when going down the philsophical road if you cared to have my opinion on it.

For what it is worth, I don't view this as a crisis for you. You are far too engaged and a thought provoking teacher to let this recent frustration of your academic discipline get you down: this is just another path that you'll take while leaving your mark and shaping your legacy. Yeah, that's right, LEGACY. You'll be too humble to acknowledge that but I'm sure many of us here feel this way

OneEyedMan June 11, 2009 at 3:54 pm

"One example, from either micro or macro where people had to give up their prior beliefs about how the world works because of some regression analysis, ideally usually instrumental variables as that is the technique most used to clarify causation."

Would you consider Daron Acemoglu, Simon Johnsonand James Robinson “The Colonial Origins of Comparative Development: An Empirical Investigation” to meet this standard?

Pingry June 11, 2009 at 4:07 pm

Russ,

You criticize statistics, but how else are we to advance our understanding of economic and social phenomena?

Are we to blissfully assume a "spontaneous order," for better or worse, without the marginal benefit which rigorous math and statistics provide to learn how this order comes about?

To close one's eyes and just say that spontaneous order is everywhere and always "natural" and "the way it is and should be" is exceptionally dangerous and leads to seriously flawed inferences and the very biased normative economics of which you accuse others. It's a lazy way to stumble in a large, unfamiliar dark room, instead of turning on the lights and looking around.

As a libertarian, I am so annoyed at how other libertarians just claim some laissez-faire, spontaneous order regarding the current financial crisis while eschewing even slightly their ideological aversion to, say, financial regulation and the imposition of higher margin requirements and lower levels of leverage.

But, of course, if an FI is leveraged 50:1 intraquarter because of spontaneous order, then that must be a good thing right? After all, it "emerged" and government should not interfere.

Never mind the fact that in the real world, of which you claim we have little knowledge, spillovers exists and spontaneous order can sometimes go awry and even magnify these spillovers (and other so-called market failures).

The GMU creed, as Don has written, (unlike, say the U of Chicago) is that there are profitable opportunities for creative entrepreneurs and others to emerge to deal with these market failures, commensurate with Hayekian spontaneous order.

This is only partly true, because some market failures cannot be solved by entrepreneurs for various reasons.

Back when the financial system was torn apart violently at the seams last September, should we have waited for the emergence of some J.P. Morgan character to mobilize, coordinate and direct scarce resources to solve a massive market failure arising from the financial frictions of greatly increased asymmetric information and counter party risk?

Some J.P, Morgan character failed to emerge, and instead we got a good policy response from the Federal Reserve acting as lender of last resort. Yes, that's right, the government played a crucial role in preventing Great Depression 2.0 by protecting the financial and payment system, exactly as Milton Friedman would have wanted, for his criticisms of Fed failure in the Great Depression (interestingly enough, both Keynes and Fisher, who were opposite of the political spectrum, also called for massive increases in the money supply at the time) were learned very well since publishing (with Anna J. Schwartz) a Monetary History of the United States.

Spontaneous order is nice, but it doesn't cut it when trying to solve real world problems, some of which are created by aggressive and corrupt government, and others of which are created by the very spontaneous order which created the problems in the first place.

Does anyone seriously believe that the answer to a problem is everywhere and always the very thing which caused it?

Talk about stumbling in the dark! As Keynes was thought to have said "when the facts change, I change my mind. What do you do, Sir?" Apparently, some people continue to cling to an incomplete and intellectually bereft ideology to justify the large investment they have made over the years.

Intellectually, nothing is sacred, not even spontaneous order, because the world is far more sophisticated that throwing up one's hands and claiming spontaneous order and calling it a day. While you correctly understand that the world is complicated, and the division of labor is the best way to aggregate this dispersed and incomplete information, you seem to relegate the lens through which you view a complicated world as one of spontaneous order and emergence, instead of digging deeper with rigorous statistical and mathematical tools.

SteveO June 11, 2009 at 4:11 pm

I don't have an example to give, but I wanted to offer this.

I think the flaw here lies not in the weakness of statistical evidence, but in the behavior and incentives of those who want to believe certain ideals.

Whenever I want some perspective on economic "truth", I always try to compare it back to gravity and aerodynamics. A person who covers his ears and refuses to believe in these does not prove that our awareness of gravity, or our progress in aerodynamics are weak.

The nature of choices and consequences in the hard sciences vs. economic policy are different. It is very clear that applying heat during a chemical reaction can produce a better result- and the technique will quickly be adopted.

Life and the range of human actions, broad and complex as any topic could possibly be, necessarily makes it difficult to "force" anyone to adopt a technique. The free-market is a filter which encourages adoption of successful techniques. The public choice mechanism allows some to disguise the outcomes of processes, and therefore stave off scrutiny (although at a cost).

[ BTW. I am currently doing research on politico-economic bias. Why individuals are prone to accept certain policy arguments and be skeptical of others ]

dg lesvic June 11, 2009 at 4:31 pm

From Mark Skousen's Vienna and Chicago: A Tale of Two Schools of Free Market Economics:

Economics has become "a new imperial science invading like an army the new frontiers of politics, law, crime, religion, sociology, history, and Wall Street."

That is economics as the "economists" would have it. And though expanding their field is to their advantage, their distractions from it are to the detriment of the science itself.

Economics is the science of the universal, eternal, and immutable laws of the market.

And it is precisely because you cannot derive what never changes from what constantly changes that you cannot derive the laws from the data of economics.

dg lesvic June 11, 2009 at 5:11 pm

By "the data of economics," I really meant, of econometrics. For there is no data in economics proper; and, I would add, because there is no data, no occasion for mathematical operations.

LowcountryJoe June 11, 2009 at 5:37 pm

>>To close one's eyes and just say that spontaneous order is everywhere and always "natural" and "the way it is and should be" is exceptionally dangerous and leads to seriously flawed inferences and the very biased normative economics of which you accuse others.<<

Is it normative to suggest that the government ought not intefere? Yes, probably. But at least in that instance, the normative here is leading toward more applied positive economics, which is progress in the postive direction, is it not?

>>As a libertarian, I am so annoyed at how other libertarians just claim some laissez-faire, spontaneous order regarding the current financial crisis while eschewing even slightly their ideological aversion to, say, financial regulation and the imposition of higher margin requirements and lower levels of leverage.<<

Wouldn't a libetarian respect laissez-faire and let those in the financial sector decide what's best? And as far as any 'crisis' that that sector goes through, respect what the market participants let emerge regarding margin requirements, etc.? No bail-outs, just sink or swim and caveat emptor. I'm suggesting that an across-the-board libertarian would. Your milage may very, though.

>>But, of course, if an FI is leveraged 50:1 intraquarter because of spontaneous order, then that must be a good thing right? After all, it "emerged" and government should not interfere.<<

And the correction emerged, too, did it not? Perhaps you do not trust the corrective action to the correction to occur.

>>Never mind the fact that in the real world, of which you claim we have little knowledge, spillovers exists and spontaneous order can sometimes go awry and even magnify these spillovers (and other so-called market failures).<<

As if the spontaneous order always produces desireable results in the short-term? Perhaps, in the future, the asshats can legislate away pain, losses, and all things not snips, snails, and puppydog tails. I'm sure Utopia with unicorns can eventually emerge from public choice if we worked on it enough.

>>Back when the financial system was torn apart violently at the seams last September, should we have waited for the emergence of some J.P. Morgan character to mobilize, coordinate and direct scarce resources to solve a massive market failure arising from the financial frictions of greatly increased asymmetric information and counter party risk?<<

Don't you think that would have been better? Actually, I'd have much preferred that Social Security surplus from compulsory payroll deductions [after the current beneficiaries were taken care of -- the surplus only] have been used to purchase up the so-called toxic assets to keep them from being spent on general federal government spending once the governmet decided it was neccessary to get involved in supposedly averting crisis.

>>…exactly as Milton Friedman would have wanted…<<

I think that Friedman would have wanted to have the money supply increased in the event of bank runs — to make it painful for people, through inflation risk, to panic senslessly.

>>Spontaneous order is nice, but it doesn't cut it when trying to solve real world problems, some of which are created by aggressive and corrupt government, and others of which are created by the very spontaneous order which created the problems in the first place.<<

Really? Default position of your inner-libertarian is to defer to government during a so-called 'real world problem' and shun the spontaneous order which had to be the creation of the problem. This is all suspect to me.

>>Does anyone seriously believe that the answer to a problem is everywhere and always the very thing which caused it?<<

And you are certain that the problem was created by the market?

>>Talk about stumbling in the dark! As Keynes was thought to have said "when the facts change, I change my mind. What do you do, Sir?" Apparently, some people continue to cling to an incomplete and intellectually bereft ideology to justify the large investment they have made over the years.<<

Yep! Caught with the pants down. Some people are just too disengenious to come clean as to who they are, what they believe their ideology is, what their biases are, and their own large investments that are so large, they have to pull a Bernie Madoff with their own character during an ideological discussion.

Greg Ransom June 11, 2009 at 6:04 pm

Friedrich Hayek and Adam Smith made it easy.

They defined economics in terms of the problem to be explained, not in terms of the techniques used to provide that explanation.

The problem that Hayek and Smith identified was design-like global economic order (e.g. division of labor and coordinated plans) WITHOUT an organizing mind who created that order.

The problem here is similar to the one identified by Darwin — design without a designer.

The explanatory causes are different — the mechanism of selection is different than the mechanism of price signals and entrepreneurial learning.

But the explanatory problem and rival solutions form is identical.

Economists were mislead by Robbins & Mises into adopting a false understanding of the object of study in economics.

It's time economists got it right again.

To see how far off track Bryan and the economics profession has gotten, imagine a world were "natural scientists" studied anything and everything in the "natural" world using only the statistics of econometrics — call it "Natureology". Such a science of "natureology" would have no paradigm problem raising patters which demanded explanation and no matching rival causal explanations to go with them. Instead, "natureology" would attempt to "explain" the would with just inductively identified and justified statistical patterns all the way up and all the way down.

"Natural science" would then be as much of a scientific embarrassment as is so much of economics today.

Greg Ransom June 11, 2009 at 6:10 pm

Note that when Friedman wanted to explain the economic process to people (e.g. _Free to Choose_) he dumped his bogus philosophy of science demanding "tools" that had been verified via the "testing" of "predictions" — instead he used Hayek's causal story of entrepreneurs learning and adjusting in the contest of changing relative price signals.

I.e. Friedman used Hayek's model of economic science, and dumped his own pseudo-Popperian 20th century philosophy & statistics inspired model of good "science".

Seth June 11, 2009 at 6:14 pm

Thank you.

I worked for a management team who were addicted to statistical analysis. I fell for the hype early, but quickly learned the answers weren't in the stats. I've looked for ways to effectively communicate this. They think I'm crazy, while they continue running models that tell them nothing.

As for economics, I think the field is an awful lot like systems dynamics and interestingly enough, that field has a similar divide between those who think they can model the dynamics of a system with math and those who can't, but believe that that thinking about consequences cascading through the system is useful.

It struck me one day that once you get beyond a simple system, to effectively model it you would need to re-create the universe.

Pingry June 11, 2009 at 6:17 pm

LowcountryJoe,

your post is so ridiculous.

"And the correction emerged, too, did it not?"

Yeah, corrections do occur, but at what cost? In fact, in this case, at what spillover cost?

Why should innocent third parties, many of whom are in developing countries and dying, be forced to incur a massive cost for something which they did not partake in?

So, yeah, market corrections do occur, but as Keynes so eloquently said "in the long-run, we're all dead"

That is, in the long-run, if these corrections take a long time and society incurs a horrendous toll, then people will replace the current government with something far more coercive.

I think the other libertarians forgot that laissez-faire finance isn't a free lunch. When spontaneous order goes terribly wrong and wreaks massive externalities on innocent people, those people will replace the current political regime with something worse if other action is not taken.

And you also write "I think that Friedman would have wanted to have the money supply increased in the event of bank runs"

Actually, Friedman would have wanted the money supply to change commensurate with velocity, but his assumption of the predictability of velocity was wrong.

And as we've seen, if velocity drops off a cliff, then the monetary base must increase to mitigate declines changes in the price level and real output.

I'm certainly not "blaming the market" entirely because government played a substantial role, but let's not be naive and think that key players in the financial system are innocent.

So, again, the issue is not of FI's making gains or losses, it's of them creating spillovers for innocent people.

I would not care if any given FI incurred heavy losses and even went bankrupt. And I'm not going to clamor for them to pay their "fair share" when they do well. But when they create huge spillover costs for innocent people, then they should be prevented from engaging in that behavior.

Much of what you say is so ridiculous, and not far from ordinary people with mental illnesses, simply because you deviate from what I wrote by bringing up absurd ideas which have no relevance. Do you realize that you have a penchant for writing like a madman?

I would prefer a serious debate with someone who can make a serious justification for laissez-faire finance in the face of massive spillovers to a plethora of innocent people.

Better yet, try to do it with an overly simplistic view of the world founded on spontaneous order.

And by the way, don't fall victim to free lunch thinking in your pursuit of life, liberty and the pursuit of externalities.

–Pingry

Bret June 11, 2009 at 6:23 pm

Russ Roberts first asks: "name an empirical study that uses sophisticated statistical techniques that was so well done, it ended a controversy and created a consensus—a consensus where former opponents of one viewpoint had to concede they were wrong because of the quality of the empirical work."

Russ Roberts then states: "No gun control proponent that I know of has publicly disavowed his previous policy position because of Lott's work. Similarly, no opponent has been convinced by his detractors."

That's just not how it works.

A given study is usually part of an incremental progression of studies (i.e., research), where the progression itself is important to our understanding of the world, while each increment by itself is not earth shattering. That doesn't mean that the empirical increments aren't important.

The fact is that there is less gun control (at least with regard to concealed carry) now than there was a few decades ago. Each of those incremental studies helped at least a little bit in pushing it in that direction.

Dr. T June 11, 2009 at 6:44 pm

As a chemist and a pathologist (both 'hard' science fields), I find the current debates about economics to be amusing.

First, many in the field believe that economics is a science, but it isn't close. Economics uses observations and hypotheses, but only mathematical modeling in place of experimentation. (Just like climatology.)

Second, some economists believe that economics is concerned with all types of human interactions and individual behaviors, which means that economics subsumes the fields of psychology, sociology, criminology, behavioral genetics, and astrology.

Economics is the branch of sociology that studies how humans interact to produce and exchange goods and services. It uses observation, modeling, and statistical techniques to assess production and exchange at all levels from barter to derivatives. That's it: no 'hard' science, no criminology, no genetics, no economania.

LowcountryJoe June 11, 2009 at 8:13 pm

I want to defend myself from the criticism that I am ridiculous and a simpleton but what is the use? Maybe the truth hurts and I should be dealing with that.

Now, I'll patiently wait while someone much more sophisticated than me explains how to legislate and regulate risk away while simultaneously creating the magical mechanism(s) that forever remove the neccesity to educate oneself regarding risk, and completing the total transformation from independence (independence with voluntary interdepencies) to trusting that the sophiticated ones have gotten it right…this time.

K Ackermann June 11, 2009 at 8:15 pm

This thread has some of the best comments yet.

It's a very thought provoking subject, and everyone has expanded on in rational ways.

I wish I had time for more right now.

Mandeville June 11, 2009 at 8:27 pm

Economics shouldn't be confused with sociology, economic history and statistical analysis, which have no bearing on economic theory.

Economic theory is deductive logical reasoning similar to mathematics. It does not rely on historical data.

You can create all the formulas you want by guessing what the variables might be, but they have nothing to do with economic theory.

Read "Human Action" by Mises to learn the difference between sociology and the a- priori deductive reasoning of economic theory.

Crawdad June 11, 2009 at 8:35 pm

Lowcountry Joe,

Beautifully put. That question is constantly banging around in my head these days.

vidyohs June 11, 2009 at 9:30 pm

I think I understood the post by Russ, but I am probably wrong.

As I said to DK, yesterday, I come here to read and learn from such as this:

We've made massive progress in publishing papers on the social world. But understanding? Not so much. We treat the natural world as if the sophisticated tools of statistics can turn reality into a natural experiment. But the world is usually (always?) too complex for the results to be reliable.

That is f.cking great, and it fits not just economics but global warming, sex, fashion, entertainment, politics, social relations of all nature, trade, markets, or whatever you want to apply it to.

The opportunity to see someone write so eloquently on my thoughts is a rare treat, especially when he didn't know he was doing it.

K Ackermann June 11, 2009 at 9:32 pm

Pingry, you bring up some very interesting points.

Spontaneous order covers a lot of ground, but how spontaneous is it? Maybe what came out wasn't emergent, but convergent.

The ultimate free market would be totally independent agents making trades that are immediately settled.

Instead, what we have are ribbons of systemic risk and nearly-permanent long-term debt relationships which probably hammer at the efficiency of resource allocation.

Those relationships are like a tuning fork, and can set things vibrating at the same frequency. Coherency is a killer of liquidity because everyone wants to do the same thing at the same time. It creates a standing wave in the transmission of signals.

Jeez, Maxwell would probably have had a field day unifying the market force with the electromagnetic force.

M3 is voltage, velocity is current, and the GDP is power. Resistance from many things contributes to a characteristic impedance, but that characteristic impedance can be greatly affected by oscillators and feedback loops that form when too much activity is in phase.

Now that I've formed that mental picture, I hope it's not completely messed up.

but seriously, sometimes you need to whack the side of it to get it to play.

vidyohs June 11, 2009 at 9:37 pm

"As for his challenge, I can't really think of an example, but I'll consider it.
Posted by: Daniel Kuehn | Jun 11, 2009 2:56:06 PM"

Thank you DK, speaking just for myself, I am sure I'll sleep easier tonight knowing that you are on the job.

It is good to know that Russ and Don have a superior thinker to keep them straight.

How old are you DK? Are you out of your sophomore year in college, at least? Or, was that tongue-in-cheek satire?

vidyohs June 11, 2009 at 9:50 pm

As an after thought, rightly or wrongly, popular or reviled, I never think of greed as a desire for more. One reason for this is that I don't think anyone of us can tell another how much they need or will need. Mother Nature obvioulsy never put such limitations on life. Life typically gets what it can.

I only think of greed as wanting what you haven't earned, or wanting purely to surpass others.

LowcountryJoe June 11, 2009 at 10:34 pm

Lowcountry Joe,

Beautifully put. That question is constantly banging around in my head these days.

Posted by: Crawdad | Jun 11, 2009 8:35:04 PM

What? This one?

I want to defend myself from the criticism that I am ridiculous and a simpleton but what is the use? Maybe the truth hurts and I should be dealing with that.

vikingvista June 11, 2009 at 10:52 pm

Unless an almost unfathomable lapse in human imagination has occurred, no such example CAN exist. At least, that's the contention of Mises. A rational agreement on specific historical events can ONLY be guaranteed within a particular philosophical framework. That's why THAT framework must be understood and scrutinized.

Ergo the study of human action.

dg lesvic June 12, 2009 at 12:31 am

Mandeville,

Now that's a name I'm going to remember, of one of the few around here who knows what the hell he's talking about.

Lobby Lloyd June 12, 2009 at 7:28 am

Russ,

Is that a reasonable bar to set? Is it not the cumulative value of these studies that counts? And can you point to a complex theory paper that passes your test?

John June 12, 2009 at 7:56 am

I never could understand how economics could be called a science, and Dr T finally explained why I was so confused.
-thanks

Daniel Kuehn June 12, 2009 at 8:44 am

Dr T. -
What exactly do you think distinguishes a "hard" science? Your post is very confusing. Certainly so called "hard" sciences have preciser measurements, but besides that you basically seem to be relying on the difference between experimental and non-experimental empirics. Since when has experimentation been required for something to be a science? People repeatedly try to compare economics to physics. It's the wrong approach. We are more like biology. We do rely on a great deal of non-experimental empirical work, and the complexity of the economy more closely mirrors the complexity of an ecosystem than it does anything in physics. That's not to say that complex systems haven't made their mark in physics – but you seem to be making an odd comparison that has less to do with what a "science" is and more to do with whether economics looks like what you do. Of course it doesn't.

LCJ -
You accused pingry of wanting government regulated utopia, so I think his disatisfaction of your response is entirely warranted. I thought pingry's post was very insightful. It reminded me of what a wise man once said: "Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."

vidyohs -
RE: "Thank you DK, speaking just for myself, I am sure I'll sleep easier tonight knowing that you are on the job.
It is good to know that Russ and Don have a superior thinker to keep them straight."

What the hell is your problem? Russ asked if anyone could think of any examples. I couldn't because I agree with Russ that there aren't I responded as much. I'm not a superior thinker to Russ and Don, but I do think differently from them on many occassions. Get over it.

Lobby Lloyd -
I think you ask exactly the right question – is that a reasonable bar to set. The task of empirics is not to decisively close a question – that's rarely it's task in any science, particularly sciences of substantially complex systems (biology, geology, meterology, economics). An accumulation of empirical work moves us towards or away from certain theories. But because of measurement and model specification problems, empricial work does not play the decisive, structural parameter identification role that it does in sciences like chemistry and physics. That's just the way it is.

Gary June 12, 2009 at 8:45 am

Forget sophisticated statistical techniques — it is a rare treat when mere facts settle a contentious issue!

Physicists, chemists, biologists, etc., usually plod along collecting mundane evidence and confirming or disconfirming mundane hypotheses. But whenever they touch on something the public cares about (e.g., evolution), facts seem to lose their oomph.

Economics is blessed because everything it has to offer collides with powerful priors.

wintercow20 June 12, 2009 at 8:53 am

Russ,

I'd offer up two points. One, the value of statistical life studies seem to have created a consensus to the extent that they are the basis for innumerable legal cases involving death, dismemberment, etc. Yes, the range of estimates varies, but not by over an order of magnitude. I'd argue more generally that hedonic regressions seem to generate widely accepted empirical estimates for things like, the value of living near a park, the value of a good view, etc. (note that by my suggesting them does not necessarily indicate that I endorse them).

Second, and I think more germane to your point, is that what we have learned in the economics of education empirical work is that we simply do not know anything about the marginal relationship between school resources and educational outcomes. So I would answer your question as: prior to this body of empirical work, people were very confident in thinking that resources mattered, now even the most dogmatic of statists would have to concede that we simply do not know where, when, what matters in terms of educational inputs and outputs.

But sadly, I cannot conjure up a single paper that satisfies your question. This is perhaps a desirable thing for the profession – think of the millions of dollars we economists earn as consultants and expert witnesses debating these sorts of things. I do enrollment management and financial aid consulting, and if there were some sort of empirical regularity/consensus, there would be no need for my services.

vidyohs June 12, 2009 at 8:58 am

dg lesvic,

"Mandeville,

Now that's a name I'm going to remember, of one of the few around here who knows what the hell he's talking about.

Posted by: dg lesvic | Jun 12, 2009 12:31:44 AM"

Did you miss the thread in the recent past where he advanced the claim that capitalism didn't occur until monopolies were created?

No monopolies, no capitalism?

Maybe it was just a bad day for him.

vidyohs June 12, 2009 at 9:05 am

No need to get your panties in a wad, DK, I just found this amusing, but expressed my gratitude for your self-effacing humble humility.

"As for his challenge, I can't really think of an example, but I'll consider it.
Posted by: Daniel Kuehn | Jun 11, 2009 2:56:06 PM"

To know that you, DK, are going to consider it is simply comforting.

I did forget to say thank you, so thank you.

Lobby Lloyd June 12, 2009 at 9:06 am

Dr. T,

It's very easy to apply broad criticisms of a field from 30,000 feet without reference to particulars. I think your criticism applies to some economics, but the claim that some studies are unscientific could be said of all fields of scientific endeavor, from life sciences to geology.

I would be interested to hear what standards of empirical science astrology or epidemiology meet that economics does not? And since your criticism seemingly applies to all economics, I'd be very interested in seeing you apply your critique a particular study, thereby educating us all, and the authors and peer reviewers, as to why it does not meet the standards of a science.

Since you're a scientist I presume you have access to ScienceDirect or other scholarly databases, so you should have no trouble finding the article "Drunk driving after the passage of smoking bans in bars" from the Journal of Public Economics.

I assure you I am not asking you to critique some mathematically complicated article that would be incomprehensible to the layman. This article is very straightforward, and statistically comprehensible to anyone with a background in empirical science.

I look forward to hearing from you.

Lobby Lloyd June 12, 2009 at 9:06 am

Dr. T,

It's very easy to apply broad criticisms of a field from 30,000 feet without reference to particulars. I think your criticism applies to some economics, but the claim that some studies are unscientific could be said of all fields of scientific endeavor, from life sciences to geology.

I would be interested to hear what standards of empirical science astrology or epidemiology meet that economics does not? And since your criticism seemingly applies to all economics, I'd be very interested in seeing you apply your critique a particular study, thereby educating us all, and the authors and peer reviewers, as to why it does not meet the standards of a science.

Since you're a scientist I presume you have access to ScienceDirect or other scholarly databases, so you should have no trouble finding the article "Drunk driving after the passage of smoking bans in bars" from the Journal of Public Economics.

I assure you I am not asking you to critique some mathematically complicated article that would be incomprehensible to the layman. This article is very straightforward, and statistically comprehensible to anyone with a background in empirical science.

I look forward to hearing from you.

Lobby Lloyd June 12, 2009 at 9:07 am

Dr. T,

It's very easy to apply broad criticisms of a field from 30,000 feet without reference to particulars. I think your criticism applies to some economics, but the claim that some studies are unscientific could be said of all fields of scientific endeavor, from life sciences to geology.

I would be interested to hear what standards of empirical science astrology or epidemiology meet that economics does not? And since your criticism seemingly applies to all economics, I'd be very interested in seeing you apply your critique a particular study, thereby educating us all, and the authors and peer reviewers, as to why it does not meet the standards of a science.

Since you're a scientist I presume you have access to ScienceDirect or other scholarly databases, so you should have no trouble finding the article "Drunk driving after the passage of smoking bans in bars" from the Journal of Public Economics.

I assure you I am not asking you to critique some mathematically complicated article that would be incomprehensible to the layman. This article is very straightforward, and statistically comprehensible to anyone with a background in empirical science.

I look forward to hearing from you.

Daniel Kuehn June 12, 2009 at 9:10 am

vidyohs -
RE: "No need to get your panties in a wad, DK"

Pot, meet kettle.

Daniel Kuehn June 12, 2009 at 9:12 am

Great thoughts Lobby Lloyd!

It's very troubling to hear such sweeping statements with so little evidence.

shecky June 12, 2009 at 11:01 am

No gun control proponent that I know of has publicly disavowed his previous policy position because of Lott's work

For good reason.

Though it must be said that I have moderated my stance on gun laws as a result of the most reliable evidence at hand.

John June 12, 2009 at 12:22 pm

Dr T. -
What exactly do you think distinguishes a "hard" science? Your post is very confusing.

I didn't find it confusing at all.
When I think about science I think of repeatable experimentation with predictable results, which is why I find it odd that Economics is called a science.

Daniel Kuehn June 12, 2009 at 12:31 pm

John –
RE: "When I think about science I think of repeatable experimentation with predictable results, which is why I find it odd that Economics is called a science"

Why experiments? See – this is exactly why it's confusing. Nobody that I know of priveleges experiments over non-experimental empirical work, and economics has produced predictable results. I'm not sure what the problem is.

John June 12, 2009 at 12:34 pm

Why experiments? See – this is exactly why it's confusing.

I say if you do X then Y will result.
You say prove it.
So I conduct an experiment showing X results in Y.
You say it was luck.
So I repeat the experiment with the same results.
You still don't believe it.
After repeating the process a few more times you finally accept that Y follows X.

That's science.

Economics does not follow that model, at least as far as I can tell.

Daniel Kuehn June 12, 2009 at 12:45 pm

John -
You don't have to explain confirmation of results to me… I asked why experimentation is necessary.

Astronomers don't experiment – are they not scientists?

And let's be clear – many economists do experiment. Don and Russ's colleague, Vernon Smith, is a pioneer in experimental economics.

John June 12, 2009 at 12:52 pm

I asked why experimentation is necessary.

Because everything else is subjective and open to debate.
In a debate about answering a question (that's the goal of science, right?) at least one party must be wrong.
There is a lot of debate on the subject of macro, I read it in this forum all the time.
That means that one or all of the points of view are wrong.

So much for answers.

You can have the last word, and the word after that, and the word after that….

Daniel Kuehn June 12, 2009 at 1:02 pm

Non-experimental empirical work is subjective? You might want to put a little more meat on that claim.

Again, this seems like a silly definition. Is astronomy, evolutionary biology, vast swaths of geology, and climatology subjective and non-scientific?

MnM June 12, 2009 at 1:29 pm

John,

I think part of the problem is that the word "science" has multiple definitions . Experimentation isn't a necessary component of all of them. Economics could just easily be called a "discipline" and convey precisely the same meaning.

I think Dr. Hanson said it best. Right now, in my opinion, at least, economics is superficial. Economists are far too trusting of the statistical work. Modern "macro" economics seems to me to be a great departure from the "micro" economic work that preceded it. Because it didn't build upon that knowledge, it shouldn't come as any surprise that it seems to be much hocus-pocus (again, with a few exceptions).

Economics asks a plethora of empirical questions. It isn't sociology or psychology. It may incorporate one or the other or both, but it isn't either. Tax incidence, the effects of interest rates, the impact of price floors/ceilings are all empirical questions demanding empirical answers.

The point experimentation is observation. I'm not entirely certain why Dr. T distinguishes between the two. Another of economics' problems is that it lacks a laboratory in which to do that experimentation. It isn't ethical to experiment on the economy, or individual markets, without the consent of the market participants. Catch 22. They need to observe but they can't (ethically) experiment.

More detailed modeling, that builds on sound micro economic principles, is what we need, not the shallow presentation of statistics that contemporary macroeconomics gives us.

Previous post:

Next post: