Masonomics

by Russ Roberts on September 24, 2009

in Complexity & Emergence, Economics, Uncategorized

Tyler Cowen recently gave a talk on what is distinctive about George Mason economics. It was nicely summarized by Arnold Kling (who got the whole thing started with this superb essay) then attacked by Pete Boettke for giving insufficient respect to GMU’s Austrian roots.

I think Tyler and Pete both made the mistake of describing their own views of economics and attributing them to GMU. I think they missed what we have in common. Here is my take.

1. Masonomics respects theories of everything. At most departments, people specialize. They do macro not micro. Or micro but not macro. Then they specialize some more. They’re labor economists or they’re experts in employment or the housing industry or financial economics or taxation or one kind of taxation–the corproate income tax, say. Here, you can specialize and we have plenty of people who do. But we have a hoard of folks who are generalists, who apply economics to everything. Who do micro and macro. Who do health and political economy. But even more importantly, we have lots of people who have one theory and they apply it to everything, relentlessly. Or not a theory so much as a worldview or lens that they use to look at everything. I can think of at least nine of my colleagues who have this kind of research agenda and who think about their lenses most of the time. And we have “normal” economists, too who “just” apply economics to some area or other.

My peculiar lens is emergent order. I see it more often than most people. It’s not just that I’m more perceptive. It’s because I’m always looking for it. So I mention Hayek more often than other economists on EconTalk. I’m not trying to do that in order to promote an economist who I feel is neglected. It’s my lens. I got that lens from hanging around Don Boudreaux and reading Hayek. I have more than one lens. I have a bootlegger and baptist lens from Bruce Yandle for political economy. I have an increasingly Smithian lens (of the Theory of Moral Sentiments) for what motivates people. That comes from hanging around Dan Klein who uses that lens much more than most people.

But a few of my colleagues have one lens or maybe lens is the wrong word. They have a whole world view of economics integrated sometimes with psychology or genetics or philosophy. They have a coherent world view. They aren’t just applying the neoclassical (or other) mainstream paradigm to the elasticity of gasoline or even trade policy. They’re trying to explain why we laugh and cry and spend too much on health or make persistent mistakes and so on. They explain lots of stuff in ways that no one else does. Naturally, these people don’t agree with each other. So they argue with each other which is good.

Some departments have one guy like that. We have more than one. We might have a dozen. People like that are sometimes considered a little bit kooky and boring because they’re so predictable. They’re always arranging the facts to fit their theory. Here we honor people like that and learn from them. It’s very unusual. It’s why we write more books here compared to other departments.

BTW, part of this tolerance for big picture thinking also makes us a home for specialization that si controversial or out of favor–public choice, experimental economics and history of thought. Or even economic history.

2. We have a strong Austrian flavor, sometimes in the semi-dogmatic sense. Though at least three of us who are Austrian or semi-Austrian (Pete, Don Boudreaux and myself and there may be more) shamelessly use supply and demand when analyzing problems and teaching our students–mainstream Chicago-style price theory. But the important part of our Austrian flavor is that we respect individual choices and are skeptical of group choices. This is partly based on a respect for complexity and emergence and the knowledge problem, partly based on the strong public choice roots that are here. The other Austrian flavor is that we are skeptical, in the main, of mainstream statistical work. Or at least we act like we do. Most of the theory of everything people don’t do standard empirical work. We’re much more comfortable telling stories or accumulating facts. We have people who do “normal” statistical analysis. But again, in most places, there might be one old curmudgeon who isn’t empirical, tooled-up and comfortable with fancy econometrics. Here we have a lot of people who just don’t do use those tools when making the case for their worldview. In that sense, we are very Smithian (in the Wealth of Nations sense).

3. We don’t just speak to the academy. We blog. We write novels. We write letters to the editor. Op-ed columns. We write books for a general audience. This isn’t an aberration. It isn’t just tolerated. It’s honored. It’s the only place I know of where that is true. We actually think economics is good for the world. That’s consistent with the first point.

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{ 34 comments }

BoscoH September 24, 2009 at 7:50 pm

I think more “mainstream” economists are jealous of you because you have something interesting to say. I can’t blame them.

Stewart Ulm September 24, 2009 at 8:20 pm

One of the reasons I like your podcasts so much, Russ, is that you’re able to be critical of someone’s view without sounding like a jerk. In fact, I’ve found myself peppering my speech with Russ-isms like, “I’m skeptical of that, but go on,” because they’re so effective at diplomatically expressing dissent.

This post is yet another great example.

Will September 24, 2009 at 8:51 pm

Haha, it seems like there’s been a lot of talk about GMU economics lately on the blog. I know it’s a recurring subject, but this post, coupled with Dr. Boudreaux defense of public institutions is odd timing for me. As a high school senior who wants to major in economics, and one who happens to be a fan of EconTalk and finds himself in the midst of an intensifying college search, it’s timely information for me. =)

Anonymous September 24, 2009 at 9:20 pm

The problem with any science is insufficient data. How can economists really claim to have all the answers when we have millions of unknown data points?

louh September 24, 2009 at 10:31 pm

absolutely

Anonymous September 25, 2009 at 4:43 am

“… we have millions of unknown data points”

And millions of known data points. Insufficient data is a problem, but nowhere near as great of a problem as people who try to force data (known, unknown, fabricated, or poorly derived) into their preset narrative.

I think the value of studying economics is to humble yourself. The failures of people who do not properly study economics are seen in their arrogance and pride.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
– Hayek

Anonymous September 25, 2009 at 7:33 pm

We have too many vested interests in professional economists for them to take the Socratic approach.

Anonymous September 25, 2009 at 1:17 pm

Has anyone claimed to have all the answers?

Justin P September 25, 2009 at 7:31 pm

More than you probably think.

Anonymous September 25, 2009 at 7:39 pm

Then it shouldn’t have been challenging for arrowsmith to provide an example with his accusation.

Or for you to provide an example with yours.

Anonymous September 25, 2009 at 7:43 pm

What accusation was that Danny?

Bob September 24, 2009 at 10:59 pm

I can think of no other University whose professors have contributed as much to my understanding of Economics including the one I graduated from! George Mason University and particularly it’s Economic Department deserves a great deal of credit for the work that they do. “Tu Ne Cede Malis Sed Audentior Contra Ito”

Anonymous September 25, 2009 at 12:50 am

I’m glad you weighed in, Russ. Your work and the work of all the “Masonomists” inspires those of us in the antipodes who must work with what little formal training we have to understand ourselves and the world we live in.

Cody L. Custis September 25, 2009 at 2:08 am

As a statistician (with a degree as a mathematical statistician), I must concur with the logical soundness of drawing conclusions from a set of premises.

It is not empirical evidence that guarantees the mean to be both the maximum likelihood estimator and the estimator that minimizes mean squared error for observations from a Gaussian distribution. This result comes from a solid mathematical framework, which exists independent of both data and a universe in which to collect data. As a branch of mathematics, statistics gains its structural strength with the consequence that any flaws in such strength are fatal.

I must wonder how many econometricians have ever derived the properties of the techniques that define their craft.

louh September 25, 2009 at 4:32 am

Not to throw Taleb at you but, don’t you run the risk of a “Black Swan”. And wouldn’t the recognition of such a possibility lead to and if and only if premise.

Anonymous September 25, 2009 at 5:00 am

Well … as Taleb likes to point out, there is the mistake of assuming you’re dealing with a Gaussian distribution. Your application of statistics goes out the window if that assumption is mistaken.

Anonymous September 25, 2009 at 1:17 pm

RE: “I must wonder how many econometricians have ever derived the properties of the techniques that define their craft.”

Really? Take an econometrics class, and you’ll see. It’s the same math. You have to derive everything you use even as students – much less practictioners. Usually potential issues come up as a result of flaws in the data or the identification strategy, which is part of life and part of science, and you can address those flaws well or you can address them poorly. But the math that supports the techniques you use to address the flaws is the same math!

Anton Rasmussen September 26, 2009 at 4:53 am

“Really? Take an econometrics class, and you’ll see. It’s the same math.”I have to disagree on this point. Cody’s argument isn’t that econ doesn’t use math… it’s just that it uses math when it shouldn’t. To accept the principles of statistics one is unavoidably connected to the axioms of mathematics… and these axioms are inherently (and perfectly) logical. To accept the principles of econometrics one is unavoidably connected to the axioms of economic theory (before those of math). Off the bat, economics makes too many assumptions for it to be inherently logical…

Anonymous September 26, 2009 at 1:07 pm

I don’t think Cody is making a fundamentally praxeological point, Anton. If you read what he wrote, he was suspicious of econometrics because he was concerned that they DIDN’T derive the properties of their technique – and I was just assuring him that they did (Econometrica, etc. is essentially a mathematical statistics journal these days – very little substantive economics).

Not that it’s invalid for you to make a praxeological critique. I think it’s a bogus critique, but it’s still valid to make it. But I don’t think that’s what Cody was saying.

dullgeek September 25, 2009 at 2:46 am

As someone who has never taken an econ course, I *love* that you blog and podcast and write for a general audience. Making it accessable to me has, I think, made me a wiser human being.

Thank you!

D.G. Lesvic September 25, 2009 at 10:14 am

Apparently, whatever Masonomics is, it’s not just economics. It’s also history, math, and psychology, and as Mark Skousen noted, in A Tale of Two Schools, Vienna and Chicago, “a new imperial science invading like an army the new frontiers of politics, law, crime, religion, sociology, history, and Wall Street.” P 86

I have no quarrel with economists going beyond economics, but their confusion of non-economics with economics is intolerable.

Another Russ September 25, 2009 at 5:10 pm

I follow the Mason Economics department much more closely than I do the one from which I graduated, but I blame geography. I live in Arlington and enjoy that the school is there even though my other ties to it are nonexistent.

Jim Breed September 25, 2009 at 6:43 pm

My bad. I got here looking for information on the new Dan Brown book. I hear that the Masonomics have been very good.
JK

Justin P September 25, 2009 at 7:30 pm

Excellent essay Dr. Roberts.

Anonymous September 25, 2009 at 8:22 pm

Before reading this blog and Marginal Revolution I had no interest in economics thinking that it was nothing but finance. I have learned an immense amount through this ‘free’ service that you provide and now spend most of my time thinking and reading about the ‘economic’ way of thinking.

It now informs how I think about everything from the economy, to politics to how I do my job and interact with people.

I, for one, am a better person because of what you and the other GMU economists have been doing.

D.G. Lesvic September 26, 2009 at 4:27 am

I don’t know about Masonomics, but economics, as the name implies, is the science of the economization of scarce resources, of the greatest satisfaction at the least cost, for the market as a whole, and for the social classes and nations within it,

Adam Smith defined it by the Invisible Hand. For, it was not about visible events, but the invisible cause and effect relations among them.

Since you could not observe the Invisible Hand, it was not empirical.

And since, if you couldn’t observe it, you couldn’t measure, count, or calculate it, it was not mathematical.

Since, as Mises explained, action is an offshoot of reason, and reason has the power to make clear through pure ratiocination the essential features of action, it is a science, not of observation and counting, but conception and deduction, reasoning and thinking.

There are no branches of economics, just economics and non-economics.

There is no micro and macro economics, for all economics is both micro and macro, the macro effects of micro action.

There is no “technical” economics, just technical pretension, showing that you can sling the bull around with the best of them.

There is no experimental economics. It is all theoretical.

There is no psychological economics. It deals not with the motivations of action but with action itself. From the axiom of action, that men act to remove unease, economics moves through all that it implies, asking not why men believe that a particular action will remove their unease, but whether or not it will do so.

Of course, there’s more to it than that. But, at least, that’s a beginning.

Anonymous September 27, 2009 at 3:24 pm

Yes, there may be more who are Austrian or semi-Austrian.

D.G. Lesvic September 27, 2009 at 3:31 pm

Prof. White,

I have been chasing you for thirty years, and now here you are right behind me.

You are my favorite of all time, and the best pure economist in the Austrian School today.

You once told me what you thought was wrong with my theory of redistribution.

Won’t you share your wisdom with the rest of us now?

Fortinbras September 27, 2009 at 9:45 pm

This post only fuels my desire to learn from and to contribute to the Masonomics Pantheon. Give me one year, Dr. Roberts, and you will see me around! :)

D.G. Lesvic September 27, 2009 at 10:42 pm

It should be noted that none of the professional economists hereabouts has ventured any opinion on this subject, at least out in the open, and that this frontier of the science, at least, has been a monopoly of amateurs.

Where are all the learned critics of the past, from behind closed doors, White, Friedman, Hazlett, High, and the young lions of today?

With all due respect for its good works, couldn’t Masonomics find one little corner somewhere for a new idea?

D.G. Lesvic September 28, 2009 at 7:27 pm

Prof. White,

You need say no more. Your silence has said it all.

And now, perhaps, we may add another layer to Masonomics:

See no new ideas, hear no new ideas, speak no new ideas.

Anonymous September 25, 2009 at 7:52 pm

That economists make claims to “have all the answers”.

And on a second reading, this could have two interpretations. One (1.) could be that you are questioning actual claims that have been made. The second interpretation (2.) is that you are speculating on the possibility of validly making such a claim, and finding such a prospect impossible. If it’s that second interpretation then I agree with you. If it’s the first, it shouldn’t be too hard to provide an example, should it?

Anonymous September 25, 2009 at 7:55 pm

Daniel – I don’t know what you’re really getting at. My position remains that professional economists have too much a vested interest in an outcome they desire, and will not follow ALL the evidence wherever it leads. Now I think Profs Boudreaux and Roberts are exempt from this – as I perceive them to be true economic scientists.

Anonymous September 25, 2009 at 8:01 pm

I’m getting at what you said here: “The problem with any science is insufficient data. How can economists really claim to have all the answers when we have millions of unknown data points?”

And I fully agree with what you just posted.

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