Sadly, the average economist is no Milton Friedman.

by on July 11, 2007 at 3:54 pm in Economics | Permalink

It beggars belief when economists at Princeton, Harvard and Berkeley claim that they are lone voices in the wilderness boldly striking heterodox positions against the hegemony of "free market economics."

David Card, for example, says “You lose your ticket as a certified economist if you don’t say any kind of price regulation is bad and free trade is good.”  Really?  Card and Krueger’s famous paper on the minimum wage was a 1993 NBER working paper published in the AER in 1994.  What happened then in 1995?  Was Card decertified, drummed out of the profession, vilified by his peers?  Hardly, in 1995 David Card was honored (deservedly imho) by the American Economic Association with the John Bates Clark medal.

Dani Rodrik says “I fall into the methods of the mainstream, but not
the faith,” which he defines as the belief that more markets and free
trade are always good and government regulation is always bad.  Give me a break.  Let’s go to the data.

Klein and Stern surveyed members of the AEA on a host of policy questions bearing on markets and government regulation.  The result, "Only a small percentage of AEA members ought to be called supporters of free-market principles."

Even on the minimum wage, support for which Card says gets you decertified, the mean economist position is in between "support mildly" and "have mixed feelings."  Indeed, even Card has mixed feelings about the minimum wage!   (See his book with Krueger in which he points out that the minimum wage is not a very effective way to help the poor).  On a host of other issues concerning government regulation, like support for OSHA, the FDA, and the EPA, the mean economist is somewhere between strongly and mildly support.

Only on free trade is there strong opposition to government regulation in the form of tariffs.  Thank goodness for small mercies.

Keith July 11, 2007 at 4:12 pm

Let’s face it: The article sucked.

I have strongly converted to behavioral economics in many areas. The most convincing pieces of evidence came from articles published in the mainstream journals. It turns out the people leave serious money on the table all the time for behavioral or cognitive reasons, to the point where it really does affect the equilibrium outcome.

So score some for behavioral economics, or even a unified social science approach that tests different hypotheses and explains deviations from the rational choice prediction.

But some of these “heterodox” types are simply leftist morons who are mad that economics doesn’t fulfill their ideological fantasies. (Oh, and by the way, I’ve seen some other ideological types who have similar problems with economics.)

I mean “deficits don’t matter because the government can always print money?” Break me a fucking give. That guy’s out NOT because he has bold insights that the rest of us don’t want to hear, but because he’s an idiot who’s wasting our time.

I’m all for rigorous testing of assumptions to generate better models, and if insights from other social sciences then turn out to work better than pure-rational choice models in this or that case, then great. Of course, in many cases, like low-skill labor markets, the neoclassical model works great, and yes, minimum wages do cause disemployment. Card and Kruger were wrong, boo-freaking-hoo.

But spare me the bellyaching from every half-assed left-wing dildo who claims that neoclassical economics was some Reaganite plot.

Coruscation July 11, 2007 at 5:21 pm

Milton was strong on the distinction between positive and normative economics.
Just because something causes harm is no reason to oppose it if you’re a curmudgeon.

Alex Tabarrok July 11, 2007 at 5:37 pm

Bryan is correct that average economist is better on markets than the average person. The standard, however, is low.

M. Hodak July 11, 2007 at 5:49 pm

My vote for most disingenuous quote:

‘“Economists can’t pretend that the consensus for free markets and free trade that existed 30 years ago is still here,† said Robert B. Reich, a public policy professor at Berkeley who served in President Bill Clinton’s cabinet.’

Anyone who was around at that time should know that Robert Reich can’t pretend he was part of that “consensus” 30 years ago. Which kind of belies the “consensus” notion, eh Bob?

Robin Hanson July 11, 2007 at 6:03 pm

You could write an article like this in any field where not everyone agrees on everything. People whose views are not the most popular can complain that they are being unfairly repressed. By itself, this complaint gives almost no useful info to outsiders. Sometimes such complaints are justified, sometimes they are not.

fustercluck July 11, 2007 at 6:17 pm

‘“Economists can’t pretend that the consensus for free markets and free trade that existed 30 years ago is still here,† said Robert B. Reich, a public policy professor at Berkeley who served in President Bill Clinton’s cabinet.’

Anyone who was around at that time should know that Robert Reich can’t pretend he was part of that “consensus” 30 years ago. Which kind of belies the “consensus” notion, eh Bob?

Huh? Nowhere in that quote does he claim that he was part of that consensus. And he wasn’t, as you pointed out.

Jason July 11, 2007 at 6:59 pm

Interesting that the heterodox reject math on the grounds of it being irrefutable. I thought Karl Popper was out of vogue.

But math can be refuted. All you need to do is reject Aristotelian logic. As, it seems, many of the heterodox have.

Bill July 11, 2007 at 8:30 pm

As the (apparently) sole alumni representative of the University of Missouri – Kansas City Department of Economics to read this blog, I say to you: Consider the source.

indiana jim July 11, 2007 at 8:37 pm

From the article:

“Mr. Blinder said economists must look more closely at the real world instead of modeling it in the lab. “Economics is insufficiently scientific,† he said. “Mathematics may be useful, but mathematics is not scientific. It doesn’t generate refutable hypotheses.†”

There is evidence, in ever greater quantities, that Mr. Blinder is correct in agreeing with Donald Gordon’s hypothesis that mathematical complexity is negatively related to operationalism
in economic theory.

Matt July 11, 2007 at 8:59 pm

So people experience varying degrees of (minor) approbation for their opinions or findings, and they exaggerate it. This seems like very typical human behavior, but Alex wants to mock their opinions and findings rather than their human-ness.

It’s not like Milton Friedman didn’t know how to play the demagogue. And it’s not like you are a better economist than David Card. So where are you going with this?

Keith July 11, 2007 at 9:09 pm

“It’s not like Milton Friedman didn’t know how to play the demagogue.”

I think that’s why I give him a lot of credit, even in areas where I disagree with him. He actually participated and voiced his genuine views, and didn’t buckle and pander and he didn’t just spew crap. He actually found cutting ways to get his own ideas across. And he actually articulated and explained economic methodology and its usefulness rather than apologizing and trying to give everybody an excuse to ignore answers they didn’t like.

Let’s face it, you gotta like any guy who replies to Westmoreland’s “I don’t want to command an army of mercenaries” with “Would you rather command an army of slaves?” What a great way of using opposing hyperbole to demonstrate the silliness of hyperbole.

Russell Nelson July 12, 2007 at 4:12 am

Unfortunately, the state of the art in economics is identical to what you would get if astrology was called astronomy, and there was no way to distinguish the astronomers from the astrologers. Some economists with PhDs are truly incompetent.

8 July 12, 2007 at 11:02 am

Did the NYTimes even notice the irony re: evolution?

Keith July 12, 2007 at 12:02 pm

“Behavioral economics is sometimes fun and interesting, but does it lead to policy prescriptions that Milton Friedman would have disagreed with?”

Maybe and maybe not. It certainly introduces a lot more uncertainty when it comes to certain policy prescriptions (though not trade and the minimum wage). It does demonstrate, in certain cases, the existence of ideal policies that would improve on laissez-faire in some areas. The question is, are these the policies that would get implemented?

Bahvioral economics also helps us understand the world a bit better and (hopefully) helps us predict outcomes better.

One useful aspect of behavioral economics: It shows economists the cognitive errors and biases that make noneconomists resistant to economic reasoning. By understanding that, economists can have a greater effect in the real world, partly by spending time to make the basics in economic reasoning (especially the basics that run against cognitive biases) more accessible. That’s probably far more useful than the 171st equilibrium refinement in game theory.

Systemically, economists have made themselves less effective by using models that overrate the abilities of the typical person. Once economists realize how dumb people are, they can be more effective in making them smarter.

notsneaky July 12, 2007 at 5:14 pm

Strange. Mickey seems capable of writing but somehow cannot read.

Keith July 12, 2007 at 10:02 pm

“I now wait for biology to crumble down into the dust from my anonymous but blisteringly scathing post!”

The intellectual integrity in the field of chemophysioeconobiology is much higher.

raffi July 13, 2007 at 8:17 am

“The epistemological transmogrification of economics into an empirical-statistical game of testing hypotheses relating to human particles in a test tube is what has tended to draw many of its adherents towards a pro-Statist position of social and economic engineering more than any other factor over the past century.”

This is hilarious. Agreed, “Economists” should just continue to make s**t up -”Hey, its like logical n’ stuff…here’s my mathmatical proof…wait, why aren’t you listening to me!” – and those of use less interested in navel-gazing and more interested in understanding how the economy actually works should should call ourselves something else. How about “Scientific Economists” or some such?

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xbox live code October 9, 2010 at 2:36 am

Economists as a breed are ideological cheerleaders, inherently intellectually dishonest. I left the field of behavioral economics more than a decade ago when I saw it being partitioned by the power players. While there is politics in every field, no other supposedly scientific field has commingled assumptions and results more disingenuously (under the guise of mathematics) than mainstream economics of the past fifty years or so. You guys are a big fat losers. The level of intellectual integrity in econophysics is orders of magnitude higher.BroermannRewenkoDahlstedtRidgebearKerwoodKerwoodWiersteinerHribar

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