How ideological are economists?

by on January 22, 2016 at 12:57 am in Data Source, Economics, Education, Philosophy, Political Science | Permalink

From Ryan Avent:

Anthony Randazzo of the Reason Foundation, a libertarian think-tank, and Jonathan Haidt of New York University recently asked a group of academic economists both moral questions (is it fairer to divide resources equally, or according to effort?) and questions about economics. They found a high correlation between the economists’ views on ethics and on economics. The correlation was not limited to matters of debate—how much governments should intervene to reduce inequality, say—but also encompassed more empirical questions, such as how fiscal austerity affects economies on the ropes. Another study found that, in supposedly empirical research, right-leaning economists discerned more economically damaging effects from increases in taxes than left-leaning ones.

There is considerably more at the link.  The Randazzo and Haidt study is from Econ Journal Watch.

1 Adrian Ratnapala January 22, 2016 at 1:12 am

I guess no one is surprised. Avent’s article ends by giving a nod to two ideas for improvements that seem good to this non-economist. (1) give up on “mathiness” and (2) be more rigorous and open about data and calculation.

#2 is good advice to all scientists. It is seemingly in tension with #1, but it comes down to saying, if you are going to make it look scientific, then do it right. If that turns out too hard, you should turn to some other method of persuasion.

Economics is after all one of the studies of humanity, I don’t think there is anything *wrong* with economists understanding the world through the lens of their ethical foundations. The trick is to be honest about it.

2 So Much For Subtlety January 22, 2016 at 2:35 am

There is nothing wrong with bringing an ethical perspective to your work, but the interesting question is whether that is what they are doing.

Do economists ethical beliefs shape their professional conclusions or do the conclusions of their work force them to admit ethical conclusions? Chicken or egg?

Suppose you were a Left Wing economist and you found that higher taxes hurt the poor. What should you do?

3 Decimal January 22, 2016 at 9:43 am

My guess is that the conclusion that higher taxes hurt the poor would not be found by a ‘Left Wing’ economist. They would look at net transfer instead of looking at only the tax side by itself.

4 TMC January 22, 2016 at 12:27 pm

You assume no effect of higher taxes on efficiency of production or incentives to producers, as would a left wing economist.

5 Decimal January 22, 2016 at 3:11 pm

Ah… grow the pie, so everyone can eat. I wonder then what the ‘optimal’ level of taxation would be.

Makes me think that the challenges of modern society are not so simple and there is abundant information around to confirm everyone’s priors!

6 Nathan W January 22, 2016 at 8:00 pm

Estimate the cost of offsetting the damage to the poor.

7 Millian January 22, 2016 at 3:24 am

Indeed the tension about mathematics exists in economics.

It’s no surprise that people who are good at writing prefer less maths, but that seems to be the road to actual truthiness.

8 Ray Lopez January 22, 2016 at 1:40 am

The shorter version is: free-market economists are immoral? Seems about right (Ayn Rand comes to mind).

9 Nathan W January 22, 2016 at 3:52 am

Some of them are like social Darwinists or variations of Nazis.

But most of them are genuinely sympathetic to the short-term issues that free markets might cause for some, but instead see it as an unfortunate cost to be paid for the longer term good (where the longer term good is defined as more more more more and better stuff).

10 chuck martel January 22, 2016 at 7:43 am

Use of the term “social Darwinist” is closely akin to wearing a name tag that says “I’m a pathological progressive”.

11 Nathan W January 22, 2016 at 10:03 am

What words do you deem should be chosen to refer to such ideas?

Is survival of the fittest not critical to arguments in favour of why free markets deliver better results in the long run?

12 Baphomet January 22, 2016 at 10:24 am

Survival of the fittest ideas and products, not individuals.

13 JWatts January 22, 2016 at 10:27 am

You could just use the phrase free-markets economist that RL used. “Social Darwinists” isn’t very precise and is often used as a pejorative. It would be the same as calling all non free-market economists redistributionists.

14 The Original D January 22, 2016 at 3:14 pm

survival of the fittest

This is an unfortunate term because “fit” also refers to physical fitness. The original Darwinian idea is that species fit into specific niches, like a puzzle piece fits a puzzle. If a virus came along to tomorrow that was unusually virulent in high-IQ individuals, or people with extra muscle mass, no one would ever say those people weren’t “fit” in the physical fitness sense.

15 Nathan W January 22, 2016 at 8:08 pm

JWatts – I never really considered social Darwinist to be perjorative. I think it’s a fairly intuitive and accurate term.

I like survival of “fit” (profits > 0) businesses. I like survival of “fit” (stable) institutions. I like survival of “fit” (self perpetuating) economic systems.

What i don’t like is the idea that we help evolution by stacking the deck further against people who already have the deck stacked against them.

Original D – Yes, niches and the value of diversity are critical to a nuanced appreciation of Darwinist ideas in social and economic systems, in my opinion.

16 kimock January 22, 2016 at 1:42 am

This is not a terribly surprising result. Yet I am somewhat reassured for two reasons. First, I believe that economics is empirical enough that it cannot be as fully ideologically driven as other social sciences and humanities (e.g. sociology, anthropology, philosophy). Second, the paper demonstrates a correlation, not a causal relationship, between economic’s economic and social views. A cynic might assert that their preexisting social views drive their economic views. I believe that there is a good chance that causation runs the other way: economists are trained at a young enough age (in their twenties) that what they see empirically shapes their broader social views.

17 Marko January 22, 2016 at 3:44 am

The shorter version , in Avent’s words : ” Ideological divisions in economics undermine its value to the public ”

( …. its value to “the public”. Haha. Avent’s quite the kidder , isn’t he ? )

The good news is that the non-economist blogosphere’s intuition was correct. Unfortunately , that’s also the bad news.

18 Nathan W January 22, 2016 at 3:49 am

“right-leaning economists discerned more economically damaging effects from increases in taxes than left-leaning one”

Find literature that supports your priors, then use their methods.

Good research uses multiple methods, presents multiple results, and explains the pros and cons of the different methods.

19 JWatts January 22, 2016 at 10:30 am

“Find literature that supports your priors, then use their methods.” Yes, that’s pretty much the modus operandi of Left Leaning economists. and it’s deplorably common even on the Right.

20 rayward January 22, 2016 at 7:18 am

Is it moral or immoral, left-leaning or right-leaning, to support (or oppose) policies that mitigate excessive inequality if excessive inequality causes financial and economic instability?

21 Ray Lopez January 22, 2016 at 10:53 am

rayward, I think if you drew a truth table for your question, it would be “all of the above” since your if/then encompasses every conceivable outcome, lol. Your prior seems to be that economic instability is a bad thing, which I think an Austrian economist might disagree with maybe.

22 rayward January 22, 2016 at 6:29 pm

You are correct (about Austrian economists): their preference is non-intervention in the event of a financial crisis and to let asset prices fall (and fall, and fall, and fall), a consequence of which is to mitigate inequality (wealthy people own most of the assets) and help avoid further crises in the future. That’s the (efficient) way markets work. Is that moral or immoral? When a lion consumes a deer is that moral or immoral?

23 Nathan W January 22, 2016 at 8:12 pm

I think he’s thinking of a different sort of economic instability than the creative destruction that many economists might emphasize as a benefit of business cycles. Business cycles are important for long-run development, but when economic instability leads to looting, violence or even revolution, then this is something altogether different.

24 Peter the Gehred January 22, 2016 at 7:36 am

Not a good result for economists. Basically confirms my observations, though. Existence, it seems, precedes essence, or our discernment thereof.

25 KPres January 22, 2016 at 12:02 pm

But not a good result compared to whom? I’d bet that sociologists and other social scientists would score far worse.

26 LR January 22, 2016 at 8:25 am

Confirms the (not debatable) premise that macro-economists reverse engineer their models to fit their moral or ethical prejudices. Or more charitably, maybe they try a lot of models and eliminate those that don’t fit their societal views. This is why the highly public bitch-slapping is so fierce in macro – it is quite simply not a science but an exercise in convenient model selection and defense.

27 LR January 22, 2016 at 8:28 am

And please let’s not have one of these “Things All Economists Agree On” type of articles linked to…

28 rayward January 22, 2016 at 8:38 am

Jonathan Haidt, an evolutionary psychologist (or social, moral, or cultural psychologist), is the author of The Righteous Mind: Why Good People are Divided by Politics and Religion, a book a highly recommend (even though, or maybe because, Hiadt’s depiction of my tribe isn’t flattering). If you don’t have time to read the book, here is a very good (and long) review by William Saletan.

29 Just Saying January 22, 2016 at 9:08 am

Every reader of every study that’s ever published should remember, before debating said study: Study shows that most studies are wrong.

30 Steven Kopits January 22, 2016 at 10:31 am

Your ideology is your objective function. It’s literally what you’re trying to maximize.

If you’re a classical liberal, then you’re trying to maximize individual utility (without egalitarian or group considerations).

If you’re a conservative (still no developed theory), then you’re trying to maximize the good of the group as a whole, with an emphasis of risk reduction.

If you’re an egalitarian, you’re trying to maximize the utility of those below the median, and generally using static, rather than dynamic, approaches.

Economics is about the optimization of a particular objective function. The ideologies, in effect, represent the three objective functions for optimization.

31 hjsldfkja January 22, 2016 at 11:53 am

Economics is about the optimization of a particular objective function. Except that neither the objective function nor the utility are observable in practice. So its kind of…. not about the optimization of a particular objective function.

32 byomtov January 22, 2016 at 11:01 am

Asking about higher taxes in isolation doesn’t make much sense.

Higher taxes on who, and what happens to the money?

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