Tag Archives: economics

Economics: The User’s Guide

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Ha-Joon Chang’s new book, [amazon_link id=”0718197038″ target=”_blank” ]Economics: The User’s Guide[/amazon_link], is sitting enticingly on my desk. It starts: “Why are people not very interested in economics?” A false premise surely? All the evidence from rising student numbers to popular economics book sales (not to mention the Piketty phenomenon) is that people are *hugely* interested in economics. And a good thing too – far too important to be left to us economists.

[amazon_image id=”0718197038″ link=”true” target=”_blank” size=”medium” ]Economics: The User’s Guide: A Pelican Introduction (Pelican Books)[/amazon_image]

I was disappointed by his column with Jonathan Aldred in last Sunday’s paper, which pretends that it’s only a beleaguered but wise minority of economists who want to see curriculum change, and dismisses the CORE curriculum that’s under development without – on the internal evidence of the column – having looked at it. Calls for radical reform make for good newspaper copy but ignore the practicalities of achieving change. It would be a shame if the real momentum behind curriculum reform got dissipated because of ill-informed comment from people who should be supporting it. Still, it’s the prerogative of would-be revolutionaries to be idealistic/unrealistic. Here is my VoxEU column, trying to be balanced about the curriculum debate.

Paging through the new book, though, it looks very good. It’s one of the launch titles in the new Pelican series. And at £7.99, about the same price adjusted for inflation as my 1970s were £1.95 Pelicans.

The trouble with economics, part 92

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I’ve had a busy week, to say the least. So I’ve only been inching my way very slowly through the very interesting [amazon_link id=”0691155240″ target=”_blank” ]Fragile By Design[/amazon_link] by Charles Calomiris and Stephen Haber.

On Monday at the OECD Forum, though, as well as talking about my own book, [amazon_link id=”0691156794″ target=”_blank” ]GDP: A Brief But Affectionate History[/amazon_link], I had a very interesting debate with Marie-Laure Djelic and Yves Flückiger about economics and economics education. They were both critical of economics, for familiar reasons – many of which I agree with.

However, Marie-Laure made one really interesting point I hadn’t thought of before. She was talking about Michael Sandel’s [amazon_link id=”0241954487″ target=”_blank” ]What Money Can’t Buy: The Moral Limits of Markets[/amazon_link]. A weakness of the book, in my view, was its failure to answer the question about where those limits lie. Sandel criticises the fact that people pay other people to stand in line for them to pick up free tickets for plays in Central Park. But why is that worse than paying people for their time in other ways, like babysitting? Marie-Laure argued that he should not have tried to specify the limits of the market, however – she sees it as a collective, political decision, not a question to which there can be a technocratic answer.

[amazon_image id=”0241954487″ link=”true” target=”_blank” size=”medium” ]What Money Can’t Buy[/amazon_image]

I only partly agree with that. Of course political imperatives should be able to override a market – think of the civic need for rationing during wartime even though it fuels a “black market”. However, it seems clear to me that instincts or political outcomes should be tested from the perspective of what a market outcome would look like. Take the example of emissions markets: there are people, maybe many people, who think markets and the environment shouldn’t mix at all, but that’s just perverse if a market process can lead to a better environmental outcome. And if there is a strong moral instinct not to allow payment for queuing, the moral philosophers should try to explain why it does differ from other forms of payment for labour time.

 

This is how little I know

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It’s terrifying how easy it is to be blithely unaware of the intellectual history of economics, even if you read a lot, as I do. History of thought is one of the glaring gaps in undergraduate and graduate courses, alongside economic history per se.

Last week, when I was speaking at the Manchester Statistical Society, my discussant, Dr Richard Pryke, mentioned the work of Ian Little. At the weekend I looked him up and found this fabulous obit written by Professor Peter Oppenheimer and this by Robert Skidelsky.

It turns out that Prof Little’s [amazon_link id=”0198281196″ target=”_blank” ]A Critique of Welfare Economics[/amazon_link] of 1950 was hugely influential and was reissued in 2002. I’m not at all proud of knowing nothing about it, and will try to fill the gap.

[amazon_image id=”0198281196″ link=”true” target=”_blank” size=”medium” ]A Critique of Welfare Economics[/amazon_image]

Is economics leaving Wonderland?

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Bill Easterly’s [amazon_link id=”0465031250″ target=”_blank” ]The Tyranny of Experts[/amazon_link] and The Idealist, Nina Munk’s book about Jeff Sachs’s Millennium Villages project in Africa, [amazon_link id=”0385525818″ target=”_blank” ]The Idealist[/amazon_link], were reviewed in an interesting article by Andrew Jack in the Financial Times yesterday. The books – neither of which I’ve yet read – seem to be part of the big shift that has occurred in development economics in recent years. That shift reflects a welcome shedding of the belief, at least on the part of many economists, that a single conceptual approach will deliver a ‘silver bullet’ solution or method that can be applied everywhere.

[amazon_image id=”0465031250″ link=”true” target=”_blank” size=”medium” ]The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor[/amazon_image]   [amazon_image id=”0385525818″ link=”true” target=”_blank” size=”medium” ]The Idealist: Jeffrey Sachs and the Quest to End Poverty[/amazon_image]

This is obviously far from a universal view, or Easterly and Munk would not have written their books. However, a number of the OECD economists I was lunching with on Friday were discussing exactly this subject. One said that he thought the RCTs approached, as so brilliantly described in Duflo and Bannerjee’s [amazon_link id=”1586487981″ target=”_blank” ]Poor Economics[/amazon_link], would turn out to have transformed the field when we look back in a few years’ time. He was keen to see the developed economies scrutinise their own policies as rigorously as some aid interventions are scrutinised now.

[amazon_image id=”1586487981″ link=”true” target=”_blank” size=”medium” ]Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty[/amazon_image]

As well as the methodology question, though, there is the tendency so widespread among economists to assume away the importance of historical and geographic specificities. One of the reasons I so loved Jeremy Adelman’s biography of Albert Hirschman, [amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher[/amazon_link], was its emphasis on this aspect of Hirschman’s development work, the crucial importance of the specific context.

The reductive turn in economics that dominated our subject from the 1970s to the 2000s is tenacious, but it seems to be on the retreat. Development economics is one of the straws in the wind. Perhaps I’m overoptimistic, but I do think economics is returning to the real world from its surreal Wonderland.

[amazon_image id=”1853260029″ link=”true” target=”_blank” size=”medium” ]Alice in Wonderland (Wordsworth Classics)[/amazon_image]

Economists out to lunch?

Economists and our responsibilities to society

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Do social scientists (including economists) have a responsibility to engage in public debate? Yes, said Nicholas Kristof in the New York Times. Academics have become too marginalised and – with honourable exceptions – he said: “Ph.D. programs have fostered a culture that glorifies arcane unintelligibility while disdaining impact and audience.”

Paul Krugman weighed in specifically on economics: “In my field there is indeed a problem with abstruseness, with the many academics who never even try to put their thoughts in plain language.” He concluded that economists who can’t explain what they’re doing probably don’t understand what they’re doing. Krugman supports the use of mathematical models but – echoing many great economists of the past like Marshall and F.Y. Edgeworth – argues that what we always call ‘intuition’, or non-mathematical explanation, matters too.

I like Edgeworth’s analogy best: the maths is like the scaffolding essential for putting up a building. You have to have it, and you have to take it down at the end.

Of course I agree with the general point that academics – especially social scientists! – have to engage with society. Not just engage with as in discuss one’s research in intelligible language, but understand how academic research and teaching interact with society, influence it and are influenced by it. (This was the theme of my 2012 Tanner Lectures, The Public Responsibilities of the Economist (link near the bottom of the page), which looked at the role of economics in the formation of modern financial markets, among other things.)

In the UK, this issue is now described by the shorthand of ‘impact’, with universities required to demonstrate their impact as part of the 2014 Research Excellence Framework, which will determine the allocation of funding. I’m playing a small role in the assessment exercise.

What impact do economists and other social scientists actually have? Is it by being ‘public intellectuals’? Or are there more ‘impactful’ channels? I’ve been reading a very interesting new book, [amazon_link id=”1446275108″ target=”_blank” ]The Impact of the Social Sciences: How academics and their research make a difference[/amazon_link], by Simon Bastow, Patrick Dunleavy and Jane Tinkler.

[amazon_image id=”1446275108″ link=”true” target=”_blank” size=”medium” ]The Impact of the Social Sciences: How Academics and their Research Make a Difference[/amazon_image]

It analyses in some detail evidence from data collected on hundreds of UK-based social scientists and researchers in the ‘STEM’ subjects (science, technology, engineering and maths). The first surprise is how many more students and researchers (and funding) there are in STEM subjects than the social sciences, which in turn dwarf the humanities and the creative arts and design: in the UK, the STEM subjects get 80% of total research funding, social sciences 14%, humanities 4% and creative arts 2%. Student and staff numbers are slightly less skewed, but the figures still make one doubt the often-made (by scientists) claim that STEM needs more.

On the impact question, the book argues that the tide has begun to turn on the inward-looking shift in academia, and on disciplinary silos which , the books says, were ‘concreted in’ by the late 1960s. This must be a good thing. What’s the point of fabulous climate science research if social scientists are not fully engaged in analysing how society might or might not change? Surely scientists – and research funders –  do appreciate that people do not necessarily believe what they’re told by academics? Trust in scientists and researchers is high but that isn’t the same as accepting them as legitimate decision-takers.

Using the data set on academics’ channels of influence built for the research, the book assesses the character of the ‘outputs’ of the academics (which varies quite a lot between disciplines) and looks at two arguments about academics’ impact. One is that there are ‘popularisers’ who can communicate but do little valuable research, and academics of course tend to sneer at this group. Another is that there are superstars who do the best research and are brilliant communicators. The truth is in between – most of the group are middling at both research output and public communication.

In general, though, social science research has a big influence on government, think tanks, civil society and business. The book traces many channels of engagement. The area where there is perhaps less influence – certainly less than the natural sciences – is in the media and social media. If Nicholas Kristof thinks the US lacks public intellectuals, he should feel sorry for the UK: the book suggests Stephen Fry as our leading public intellectual at least in terms of number of Twitter followers – a brilliant polymath but not a social science academic. Academics, in my experience, are often either reluctant to engage with the media (for several valid reasons such as time, deadlines, simplification…); or lack understanding of the conventions and constraints.

One example of highly effective collaboration cited here is the Great British Class Survey, between an academic team of sociologists and the BBC. There was huge public engagement and interest internationally, and it was a successful ‘co-production’ of social science between academics and the public. But no doubt there are some academics who see this as excessive popularisation.

The book ends with a discussion of what the authors call a ‘dynamic knowledge inventory’, a constantly updating repository of our current understanding of society. They commend ‘broad front’ social science and integrating social science with the STEM disciplines. I like the quotation from [amazon_link id=”0571270123″ target=”_blank” ]Tom Stoppard[/amazon_link] in the final chapter: “I don’t think writers are sacred but words are. They deserve respect. If you get the right ones in the right order, you might nudge the world a little.”

[amazon_image id=”0571270123″ link=”true” target=”_blank” size=”medium” ]The Real Thing[/amazon_image]

The LSE website link to the podcast of the launch event is broken but there are some slides available here.

Update: podcast link is here.