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Tyranny of the Majority, Tyler Cowen Edition
Two different Tylers talk about the Tyranny of the Majority.
Earlier today:
I like Joel's book but I think he is far too pessimistic about the prospects for diversity in the modern world.
But when discussing the different flavors of economics:
The very existence of heterodox economics brings benefits. A personal anecdote will suffice. My first two publications were both in heterodox journals: the Journal of Post Keynesian Economics and the (institutionalist) Review of Social Economy. These articles lifted me into a top graduate school and financial aid (can you imagine how confused the admissions committees were to see a GMU undergrad with an apparently leftie publication record?). I would not have had comparable success at Econometrica.
This tale relates to the value of diversity more generally. We will miss much of the value of diversity by simply listing a bunch of diverse elements and evaluating them one-by-one. Diversity brings broader benefits by allowing people to use niches as ladders to further steps, frequently into the mainstream, or in my case into another niche. Diversity is also a form of insurance, and of course it doesn't always pay off. Finally many excellent mainstream or sometimes even right-wing economists started with an intense interest in social justice, often gleaned from heterodox writings. Vernon Smith was once a socialist, and George Stigler was early on a trust-basher.
Yes the profession is getting better but we also are losing too much diversity in terms of schools of thought. The diminution of the Austrian School, as an organized and intellectually alive phenomenon seems to me a shame, even though I don't believe in a unique Austrian method. Heterodoxies encourage the mainstream to be more philosophical and more self-reflective.
Sometimes intellectual inefficiency is efficient, and my remarks about heterodox economics should be taken in this light.
The emphasis is mine. As is the question: Isn't the second Tyler describing the Tyranny of the Majority? If so, what are the Waldfogel-ian fixed costs that are preventing all the different flavors of economics from flourishing?
Posted by Justin Wolfers on October 4, 2007 at 04:24 PM | Permalink
Comments
I don't think it's the tyranny of the majority. I think it's just that the "consumers" of economists, universities, don't demand heterodoxy. Maybe heterodoxy is actually a public good, with high costs for the individual heterodox economist and benefits dispersed among the orthodox economists.
Posted by: Robert Beard at Oct 4, 2007 5:07:06 PM
Hi Justin,
For a while, I've been failing to get folks interested in the fact that there are interesting informational demand side issues as well as fixed costs on the supply side issues at play - even in the provision of a single good...
http://pages.stern.nyu.edu/~hbar-isa/hbigcvccheap.pdf
Here's my (haiku) abstract of that paper:
Much too much to learn.
We can’t rely on others
when we act the same.
I guess in terms of economic research - there are serious information costs. Sometimes you have to spend time and effort to think through the value of research - whether it's important makes sense etc. Easy to imagine free-riding in such an environment and further that any single individual, or mode of thought won't capture it, and so we rely on others: effectively the sort of externality that a market mechanism isn't always great at overcoming.
Enjoying the posts. All best, h.
Posted by: heski at Oct 4, 2007 5:15:56 PM
Burn.
Posted by: oh, snap at Oct 4, 2007 6:07:27 PM
Yes the profession is getting better but we also are losing too much diversity in terms of schools of thought.
I don't see why diversity for its own sake is necessary in economics. Isn't the point to be right?
Posted by: Joshua Holmes at Oct 4, 2007 6:11:18 PM
I think he's speaking up for diversity. But that doesn't mean he would describe the current situation as "tyranny," nor that he would blame it on "the market."
Posted by: ed at Oct 4, 2007 7:00:32 PM
Has anyone ever constructed a mathematical model of economic schools of thought?
Posted by: TGGP at Oct 4, 2007 8:11:12 PM
Isn't anyone troubled by the idea that there are schools of economic thought? There are no schools of physics thought.
How are ideologies compatible with the claims that economics is a science?
Posted by: robertdfeinman at Oct 4, 2007 9:37:18 PM
robertdfeinman said: "There are no schools of physics thought."
Try telling that to Lubos Motl and Peter Woit. Schools of thought develop around important concepts within a field, and grow so that people share particular viewpoints about method and some key answers that method brings. A school of thought is simply your base line assumptions from which you begin your exploration. Marginalism for economics, string theory for physicists.
Posted by: Dan in Euroland at Oct 4, 2007 9:54:35 PM
Robert Beard and Ed are exactly right...
Posted by: Tyler Cowen at Oct 4, 2007 10:34:02 PM
What if the most extreme Austrians are correct, and the best thing for economists to do in politics is to tell politicians to leave the markets alone? Would politicians follow their advice? Would academics and intellectuals be humble enough to admit that they cannot fine-tune the economy for the betterment of all? Was Hayek and Keynes's battle really decided over the worthiness of their ideas?
To me, much of economic history is like the history of medicine. People wanted to "do something" to help the sick, so people were bled with leeches, or given mercury. I'm not saying the Austrians are necessarily correct, but I've just got a lot of skepticism for people who think they could do it better if only they were in charge.
Other sciences benefited enormously from freedom of speech and thought, when politics was separated from the realm of ideas. Is this even possible with economics?
Hmm, maybe I'll just blog about it.
Posted by: G at Oct 5, 2007 12:23:42 AM
Schools of thought are an essential part of a science's development. Physics was full of all sorts of weird competing ideas two hundred years ago. And that was a good thing, because there really was no way of knowing who was going to be right in the end. Structure of Scientific Revolutions and all that.
Economics is a relatively young field, still working with its own equivalent of phlogiston and aether. All the social sciences are, really. Though I'd say economics is furthest along. :) That's not a criticism, there needs to be bunk research in order for the field to expand.
Posted by: Matt A at Oct 5, 2007 2:30:55 AM
Diversity in economics is coming from psychology (behavioral), history (institutional), biology (evolutionary) and sociology (experimental). No worries.
Posted by: David Zetland at Oct 5, 2007 3:59:16 AM
First, to the extent there was a market imperfection that delayed a lot of "heterodox" insights from entering the mainstream, that's probably because you don't really have a market in ideas in economics. You have a quasi-market where the market value is imputed based on the assessments of people who have some recognition in the field. That probably does create a bias away from new insights. In this case, "preference externalities" are built directly into the quasi-market.
Posted by: Keith at Oct 5, 2007 9:37:23 AM
Dan in EU:
Since scientists are human it is quite possible for them to become overly attached to their own viewpoint. There have even been cases of senior scientists suppressing the work of junior workers whose work contradicted their own. This is a defect in human nature, not science.
People like to point to string theory as such an example, but it's not. There are many who are "sure" that string theory will prove to be the next breakthrough. However the consensus is that string theory is an unproven theory and is awaiting experimental verification. If it's predictions fail to be borne out by experiment it will be discarded even while those who are emotionally invested bluster.
Einstein never could fully reconcile himself with the developments in quantum mechanics. His attitude was regarded as a blind spot and did nothing to impede the development of the field, nor its widespread adoption.
In addition the stakes are different. If string theory is accepted prematurely the difference to the world is insignificant. If a particular economic theory is adopted with inadequate validation the results can (and have been) momentous. The problem with economic "schools" is that they claim more than they have a right to do so.
Many people feel this is because they are driven by ideology not science. There are schools of political thought, but no one thinks this is science.
Economists tend to be self-assured and arrogant. These are not good characteristics for a scientist.
Posted by: robertdfeinman at Oct 5, 2007 11:20:52 AM
TGGP,
Yes. There was a paper some years ago by William Brock and Steven Durlauf
in Economic Theory about schools of thought. Involved nonlinear, mean-field
dynamics, with tipping points playing an important role. More generally,
it supported the idea that there may be a tyranny of the majority.
Posted by: Barkley Rosser at Oct 5, 2007 12:10:09 PM
rdf, are economists more self-assured and arrogant than the average scientist? From what I've read the best scientists tend to score low on the Agreeableness personality factor. Their ego often serves as the drive for them to churn out work in what is otherwise not that attractive a profession. I agree with you that "social science" is not like the hard sciences and probably should not have the term "science" in it.
Barkley Rosser, are you referring to this?
Posted by: TGGP at Oct 5, 2007 3:22:25 PM
David Zetland, how is experimental economics related to sociology?
Posted by: TGGP at Oct 5, 2007 3:23:16 PM
TGGP,
No. William A. Brock and Steven N. Durlauf, "A Formal Model of Theory Choice
in Science," Economic Theory, 1999, 14(1), pp. 113-130.
Posted by: Barkley Rosser at Oct 5, 2007 3:55:47 PM
I guess my comment on the last post was at the wrong place. Never mind. . .
There are schools of though in Physics, and you do not want to stand between too gentlemen advocating for different interpretation of the string theory — there are even in Maths, and I am not just talking about æsthetics, but actual disagreement on hard-to-prove conjectures. Each have arguments, however neither is compelling enough.
I believe it is both a curse and a blessing to have new schools having to rely on other discipline to justify their existence: more original intake indeed, but it sounds like a proof of the current prejudice to me.
There are several models and many observations about the social ties among the scientific community, but I'm not sure this is what you mean when you say "economic theory".
> The problem with economic "schools" is that they claim
> more than they have a right to do so. Many people feel
> this is because they are driven by ideology not science.
> There are schools of political thought, but no one thinks
> this is science.
Well: firstly, political science is a science, however you name it. Orckam, Pascal or anyone who defined science never said it had to be either unanimous or exclusively based on greek-letter maths. You sound American, and I can understand having a science explain you current political situation is daunting — but in civilised countries, we do not mean “theory” as an equivalent of: “The other guys are loonies, but to prove them wrong in the polls, we need more airtime.”
Actually, I'd love to have references for what you consider unacceptable schools, because I can give you the name of five major non-mainstream economic results that have decisive political impact, *with proven experimental results*; not considering them would be “claim[ing] more than they have a right to do so”. I'm not saying they are to be taken as the Gospel and can't be proven wrong, just that they match the scientific criterion, and that dismiss them as "non-science" and "opinion" is dangerous, cruel and unscientific at best. I'm saying they deserve major publication, and before claiming they are wrong, you should publish or quote several papers of similar quality detailing why.
Actually, I'd love to name five of them now:
1. Piketti, on firing employees and ROI; some of his papers are opinion: not these.
2. Keynesian economics. Last time I checked, he helped resolve the '29 crisis, made a fortune out of King's College assets and made fantastic points about investors behaviour on a stock market and the impact of liquidity. Try to publish anything with his works as a reference now.
3. Aglietta: most of what I know of.
4. Marchal et al. on the formation of an 'unemployable' category
5. Boyer & Orléan: everything from either.
If someone writes something you dislike, and base his sayings on observations, then it is you who has an opinion — and bad news: it is likely inaccurate.
Posted by: Bertil at Oct 6, 2007 6:58:47 PM
Bertil:
I won't repeat the things that constitute the scientific method, I'm sure you can look them up on wikipedia.
When two physicists argue over an, as yet unverified, hypothesis they are not practicing science, they are showing off human weakness. It would be different if there were some conclusive data, then one would be right and one wrong. Right now they are in schools of "belief" not science.
Macro-economics suffers from the inability to make accurate and repeatable predictions based upon its models. If Keynes' recommendations proved useful at some point in the past this doesn't mean his theory was correct. It could have been a coincidence. Even if his policies were followed a dozen times this would only mean that the probability of his being right had increased. But since we don't know what would have happened if some other course of action had been followed instead, even this repeated success provides only a weak "proof".
Micro economics works better because there are fewer variables and it is, sometimes, possible to run controlled experiments. As for the math, it needn't be complicated. In most cases simple statistics is all that's required.
This model works very well in epidemiology. There is some discussion these days as to whether much of the math in economics papers is just academic window dressing.
I don't think you have proven your point (at least as far as macro-economics is concerned).
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Posted by: aizheng at Oct 8, 2007 2:02:32 AM
Robert,
I think that you are greatly mistaken by an illusion of Truth: it is not a shinning naked lady, pure and innocent. Science is based on theories, stories that people tell to each other because they make sense. Evolution is a very, very good stories, but is it not an absolute: biologists still try to understand the finer mechanisms that have helped it — but you should not think because you got the key idea that the whole Truth unfolds out of Darwin's mind, like Athena sprung out of Jupiter's.
Because these theories are used to measure life, and take decisions, and make more stories with them, they shape reality; macroeconomics, of all science, should not be looking for Truth, but insights. Saying that Keynes was accidentally right about what to do in the 1930's is the worst case of lack of intellectual integrity: not only the opposite was tried and blatantly failed just before he was listened to, but he himself gave arguments to understand why his theories are not as useful now.
Regarding how difficult are the maths, I can tell you they are tough enough for the referees of the best papers (Yes, I'm talking about errors that I found in the AER) miss some mistakes. It's not a big deal: key ideas go through fine and no big point is missed; basically, it's a similar rate as for Brittanica; but statistics are lies — all the more so when trusted into economist's hands. Once again, I'm not saying that because I read a quote attributed to Churchill saying so some times ago, but because as the local expert on everything quantitative, I have a direct view on what and how calculus is used in science, and it's like clay sculpting: dirty, very much so — but what comes out is beautiful.
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