Fuente BLOG NADA ES GRATIS:
http://nadaesgratis.es/cabrales/econo-ignorantes-o-algo-peor
Respuesta a Larry Elliot
Dismal ignorance of the “dismal science”—a response to Larry Elliot
In a recent Guardian column, Elliot reproduced some classic misconceptions about what economists actually do
It has become routine to assault the “dismal science” with a dismal ignorance of what economics actually involves. Writers, students and even some social scientists from other disciplines who have very little exposure to what economists do are quick to point the finger and declare economics as a veil for vested interest, and dismiss it as a way of thinking that is fossilised in numbers.
Sometimes, though, the criticism can even come from within the economics bubble itself. This week, a column by Larry Elliott in the Guardian wrapped up a whole array of these fashionable assaults in a single piece of prose. He wrote: “Neoclassical economics has become an unquestioned belief system and treats anybody who challenges the creed of self-righting markets and rational consumers as dangerous heretics,” adding “Complex mathematics is used to mystify economics, just as congregations in Luther’s time were deliberately left in the dark by services conducted in Latin.”
That is simply wrong. Not only that, it is dangerous. Such ill-informed expert bashing is exactly what gives politicians the excuse they need to make policy whilst ignoring evidence. It is also very distant from the empirically based discipline that we see as modern economics.
Like most economists, we do not try to forecast the date of the next financial crisis, or any other such event. We are not astrologers, nor priests to the market gods. We analyse data. Gigas and gigas of data on how much people work, which jobs they do, what they buy and what they eat, how they do in school and other aspects of human life. We do so for the UK and many other countries around the world—rich and poor.
We analyse this data to understand how people make choices, because that determines how they respond to policies and how they interact. You can ask us about taxes, social mobility, inequality, crime, poverty alleviation, pensions, roads, sanitation, public safety, and, obviously, wine, beer and cider prices.
We recognise the important role that government plays in determining well-being and life chances; some of us have spent most of our lives trying to figure out how to design taxes equitably and efficiently. We worry about alcohol prices and the impact on public health. We study whether minimum wage floors are set at sensible levels. We work with governments and NGOs in Bangladesh, India, Uganda, Pakistan, Zambia to build evidence on issues as diverse as which poverty alleviation policies actually work, how best to recruit and retain community health nurses in rural areas, and how poor households can be supported in their parenting practices to foster the development of their children early in life.
But why do Elliott and many others have such a distorted view of economics?
The first answer to this question, we think, lies in a misunderstanding of the purpose of mathematical models. Critics complain that economists’ models are not realistic and make absurd assumptions. The London Tube map is not realistic and makes absurd assumptions. If it did not it would be illegible. And useless. The map is useful precisely because it abstracts from unnecessary details to show you the way. This is what economic models are for, they help us to find our way through complex data in a complex world.
When economists write a mathematical model they do so to highlight particular aspects of reality without confusing details. Take the infamous “homo economicus” theory, which says that humans are both selfish and rational. We think that this explains the behaviour of many corporations well. We also think that it does poorly at explaining how we treat our children—but it is useful precisely because it serves as a benchmark. Economists spend most of their time studying departures from this benchmark—altruism towards our children, irrational behaviour when drinking. And not just at the fringes. These are Nobel Prize-winning economists from Richard Thaler to Oliver Hart to Jean Tirole.
“Critics complain that economists’ models are not realistic. The London Tube map is not realistic—if it was it would be illegible”
The other function of maths is that it can be a powerful lie detector. It will not let you get away with lies, or, to be precise it will tell you exactly which assumptions you would need for those lies to be true. It offers a framework that economists can use to empirically test key, first order principles. Absurd assumptions are the canary in the mine.
A further misunderstanding is that most economists spend most of their time doing maths. This is just plain wrong. The way economics is done has been transformed in the past 30 years with an empirical revolution, meaning we now use fine-grained data on individuals, households and firms. In a recent survey of published work in top journals, over three quarters of papers analysed data collected either by the researchers themselves or from secondary sources. Economists provide evidence, increasingly using randomised control trials, or big data. Often this leads to theories being supported or knocked down: this is the bread and butter of modern economics, with many more examples being discussed on Twitter with the hashtag #whateconomistsreallydo. Mathematical models account for less than a quarter of economics output. Why they get so much prominence in the layman view remains a mystery.
Another misconception is that most economists think that markets are perfect and frictionless. Again, nothing can be further from the truth. While a perfectly competitive market is a useful benchmark, most interesting economics is about the study of market imperfections: real markets are characterised by asymmetric information, frictions, market power; all features that are central to modern theories and that are essential in determining key outcomes. This is the subject matter of the best economists, such as another Nobel laureate Alvin E Roth, who has studied the design of things called “matching mechanisms,” relevant from schools to kidney allocations.
Then there is the misapprehension that the profession is keen to keep all this hidden from its students. Innovations in the teaching curriculum designed to highlight the empirical nature of the discipline and imperfections of real economies from the beginning—such as CORE—are now being widely adopted for teaching undergraduates around the world.
Most importantly, and the reason we are writing this, is that all the bashing of economics can change how policy is made. It gives politicians freedom to make policy choices without being accountable to the facts. We are heading away from evidence-based policy and dangerously close to surrender to special interest groups, gut feelings and superstitions. Now, that is something truly scary.
Signatories:
Orazio Attanasio, UCL
Oriana Bandiera, LSE
Richard Blundell, IFS and UCL
Steve Machin, LSE
Rachel Griffith, University of Manchester and IFS
Imran Rasul, UCL
Twilight of the Money Gods: Economics as a Religion and How it all Went Wrong by John Rapley, (Simon & Schuster)
How old were you when your parents first told you that money doesn’t grow on trees?
Before 2008, if you asked a congregation of economists why we couldn’t simply print money to pay for what we need, they would first scoff. Then if you persisted they would invoke Germany’s inter-war hyper-inflation as proof of the doctrine that this leads to higher prices and so there is no magic money tree.
However, since 2008, the world’s major central banks have printed $12trn as part of their “quantitative easing” programmes. But the inflation needle gently bobbed up and down and many continued to be worried about the perils of deflation—not inflation. QE is a Lutheran moment for the Church of Economic Science.
The question here is whether economics may be more religion than science. And while he doesn’t focus in on QE specifically, this is the case prosecuted in John Rapley’s brilliantly titled Twilight of the Money Gods: Economics as a Religion and How it all Went Wrong. Rapley argues that much of what counts as economic theory is pure doctrine, supported by narratives or beliefs rather than evidence. The book is a must-read for all.
Some economists would haughtily counter that they follow Karl Popper’s philosophy of science. They establish hypotheses and use data to refute them. They discard the refuted theories and the rest are added to the canon of theory.
Rapley argues in lucid, fast-paced prose, that this is a veil and that such a methodology cannot work when you are studying human behaviour and beliefs. Economic belief, he argues, changes the data, rendering prophecies self-fulfilling. If enough people believe that bitcoin is valuable, then it will rise in value. We assume that scientific ideas are shaped by reality. In economics, reality is shaped by ideas.
For instance, the wealthy sponsor ideas around the belief that attempts to chasten the well-off will inevitably cause economic instability. If a government gets elected with radical left-wing ideas, the wealthy send their capital abroad, thereby causing markets to crash. Consequently, economic analysis is hopelessly conditional and contestable. Rapley tells us that the high priests of economics justify their exalted position as the most influential courtiers by pretensions of science rather than hard science.
It is worth remembering however that models of self-fulfilling booms and crashes have been in the economic locker for decades. While I sympathise with Rapley’s overall argument, perhaps he does not take sufficient account of this fact.
In criticising a central plank of “economic science,” Rapley states that maximising our gain “is not always our principal motive for action, nor is it clear that the endless accumulation of wealth always makes us happier. And when we do make decisions, especially those having to do with matters of principle, we seem not to engage in the sort of calculus that orthodox economic models take as a given. The truth is, in much of our daily life we just don’t fit the model all that well.”
That is perhaps an unfair caricature of economics, which paints a more complex picture than granted here. Still, Rapley reveals vast knowledge and is a master of powerful imagery. The book is for the most part wonderfully provoking.
Is it, in the end, convincing? Can we really not trust the accuracy of economic predictions? Let’s take stock.
Freer trade has caused the greatest shifts in income distribution in the history of humanity, mostly good, but not for everyone—just as orthodox economics predicted. The architects of the Chinese and Indian growth miracles would argue that their countries have moved closer to the precepts of economics rather than departing from it. In 2008 we could easily have followed the path of the 1930s—a financial crash after a long boom, precipitating the deepest economic depression that only ended with the most bloody world war. This didn’t happen because of economic policy: fiscal stimulus, no new trade tariffs and the printing of cash. If 2008 was the twilight of the money gods the night was short.
Rapley has done an important service to economic inquiry here, but it may not be reason enough to abandon scientific pursuit in economics.
Six Decades of Top Economics Publishing: Who and How?
Presenting data on all full-length articles published in the three top general economics journals for one year in each of the 1960s through 2010s, I analyze how patterns of co-authorship, age structure and methodology have changed, and what the possible causes of these changes may have been. The entire distribution of number of authors has shifted steadily rightward. In the last two decades the fraction of older authors has almost quadrupled. The top journals are now publishing many fewer papers that represent pure theory, regardless of sub-field, somewhat less empirical work based on publicly available data sets, and many more empirical studies based on data assembled for the study by the author(s) or on laboratory or field experiments.
Fuente
- La respuesta a este tipo de argumentos que algunos plantean contra la teoría económica “convencional” o contra la ciencia económica en general es muy simple: apliquen el método científico. Una teoría científica no se refuta publicando textos periodísticos en la prensa ni repartiendo panfletos; se refuta escribiendo artículos en publicaciones académicas. Si los argumentos son sólidos, la comunidad científica no tendrá más remedio que aceptarlos.
- Gracias por su post. Sin duda no son ignorantes, son algo peor, mucho peor, y por eso no es recomendable perder tiempo en periodistas como Larry Elliot. Ninguna persona razonable recomendaría a Messi prestar atención a Alfredo Relaño, pero sí a lo que dicen Guardiola, Mouriño, Zidane, etc., sobre su juego. Un economista académico interesado únicamente en su investigación científica —esa que le permitiría ganar primero la medalla JBC y luego el premio Nobel— debe prestar atención a lo que digan sus pares, lo que plantea el problema de quiénes son sus pares. En relación al artículo horrible de Elliot, la pregunta es si los economistas académicos deben considerar a Steve Keen un par (Elliot “justifica” su artículo por referencia a Keen). Siendo generoso con todo aquel que tiene una pretensión académica y científica, Keen sería un par (aunque ahora su interés principal es el activismo en contra de la Economía Neoclásica). Sí, a mi me gustaría saber que piensan Yuliy Sannikov (gran teórico, medalla Clark 2016) y Dave Donaldson (gran investigador empírico, medalla Clark 2017) de los trabajos de Keen. Mucho me temo que sólo unos pocos economistas académicos y científicos se han interesado en las ideas de Keen --no los culpo porque el costo de oportunidad de revisar las ideas de otros es alto-- y que el activismo de Keen nada ayuda en atraer su atención.
En realidad, aquí la única "accusatio manifesta" es la del señor Larry Elliot. Yo me limitó a señalar que además de manifiesta es manifiestamente errónea. Y, por tanto, él o los que la repiten, son econo-ignorantes, o algo peor.
ANTONIO CABRALES dice:
En realidad la economía no ha abandonado la intención de informar la toma de decisiones políticas. La renta básica universal o el libre comercio son objeto de intenso escrutinio empírico por ejemplo, con métodos experimentales o cuasi experimentales. Seguimos haciendo ciencia, pero ahora es mejor, eso es todo.
¿Econo-ignorantes o algo peor?