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Economists with physics envy

Monday, February 12, 2018 12:01
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An interesting article in Aeon by John Rapley suggests – economics has always been an ethical and social exercise. In other words it ain’t physics.

Two questions: is it good or bad that professional athletes earn 400 times what nurses do, and is string theory a dead end? Each question goes to the heart of its discipline. Yet while you probably answered the first, you’d hold an opinion on the prospects of string theory only if you’ve studied physics.

That annoys economists, who wonder why everyone feels free to join economic debates instead of leaving them to the experts, as they do with physics or medicine. What economists don’t usually admit is that, on a range of topics they examine, they often had an answer to the question before they began their studies. Scientists are supposed to reach their conclusions after doing research and weighing the evidence but, in economics, conclusions can come first, with economists gravitating towards a thesis that fits their moral worldview.


Mr Rapley also points out how economic behaviour is inextricably entangled with wider aspects of human behaviour and frailties. This cannot be news to anyone, but even today vast areas of public debate seem to assume that we are economically rational. 

Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity. Change the social context – in economic parlance, change the incentive structure – and people will alter their behaviour to adapt to the new framework.

The last paragraph is particularly interesting. 

Given this willful blindness, the current reaction against economists is understandable. In response, a ‘data revolution’ has prompted many economists to do more grunt work with their data, while engaging in public debates about the practicality of their work. Less science, more social. That is a recipe for an economics that might yet redeem the experts.


Source: http://akhaart.blogspot.com/2018/02/economists-with-physics-envy.html

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