Thursday, December 8, 2011

Are economists not humble enough?

The Economics profession has been targeted on various fronts lately: one is for a lack of a code of ethics, as exposed by the documentary Inside Job, and another has been the lack of forecasting or warning about the current crisis. With respect to the first, the American Economic Association has convened a committee to create a code of ethics, although unfortunately with a rather narrow mandate. Regarding the second, I believe the accusations are overblown, in part because economists have warned about excessive house prices, because bubbles are by definition unobservable, and because the principal accused, modern macroeconomics, has addressed before the crisis many of the aspects it is being accused of missing. This latter point has mainly been put forward by some economists who have a rather antiquated knowledge of the field, as occasionally addressed here.

One of them is David Colander, who has an admirable art of getting into all the right committees at the AEA. This time, it is the Ethics Committee. In his latest paper, he argues that he is not too worried about the funding of economic research and the lack of disclosures. He is rather bothered by the fact that economists do not have the humility to declare how fragile their results may be. They should be more forthcoming about the risk of error, much as engineers do as they care a lot about failure.

I can see where Colander is coming from, but I do not think this is the fault of the economists, but rather of the public consuming economic research. From personal experience, nobody cares about alternative scenarios. Well many editors do, but people in the industry do not. All they want is a precise number to run with. And even if you include standard errors and such, all that is reported is the median. I am guilty of this on this blog as well, it would take too much time and space to report this for every paper, and it distract from the main message. Only when I think the authors have abused the simplification or neglected possible scenarios do I discuss this, and this does not happen too often. And I think it is very symptomatic how Thomas Sargent and Christopher Sims have recently been ridiculed in the press for refusing to provide instant answers to difficult questions. In short, I think the problem has less to do with the economists than with the readership.


Vilfredo said...

I guess your point came summarized as: the readers force economists in not being humble. Well, economists could try to resist more.

Kansan said...

It is all good and nice if they resist more, but there is always going to be one who will be willing to state things without reservations, and this is the one the media, the policy people and the general public will flock to.

TJ said...

" but I do not think this is the fault of the economists, but rather of the public consuming economic research"

I disagree with this.

"In short, I think the problem has less to do with the economists than with the readership."

Again, I disagree.

First off: the *public* doesn't consume the output of the professional economics industry. Politicians and policymakers do. Journalists and opinion columnists do. Politicians convert economic theories into practice, and journalists translate economic theories into articles that are then consumed by the public. It isn't the public's fault that their rulers have been sold dud policies.

If politicians and policymakers demand levels of precision that economists know that they cannot provide then it is the responsibility of the *economists* to explain to the politicians and policymakers that it is better to be roughly right than precisely wrong. If a theory really doesn't provide certain answers then economists should make this clear to the politicians.

If journos want precision and certainty so they can sell newspapers then, again, it is the responsibility of the economics profession to explain what one can be certain about and what one can't be certain about.

Or to put it another way: I'm an engineer. Imagine I design an electronic appliance that electrocutes one in every thousand people who uses it, because I neglected to include an earth wire. When I'm hauled before a judge to explain myself, I can't very well say:

"Oh it's all the public's fault, the lack of an earth wire is clearly visible on the circuit diagram on the inside of the casing."

If economists want to be taken seriously ever again they need to take some responsibility for their work and be honest. And yes, be humble.

Economic Logician said...

TJ, I am not disagreeing. But Kansan's point is very valid. There will always be an economist, or someone who pretends to be one, who is not going to be humble, and this is the one the journalists will be flocking to. The only solution here would be to regulate the profession and certify economists, as I have written about before.

Kansan said...

TJ: What we observe is the result of a substantial selection bias. Humble economists are simply not selected for studies and interviews, precisely because their are humble.

I think I am humble, and I consistently refuse interview requests precisely because I know what will be expected from me, and I do not want to prostitute myself.

Kansan said...

This article in the American Scientist tears apart some of the certitudes Steven Levitt has expressed in his works as editor of the JPE or in his popular books. This is someone who was not humble, but got greatly rewarded in the public opinion and probably his pocketbook.