On the state of economics

I haven’t yet written much about the Nobel Prize this week. There was little discussion of it within my department, likely due to a dearth of macroeconomists and a few days off for “reading days”. I will try to write something more in depth about it, perhaps over the weekend, but I found this piece, by John Kay, rather insightful for several reasons, two of which I’ll highlight here.

The first has to do with teaching. Students often struggle with the concept of a model. It’s something that is so profoundly simple, and even simplistic, that they struggle to see the use of it. I really like Kay’s description of the necessity of simplifying assumptions

All science uses unrealistic simplifying assumptions.  Physicists describe motion on frictionless plains, gravity in a world without air resistance.  Not because anyone believes that the world is frictionless and airless, but because it is too difficult to study everything at once.  A simplifying model eliminates confounding factors and focuses on a particular issue of interest.  To put such models to practical use, you must be willing to bring back the excluded factors.  You will probably find that this modification will be important for some problems, and not others – air resistance makes a big difference to a falling feather but not to a falling cannonball.

At lunch today with my chair, we discussed the decline in female economics majors. Our department, unlike many economics departments, has quite a few female faculty members. I didn’t have a single female economics professor at Duke, though I did in my time abroad. In fact, the female economics faculty with whom I did interact at Duke left a not-fantastic impression. At least anecdotally, I can say that high female-to-male faculty ratios didn’t push me down my current path, or low ones didn’t discourage me, either. Rather, Kay suggests there is something about the nature of our model-making that is profoundly asocial and disconnected, and thus, perhaps, male.

The knowledge that every problem has an answer, even and perhaps especially if that answer may be difficult to find, meets a deeply felt human need.  For that reason, many people become obsessive about artificial worlds, such as computer games, in which they can see the connection between actions and outcomes. Many economists who pursue these approaches are similarly asocial.  It is probably no accident that economics is by far the most male of the social sciences.

The whole piece is incredibly well done and provides a clear, straightforward critique of economics today; it is a bit dense. It addresses much of the debate behind current arguments for and against deficit spending, which, sadly, are likely not well understood by those pushing for either side. I highly recommend reading it.


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