Interesting article proclaiming the end of “homo-economicus” (ht Economist’s View). This is an issue I care about a lot – so one day I’ll attempt to discuss the article in some detail. Today however, I’m just linking to the article and waiting to see what interesting comments you guys have about it 😉
It also reminds me of this awesome comic from XKCD:
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Source XKCD
In this post I will try to say what economics is – at least, as far as I understand it 😛 . The purpose of this piece is to be part of the set of posts for new readers – so feedback is very appreciated.
So I’ve started reading the moral philosophy and economics book I was discussing, and on the eighth page I found this quote:
The idea that studying ethics could help people do economics or policy analysis may seem far-fetched. Why not consult tarot cards instead?
Now I do not agree with the first part of the above paragraph – policy analysis requires value judgments to reach conclusions, and understanding ethics helps to inform value judgments.
But my focus is on the second part of the paragraph. Why the dig at tarot card reading?
My impression that his focus is on the broader form of economics that requires value judgments in order to reach conclusions – however, if this is what he is focused on tarot card reading is virtually equivalent. Let’s discuss why:
I always felt that the role of moral philosophy in economics entered when value judgments appeared – and as a result, it would be possible to separate this issue from the domain of economic science.
However, a book I just purchased (Economic Analysis, Moral Philosophy, and Public Policy – by Hausman and McPherson) appears willing to attack this belief of mine:
Our job will be … to show how knowing moral philosophy helps one do economics and policy evaluation better
Given how heavily another Hausman book (The Philosophy of Economics: An Anthology) helped shape my view of the economic method, I am sure that this book will end up with me talking like a very different economist. You have been warned 😉
Macroeconomics may have incentive problems, and there may be a lot of room for improvement or refocus, but I think saying that “contemporary macroeconomic theory has failed” is going too far.
Now, I’ve shown myself to be no fan of some of the economics that has, and will, be performed – I quoted approvingly when Dani Rodrik said that some economists had abused the theory. Similarly I nodded my head when Arnold Kling said the same thing. When Agoraphilia pointed out that the “rational expectations hypothesis” is constrictively narrow (namely in how it treats beliefs and expectations) I jumped around in an orgy of agreement.
However, I don’t think we can call contemporary macroeconomics on its predictive failures and then not attack the rest of the economics discipline on similar grounds.
Personally, I hold an interest in social sciences outside of economics. The only problem is that I have even less knowledge about these other social sciences than I do about economics.
As a result, I was glad to see this post on the four major “traditions” of sociology:
I especially like the ordering – from the most holistic to the most reductionist.
Economists strongly work with the fourth category – but have been known to dabble in (or at least understand the value of) the third category. However, many modern economic theorists keep clear of the first two categories, and the idea of a “social reality” (as we fundamentally believe that society is reducible to the incentives of individuals). Are we missing anything by ignoring this concept?