Why I Don't Like Economists

They're all great guys, smart and amusing and passionate about their work. So what's not to like about economists? In a word, hubris. Economists fly too close to the sun of science.
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Actually, I do like economists. One of my long-time friends is Jeff Frankel, who teaches economics at the Kennedy School of Government at Harvard and who served on President Clinton's Council of Economic Advisers. I rented a room at Jeff's house in Berkeley 25 years ago, when he was a young professor and I was an even younger graduate student. There I was able to meet many famous economists, including future Treasury Secretary and Harvard President Larry Summers and future Nobel Prize winner George Akerlof.

At Knowledge Mosaic, one of my jobs is to publish the Securities Mosaic Blogwatch, which includes licensed content from more than 25 of the leading legal and financial bloggers in the country. Among them, I count a number of professors from the Law and Economics movement, lawyers with a background in economics (some, such as Josh Wright, a rising star at George Mason University, have both a law degree and a PhD in economics).

They're all great guys, smart and amusing and passionate about their work. So what's not to like about economists? In a word, hubris. Economists fly too close to the sun of science. Their wings melt.

Consider Greg Mankiw, the famed Harvard economist and CEA chair under President G.W. Bush, now author of a popular blog. On November 5, he printed a table ranking GRE scores by graduate field, with graduate students in physics, mathematics, and computer science alone ranking higher than economics. Political science, sociology, and psychology trailed far behind, in 17th, 23rd, and 24th place, respectively.

Mankiw titled this post, "Larry, Vindicated," a reference to a conversation in which then-Harvard president Larry Summers asked Peter Ellison, a professor of biological anthropology, whether he didn't "agree that, in general, economists are smarter than political scientists, and political scientists are smarter than sociologists?" In his subsequent recommendation that Summer resign, Ellison condemned the "intellectual arrogance" of Summers' question and emphasized the generally polarizing and demoralizing impact of his attitudes on the Harvard faculty.

For now, let's not even consider that Mankiw's post, with its sneer of "neener-neener", is remarkably juvenile and significantly beneath his professional station. The underlying logic of the post itself - that economists are "smarter" and therefore more "worthy" than other social scientists - is silly. Mankiw adopts a similarly patronizing (and silly) tone in his November 8 "Memo to the POTUS-Elect," which tosses out recommendations that Obama listen to his economists on various and sundry matters, like garnishes upon a wilted bed of lettuce.

The contempt of economists for other social science disciplines is legendary, associated with their view that economists practice "real" science while political scientists and sociologists and psychologists practice, at best, a kind of crude guessing game. As someone who holds a PhD in political science, far be it from me to defend that discipline, or to claim that it in any way resembles the natural science disciplines. I plead guilty to the crude guessing game charge.

The problem with economists is that they possess no similarly ironic distance from their own discipline. The mathematical orientation of modern economics is the foundation of the view within the discipline that they practice real science. In truth, this resemblance constitutes a false positive (reinforced by the false Nobel Prize the Bank of Sweden awards to an economist each year).

In the GRE table, economists rank 8th in quantitative skills and 4th in analytical reasoning. However, mathematical, logical, and reasoning aptitudes alone do not translate into wisdom, judgment, or intelligence (think Warren Buffett) Financial engineering systems failed to successfully model risk, for example, because they did not accurately assess the behavioral dimension of risk, the "hierarchies of belief" that underpin human preference-ranking and decision-making.

In retrospect, of course, many economists have analyzed and criticized the failure of these models, and more specifically, the failure of the analysts who misused these models. Some have belatedly acquired the religion of regulation. Save James Galbraith, however (who believes the financial meltdown constitutes "an enormous blot on the reputation of the profession"), economists themselves, have not used this misapplication of mathematical modeling as a teaching opportunity for their own discipline.

By the way, if one looks more closely once more at the scores in the GRE table, economics ranks only 10th in the verbal component, behind philosophy, English language and literature, history, religion and theology, art history, anthropology and archeology, physics, political science, and earth sciences. Neener-neener, indeed.

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