The hubristic science
James Forsyth 11:42am
There is a great piece by Harvey Mansfield in The Weekly Standard about economists and their role in the current crisis. It is hard not to agree with Mansfield’s contention that economists became far too confident about what they could achieve. As Mansfield writes:
Mansfield’s conclusion is a spirited attack on the idea of homo economicus:“The economists I know are generally, as individuals, sober and cautious, the most respectable of all professors and in their honesty and reliability representing the best in bourgeois virtue. But when they get together as economists, they give way to boyish irrational exuberance over the accomplishments and prospects of economics as a science.”
The failure of the predictions of so many economists should remind us that economics is a social science not a pure science. Indeed, one of the reasons why behavioural economics is so valuable is that it reminds us of this crucial point.“it is not possible for us, or most of us, to live perfectly flexibly, always ready to calculate anew in fresh circumstances what it is in our interest to do. Thus the ideal of calculated self-interest posited by economics is not a human possibility. We will get in the habit of being spenders or savers and will not be able to turn on a dime, changing our behavior when our interest changes. Indeed our selves are not independent of our ways of life, and it is not possible to calculate your self-interest without knowing your way of life.Economics needs to stop trying to duck responsibility for what it recommends. It needs to examine the whole of life and to focus on the virtue or virtues of different ways of life. It should give over talk about "preferences," as if human desires were given facts unaffected by the science of economics. It should abandon the crude positivism that claims that one can study facts without giving advice, or that one can confidently predict without causing people to believe in one's predictions. It needs to replace its false modesty with true moderation.”
Previous
kinglear
April 7th, 2009 12:01pm Report this commentA fellow graduate of the LSE became a cartoonist and always uses my name if he is using an economist in one of his cartooons. The one I treasure most says " ******** is an economist, and has built up quite a reputation. He was right twice in 100 times."
Scary Biscuits
April 7th, 2009 12:31pm Report this commentStop thinking like communists and go to http:\veryscarybiscuits.blogspot.com
TomTom
April 7th, 2009 1:13pm Report this commentWhat rubbish ! Economics is not the cause of easy credit pursued by electioneering politicians. Anyone versed in Economics as opposed to those with a superficial smattering could have predicted this debacle 20 years ago.
Blame mathematicians for their models which implied certainty where stochastic doubt existed. the Hedge Fund speculation relies upon mathematical models to blind the ignorant about RISK - it does not quantify risk it promotes the idea that risk is eliminated.
You use Utility Curves in your graphic which have no application in macroeconomics unless you try to fabricate a Social Utility Function. You would do better to realise that this essay confuses Microeconomics with Macroeconomics and is laden with fallacy. It is such a poor article that the author exposes his lack of knowledge or rigour.
City economists are employed to sell bonds and equities - in the post-Thatcher world academic economists have been driven from the airwaves in favour of City boosters.
Economics is not at fault, Media is, for it hyped every boom from Martha Lane Fox and the joys of Lastminute.dot.com to boosting house refurbishment and trading antiques
bmc3186
April 7th, 2009 1:31pm Report this commentThe notion that economist's honestly believe in homo economicus is absurd - as virtually any of them will admit.
Further, the suggestion that it was economists - rather than politicians, mathematicians, and any number of those working in financial services who have never studied economics - that caused the crisis is crazy.
It's very true that economists are unable to predict a lot of economic activity. What this piece misses out on is the fact that they're usually the first ones to admit that.
Dave B
April 7th, 2009 2:07pm Report this comment" It needs to examine the whole of life "
I recently read 'Roads to Modernity', which looked at the 'moral philosophers' of the British Enlightenment. The most famous of these being Adam Smith.
Forlornehope
April 7th, 2009 5:51pm Report this commentA good read on this subject is "The Origin of Wealth" by Eric Beinhocker. It can be summed up as economics as if the world is full of real people.
Fergus Pickering
April 8th, 2009 9:15am Report this commentEconomics is not a science. Itis an art masquerading as a science. It is as much a science as betting on horses. Some tipsters are better than others. None of them areright all of the time. Why economists want to line up with chemists rather than historians beats me.
Back to top