The Future of Everything

May 21, 2014

In economics, criticism is apparently not worthwhile

Filed under: Economics — Tags: , — David @ 11:46 pm

Since the financial crisis that began in 2007, the field of economics has come under increasing criticism, especially from students. Groups such as Rethinking Economics (with branches in seven countries), Manchester University’s Post-Crash Economics Society, and about a hundred others around the world (see the list here), have sprung up to demand urgent reforms in the way that economists work and teach. A consistent theme is that mainstream economists needs to adopt a pluralistic approach which takes ideas from different areas and perspectives. In Quebec, for example, students recently wrote a petition noting that the field “isolates itself from criticism, leaving little room for ethical, epistemological, philosophical, political and historical reflection, which would allow the discipline to reflect on itself and renew continuously.” This may explain why, as Cambridge University economists Ha-Joon Chang and Jonathan Aldred note, their subject “is the only academic discipline in which a significant and increasing number of students are in an open revolt against the content of their degree courses.”

My own experience with my book Economyths: How the Science of Complex Systems is Transforming Economic Thought partially backs up the claim that economists do isolate themselves from criticism. The book, which was written from the viewpoint of an applied mathematician and brought in ideas from areas such as complexity and biology, was received warmly by many readers, including a number of economists. It was a finalist for the National Business Book Award in Canada, and received a favourable review from the International Journal of Social Economics, as well as from financial publications such as Handelsblatt in Germany, Obserwator Finansowy in Poland, Toyo Keizai in Japan, and many others (see reviews here). William White, former Deputy Governor of the Bank of Canada, named it as a Bloomberg Best Book of 2013. Thomas Sedlacek, who Yale Economic Review described as one of the “5 hot minds in economics,” liked it enough to co-author a subsequent book with me.

The only place that the book received a downright hostile response was with Canadian academics. An example was the blog Worthwhile Canadian Initiative (see below), which features a number of academic economists who are well-known from mainstream media. In an online discussion, these experts and others managed to write off my book without actually obtaining a copy, describing it variously as juvenile, rubbish, idiotic, intellectually lazy, random, semi-articulated, ignorant, and “sort of like Malcolm Gladwell without the insight” (ouch). One anonymous poster even compared me to a climate change denier.

Compare that with the straightforward description from William White, who from his roles at the Bank of Canada and OECD has direct experience of economic policymaking (and has actually read the book): “Lists 10 crucial assumptions (the economy is simple, fair, stable, etc.) and argues both entertainingly and convincingly that each one is totally at odds with reality. Orrell also suggests that adopting the science of complex systems would radically improve economic policymaking.” In a 2013 paper, White notes that insights can be gained “from the new, and rapidly developing, study of complexity economics … There are many parallels in this regard with evolutionary biology.” Economists are not trained in these areas, so need input from scientists with different skill sets, including mathematicians and biologists.

The blog discussion is also revealing about the dynamic (which is otherwise hard to demonstrate) through which economists can be extremely hostile to criticism while maintaining a self-image of openness and tolerance. “I don’t mind people taking pot shots at the economics profession,” writes one. Another says: “Economists welcome criticism … There is a very healthy discussion about methodology. Bring it on.” But they confuse academic bickering with genuine criticism from outsiders (or students) who share none of their biases.

The site also highlighted an even more vituperative review of Economyths by Chris Auld, an economics professor at the University of Victoria, in which he described the book as “a terrible, willfully ignorant, deeply anti-intellectual book. The characterization of economic thought presented is ridiculous. The level of scholarship is abysmal.” And so on. (Oxford University Press and Yale University Press didn’t detect this problem with my writing.)

Like a kind of thought police, Auld also maintains a list of “anti-economists” on his site who get a similar treatment. The list includes figures such as environmentalist David Suzuki, heterodox economist Steve Keen, and evolutionary biologist David Sloan Wilson (“vitriolic and spectacularly wrong” so no useful biological insights there, then!). In another post, he provides a list of “18 signs you’re reading bad criticism of economics” which includes everything from “Goes out of its way to point out that the Economics Nobel is not a real Nobel” to “Cites Debunking Economics.” So I guess that would rule out anything from Nassim Taleb or Steve Keen, which is a shame since along with William White they were among the few people to warn of the financial crisis before it happened. This is the academic equivalent of putting your hands over your ears and humming loudly. No wonder students feel alienated. Remarkably, Auld again takes pains to say that economics “benefits from criticism” (as long as it’s the right type).

These sputterings from the Canadian economics community are a good example of the kind of denial that some economists are in about the state of their discipline. For me, though, the most troubling part is the attitude, well-answered by the commenter at the end of the WCI post, of “Why should I care?”

I certainly feel sorry for any students (such as Jeff V below) who would dare to question their professors. The attitude revealed here goes some way to explaining why economics still seems stuck in the past and is failing to move on after the crisis. The Quebec students write that economics has “little room for ethical, epistemological, philosophical, political and historical reflection.” Who would want to bring up these topics in class or in a thesis, as I do in the book, and risk being called ignorant, intellectually lazy, etc.?

When the academics take their fingers out of their ears and listen to both outside critics and their own students, maybe the field can start to grow up.

Without further ado, we hereby present:

An Economic Comedy, in which economists attempt to write off a book without reading it

(A shortened version of the WCI post and comments, with some commentary; the full text is available at their site, and the Globe and Mail article which caused it is here.)

FW, professor of economics at Carleton University, writes a post called: “Another rant about the Globe and Mail’s coverage of economics.” It is her reaction to the Globe and Mail article in which journalist Brian Milner interviews me about Economyths, and I criticise things such as the assumptions of rationality, stability, and efficiency which underlie most economic models, use of the normal distribution, etc. She admits that “I haven’t read Economyths” but nevertheless gives her opinion:

I don’t mind people taking pot shots at the economics profession – I do it myself. But at least try to get the shot remotely on target.

A student, Jeff V, makes a comment backing up some of the points in Milner’s article:

I can’t really comment on to what degree behavioural economics is part of the mainstream, but I can say from experience that it was totally absent from the PhD economic classroom (at least, in my not-so-authoritative sample of 1 school).

I think it is fair to observe that economists rely far too much on rationality and effiency, if only because they form key assumptions to the great bulk of their math. I suspect that most PhD’s don’t even realize how much they rely on these assumptions; they just learn to do the math, without ever really learning what the math means. (in addition, if you remove the assumption of normal distribtions, nearly the entire discipline of econometrics can be tossed into the rubbish bin.)

He soon gets slapped down by an anonymous poster, Adam P.

Jeff V, I would submit that your sample is not authoritative because you clearly didn’t learn anything.

KM, associate professor of economics at UBC, announces that he has seen some of Economyths on Google books, and is certainly open to criticism (unless of course it’s from a critic who shares none of his biases):

Economists welcome criticism. In the academy, we are well-known, if not infamous, for being direct, abrupt, and rude in criticizing each other (and others). There is a very healthy discussion about methodology. Bring it on. But, as Frances says, try to be remotely on target. That involves things like trying to understand what exactly the methodology is that you’re criticizing.

He clearly has no clue what economists actually do and how we model things. The result is that level of criticism in this book is juvenile.

We don’t just assume normal distributions because it makes our life easier (although that is certainly part of it). The Central Limit Theorem gives us some cover for the pervasive normality assumption.

FW introduces the “straw man” argument, again without reading the book. Anyone who criticises mainstream economics can expect this one.

Explaining economic phenomena with insights from biology is cool. Knocking down straw men – some mythical economist who believes Econ 1000 is the literal truth – is not.

Anonymous poster compares the (still unread) book to climate change denial.

Frances you are way too kind. The article and the arguments are rubbish. Completely idiotic.

This lazy pseudo intellectual rubbish drives me nuts. It’s the same kind of know-nothing garbage used by the climate change deniers and it’s hugely damaging to any kind of intelligent discourse.

Ugh.

FW does not see fit to remark on that extraordinary comment published on her blog, but manages to find some sections of the book on Google and concludes that:

It cites a few interesting studies … But doesn’t really rise above the sum of its parts.

A bit later, she is still trying to read the book without buying it:

[R]ead a few pages of David Orrell’s Economyths at http://bit.ly/bACSFs – it’s just random – sort of like Malcolm Gladwell without the insight and the underlying story that ties it all together … Around chapter 8 it seems as if there’s an idea being developed of society as an organism (an idea that dates back to John A Hobson, but Orrell doesn’t mention this). But it never really gets further than just a semi-articulated idea. Honestly, you’d be better off reading Malcolm Gladwell.

At this point, I step in with some responses.

Thanks for your interest in Economyths (or at least, a Globe and Mail article about it). In case you actually buy a copy of the book, here are a few reading tips that should help address your queries.

“Economists welcome criticism.” This is not my impression, or the impression of many of the “heterodox” economists discussed in the book (who are surely the best judges). See for example pg 164: “As the professor of gender and economic development Lourdes Benería notes: ‘Economics is a very hegemonic discipline, even though there are so many heterodox economists that protest this arrogance and this unwillingness to discuss criticisms.’”

“The Central Limit Theorem gives us some cover for the pervasive normality assumption.” No, it doesn’t. See section starting pg 82: “Mathematical justification for the ubiquity of the normal distribution came with the so-called Central Limit Theorem …”

“Knocking down straw men – some mythical economist who believes Econ 1000 is the literal truth – is not [cool].” See pg 6, section starting: “[F]aced with the above list, most economists would protest that it is an over-simplified straw-man, and that economics is far more sophisticated than that …”

“This lazy pseudo intellectual rubbish drives me nuts. It’s the same kind of know-nothing garbage used by the climate change deniers and it’s hugely damaging to any kind of intelligent discourse.” Relax, it’s only a book you haven’t even read (and don’t you think it’s a little intellectually lazy to write off an entire book after reading an article and browsing a few pages on Google?). For the relationship between climate change and mainstream economics, see Chapter 8.

“Around chapter 8 it seems as if there’s an idea being developed of society as an organism (an idea that dates back to John A Hobson, but Orrell doesn’t mention this).” From my earlier book The Other Side of the Coin, p. 112: “Network science can give us insights into the structure and behaviour of society – and remind us, as Hobson wrote, that ‘humanity in all its various aggregations is a social stuff, and … whatever forms of coalescence it assumes, i.e., a nation, caste, church, party, etc., there will exist a genuinely organic unity … distinct from and dominant over the life and aim of its members.’”

“Honestly, you’d be better off reading Malcolm Gladwell.” He is a fine populariser of science, though not known for his critiques of mainstream economics. But maybe that’s the attraction.

SG, professor of economics at Laval University, thanks me for stopping by:

A couple of quick questions: have you run these ideas by economists, either in journals or a conferences? If so, what sort of feedback did you get? If not, why not?

I reply to SG:

Yes, I have spoken about these ideas at conferences, have co-authored research papers, and also get feedback from my books and articles (see here). The response has been positive from heterodox economists and forecasters who are at the pointy ends of making predictions, but some people get surprisingly upset when you say that markets are not rational. The book wasn’t written in a vacuum – a lot of people have similar criticisms of economics. See for example Economics needs a scientific revolution. Or watch the interview with George Soros at the Institute for New Economic Thinking ([Economics] needs to be rethought from its fundamentals).

Someone who says they are from Macleans magazine pops in to mention another article making similar points:

I see on his facebook page DO links to a recent Newsweek article (circ approx 2 million) that appears to me to have similar arguments, and incorporates similar criticisms from real live economists.

Any rebuttal to this article?

FW, who has apparently spent a significant amount of time criticising the book based on what she can see in Google, now announces she is very busy.

There’s at least dozen things competing for my eyeballs today and every day. I don’t read anything unless I know what I’m going to get out of it – perhaps information, perhaps joy, perhaps catharsis, but there has to be some clear expectation of gain.

There then follow some anonymous posts from AP criticising my level of knowledge:

someone this ignorant of what the economics profession actually does shouldn’t be critiquing it. this is about on the level of me critiquing your wardrobe even though I have no idea what’s in it.

SG first suggests I send him a free copy of the book …

Have a review copy sent to us.

… then gets frustrated when I don’t reply:

Good lord. DO, if you’re trying to persuade economists that you’ve written something worth reading, you’re not doing a very good job of it. Throw us a bone. An idea. Something.

Another anonymous poster thinks this is getting ridiculous:

I fancy he’s not nice to his mother either.

If so that’s a pretty fundamental ignorance of proper behaviour.

AND I just imagined him being cruel to animals.

The person from Macleans introduces a note of reality.

This is a typical “shoot the messenger” strategy first started by FW (who admittedly never read the book) and since embraced by AP, SG and others with a vested interest. I’ve seen it myself, firsthand.

AP, SG: What say you to the Newsweek article/criticism? Throw me a bone.

No one answers that. They are as interested in reading a critical article from Newsweek as they are in reading my book. FW wraps up her end of this enlightening conversation with the conclusion: why worry about it?

I haven’t been contributing much to this discussion because, honestly, I can’t see the point.

There are thousands of economists in this world.

Some do useless work. Some do worse than useless work.

Some economists do great work some of which (I think) makes the world a better place – e.g. the group of dedicated academic economists and environmentalists in BC who lobbied hard for a carbon tax.

Life is too short to spend it worrying about useless (but mostly harmless) economics.

As for the worse than useless – i.e. actively harmful economics – yes, by all means, do something about it. Something effective – like getting ideas out where they’re likely to be read, lobbying and campaigning. Something constructive – like providing an alternative (and feasible) solution to some of the problems the world faces.

But criticizing what others have done without providing an alternative – why should I care? There’s some law that someone posted a link to on this blog a month or three ago that says 90% of everything is garbage. Including mainstream economics. Including heterodox economics.

So why worry about it?

Macleans answers her question:

Here’s one example of why:

I heard this NY Times reporter on the CBC over four years ago.

I sent out the clip to a number of reporters/columnists. One G&M columnist followed up on it (as well as a number of related columns). He was probably the first in Canada on a national level. Note the reference in the first paragraph of this ROB mag article.

James Cameron’s well covered tour and pressers yesterday just shows how far the public discourse has evolved since then. Clifford Kraus, NYT reporter deserves some credit for originally not stating “Why should I care?”

Why should economists care? Here’s another reason.

Response to Chris Auld’s review of Economyths

Filed under: Economics, Reviews — Tags: , — David @ 4:58 pm

My book Economyths has received a number of reviews, from publications ranging from Handelsblatt to the International Journal of Social Economics. The only seriously negative review was penned by Christopher Auld, a health economist from the University of Victoria in Canada. According to Auld, Economyths is “a terrible, willfully ignorant, deeply anti-intellectual book. The characterization of economic thought presented is ridiculous. The level of scholarship is abysmal.”

Hmm. For context, compare this with the description of the book from former Deputy Governor of the Bank of Canada William White, who cited it as a Bloomberg Best Book of 2013: “Lists 10 crucial assumptions (the economy is simple, fair, stable, etc.) and argues both entertainingly and convincingly that each one is totally at odds with reality.”

Of course, it is normal for different readers to come to different conclusions about a book, but this seems extreme. So what is going on?

Feedback is always useful. But Auld’s article isn’t a review – it’s a rant.

Throughout his piece he makes numerous exaggerated, inaccurate, and misleading statements. For example, this academic economist writes that I spend “several chapters discussing the scandalous fact that economists oppose any and all government intervention to protect the environment.” Even if that were my position, which it isn’t, I wouldn’t spend several chapters discussing it (especially since the book only has ten chapters).

Auld quotes me as saying that “senior economists are ‘part of a giant global conspiracy – an attempt to distract us from the real game that is being played behind the scenes.’ (I am not making this up.)” Actually, he is making that up: the full quote is a question, and the answer is negative. He leaves out the question mark.

Auld writes that “I don’t think there’s a single sentence about what economists believe in Economyths with which I agree.” But the book’s assertions are based on or backed by quotes and papers from economists, and the book has been endorsed by leading economists such as White, and Norbert Häring, and Thomas Sedlacek, to name a few.

I was alerted to the post by a reader of my column from World Finance, who engaged Auld in the comments section of his post. Those comments have since been removed.

Auld also maintains a list of “anti-economists” on his site, who receive a similarly affectionate treatment (they are described as vitriolic, spectacularly wrong, technically incompetent, etc.). It includes, besides me, the environmentalist David Suzuki, the economist Steve Keen, and the biologist David Sloan Wilson – all people from outside the mainstream economics establishment who have questioned the basic assumptions of economics.

In another post, Auld provides a list of “18 signs you’re reading bad criticism of economics” which includes everything from “Goes out of its way to point out that the Economics Nobel is not a real Nobel” (ref Nassim Taleb) to “Cites Debunking Economics” (ref Steve Keen). Taleb and Keen, together with White, are among the few people credited with giving advance warning of the financial crisis. Silence those voices, and what hope is there to predict the next one?

In recent years, there have been growing calls from students and others to change the way economists work and teach. As Cambridge University economists Ha-Joon Chang and Jonathan Aldred note, their subject “is the only academic discipline in which a significant and increasing number of students are in an open revolt against the content of their degree courses.” A common complaint is that economists need to be more open to a range of ideas from outside their fields.

A first step would be for economists like Auld to get out of book-burning mode.

May 19, 2014

World Finance: Unconditional basic income

Filed under: Uncategorized — Tags: — David @ 7:05 pm

Discussing basic income with Green Party’s Natalie Bennett

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