Economics

Academic economics, institutions and incentives

Economics economistsAn interesting discussion about academic economics and its role in public life has sparked into life while I’ve been away (eg Simon here and here; Chris here and here). This discussion touches on many of the things that are closest to my academic interests – in particular, thinking about economics as a set of social practices as much as bodies of knowledge.

Just before I disappeared for a few days I finished Lanteri and Vromen’s recently published edited collection The economics of economists: institutional setting, individual incentives, and future prospects. It’s a volume that speaks to many of the same issues, particularly with respect to the incentives facing economists individually and collectively. The contributors approach the issues from a range of social scientific perspectives.

I’d been looking forward to reading the book because it includes several economists who I’d go out of my way to read – Arjo Klamer, David Colander, Deirdre McCloskey, Robert Frank.

And there is plenty of interesting material here, touching on diverse aspects of economics. Topics include understanding economics as an academic discipline in which to build a career; how the discipline can be taught most effectively; the risk of European economics losing its strengths and distinctiveness as it seeks to ape US economics; and some challenges regarding the way the economy should be understood. The collection is eclectic; there is little offered by way of unifying themes.

Whether you’ll find the volume of particular interest depends on how familiar you are with the debates.

One reason for saying this is that the whole volume feels like it has taken quite a while to appear. I’ve no idea whether that is the case. If it had appeared in 2009-2010 it could well have been seen as setting an agenda. As it is, it feels a little behind the curve. Most of the papers by the more prominent authors reprise arguments made elsewhere, and first made several years ago. That goes for the Klamer paper on the culture of the economics discipline and the Frank paper on the economic naturalist approach to teaching introductory micro. The final chapter by Colander et al on the The financial crisis and the systemic failure of academic economics first appeared in working paper form in 2009 and a journal article version appeared in the Critical Review in the same year. It already has hundreds of citations.

The paper by McCloskey is, for me, almost worth the price of admission on its own. The chapter is beautifully crafted. McCloskey probably has the most distinctive voice in economics, infused with sensibilities that any younger economics scholar would almost certainly feel obliged to suppress if they were looking to forge a career in the discipline. But the chapter is a distillation of arguments that have been made at great length elsewhere, on more than one occasion. Indeed, the chapter is notable for its thinly veiled frustration: why do so few seem to be listening? McCloskey’s points are, in one sense, relatively simple – that theory without applied work is of little value, and that a focus on statistical significance to the neglect of importance is a fatal flaw in most empirical work in economics – but, in another sense, they are perhaps so profound as to be difficult to take on board.

While several of the chapters provide handy overviews of arguments that already exist elsewhere, some contributions address issues in novel ways – or at least offer arguments that I’d not come across before. I found the chapter by Lanteri and Rizzello the most interesting in this respect.

There is a longstanding debate in economics – much of it associated with papers by Robert Frank and colleagues – about whether studying economics makes you more selfish through repeated exposure to arguments about the beneficial consequences of self-interested behaviour or whether there is a selection effect – those who are of a more self-interested disposition find economics an appealing subject of study. The debate continues, but I’d summarize by saying the evidence weighs more heavily in favour of the argument that studying economics makes people more likely to display behaviour predicted by economics, such as defecting in prisoners’ dilemma games.

Lanteri and Rizzello approach the issue from a different, and arguably more sophisticated, angle. They are interested in exploring social identity and role expectations. In relatively small sample experiments they ask non-economics students to act as if they are were economists when they interact with others. This leads to the participants displaying behaviour much closer to that prescribed by economic theory and more frequently observed from economics-trained participants.

If that result stands up then it reopens the whole debate. It suggests that the differences observed in previous experiments could be ascribed to a social process by which economics-trained participants fulfil the expectations associated with a particular social role, rather than indicating that studying economics has rewired their subjectivity. You could no doubt link these sorts of arguments to the performativity literature, if you were so inclined.

Economics is not the most reflexive of disciplines. There is quite a strong “those who can, do; those who can’t, do methodology” tendency. But that means that mostly it goes about its business in relatively unsophisticated ways. For sure it is fiercely technical. But having emptied the curriculum of almost all history, history of thought, philosophy of science or methodological reflection, many economists lack more than rudimentary tools for developing deeper understandings of what it is they are doing or what those activities can sensibly achieve.

Books like the Lanteri and Vromen volume offer a window on to some of these debates. But it offers only a tantalizing glimpse of the possibilities. In terms of substance the book will be of greatest value to those who are coming to some of the issues for the first time. But in form it is not really written with that audience in mind. So there is a possibility that it will not find a ready audience. That would be unfortunate.

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