Posts Tagged ‘The Rhetoric of Economics’

Truth Versus Precision in Economics by Thomas Mayer

September 12, 2009

TruthVersusPrecisionMy initial interest in Thomas Mayer’s Truth Versus Precision in Economics was spured when it was mentioned alongside McCloskey’s The Rhetoric of Economics in a footnote in a paper I read; the paper refered to it as a justification to accept unconventional p-values (probability of sampling error) in evaluating regression results.* Anyway, I picked it up at the library and was soon enthralled by Mayer’s sympathetic ideas.

The main claim in Truth Versus Precision is that economics is a victim of the principle of the strongest link, which leads to increased rigouization and decreased real-world relevance.

Mayer argues persuasively that economists has incentives to spend too much time on formalism, and that the formally explicit parts of arguments thus gets too much attention. Weaker parts of arguments are usually tended to by arm-waving. Strong, mathematically explicit arguments are subject to relatively much attention and are thus made stronger; weaker, implisit or verbal arguments receives less attention and remains weak. Further, the strength of a chain of arguments is often measured by the strength of the strongest argument, counter to the proverb that a chain is no stronger than its weakest link:

I call this procedure of focusing attention on the strongest part of an argument, and then attributing its strength to the entire argument, the ‘principle of the strongest link’ [p. 57**].

Mayer further suggests that economists preoccupation with formalism governs the prestige ranking of economics fields:

The prestige ranking of economics runs: first, formalist theory; second, empirical science theory; third, policy-advicing and data gathering, and fourth, history of economic thought and methodology [p. 46].

Mayer is a macroeconomist, and naturally parts of Truth Versus Precision discusses problems in macroeconomics. In particular, he argues that the foundations of new classical economics are questionable and concludes:

[N]ew classical theory is another example of the principle of the strongest link. Its advocates rightly take pride in the rigour of their deductive chains. But a rigorous deduction from a questionable premise, accompanied by no adequate tests of the conclusions, does not guarantee truth [p. 120].

Mayer also discusses the problems surrounding empirical testing in economics, for example that many focuses solely on Type I errors, that regressors with insignificant coefficients are excluded, problems with pre-testing of data, and confusions between statistical and substantive significance (see pp. 134 – 139). Finally, he discusses problems surrounding robustness tests (or rather, the lack thereof) (see pp. 142 – 147). He concludes the chapter on emprical testing accordingly:

[M]ost econometric testing is not rigorous. Combining such tests with formalized theoretical analysis or elaborate techniques is another instance of the principle of the strongest link. The car is sleek and elegant; too bad the wheels keep falling off [p. 149].

In the last chapter, Mayer discusses possible remedies. He calls for less abstraction and less formality; more replications and retests; proper use of statistical tests; care for data and awareness of anecdotal evidence; he wants journals to act as communication devices (not archives); critical evaluations of conflicting evidence; less focus on formal techniques in graduate training programmes; and more focus on writing skills.

All in all, I find many of Mayer’s arguments persuasive; they align with my feeling of unease when it comes to mathematical economics (note; I’m a mathematical economist myself). Some of Mayer’s critique also align with some of McCloskey’s critique. However, a professor at my school told me that Mayer was out-dated already in 1993 (the year of publication), and mentioned an article by Alexander Rosenberg from 1983 as evidence: Rosenberg discusses new classical economics. Notwithstanding, I still think there is something to Mayer’s critique, and as I said, it resonates with my own attitude towards economics. A more recent treatise discussing the very modern development of economics would be useful; have economics ridden itself of the principle of the strongest link? I need to find out.

* See p. 157; as far as I can see the only place in the text that actually argues for unconventional p-values, but not unconditionally.

** Page numbers refer to the paperback edition.

Related posts:

Wikipedia vs. Public Restrooms, and Social Knowledge

April 12, 2009

The user who visits Wikipedia to learn about some subject, to confirm some matter of fact, is rather in the position of a visitor to a public restroom. It may be obviously dirty, so that he knows to exercise great care, or it may seem fairly clean, so that he may be lulled into a false sense of security. What he certainly does not know is who has used the facilities before him.

The words belong to Robert McHenry, a former editor in chief of the Encyclopædia Britannica. I found the quote in David Weinberger’s book ‘Everything is Miscellaneous’ (p. 132). The quote is taken from an article McHenry wrote on TechCentralStation.com back in 2004. I’m sure it makes interesting reading. 2004 is five (5!) years ago, however, and a lot has happened since then.

Another skeptic towards Wikipedia is (or, was) Stephen J. Dubner of Freakonomics; he discovered himself on a list of well-known economists. That was 2005, however, and Dubner’s skepticism has faded (if my memory serves me right, that is; I’m sure he mentioned his newly won trust in Wikipedia somewhere, but I wasn’t able to find it; I need a backward-link seeking tool to find entries linking to the post I link to above, because it was when he mentioned his new view of Wikipedia he linked to the old post with his Wikipedia skepticism I found that; confusing I know, but it’s not important, so just forget about it).

Wikipedia may be great, but it also may be wrong from time to time. To know, you need to find out whether an entry is disputed or not. If it is, I’m sure the relevant discussion page suffices to make sure what is trustworthy and what is not, and eventually what side of the dispute you want to sympathize with. However, if the subject is a bit odd, Wikipedia may be wrong and still not disputed because so few people ever looks up the entry.

So, can Wikipedia be trusted on the big, important entries, but not the small ones? When is an entry big; when is it small? My conclusion is that Wikipedia may be a good starting point, but usually I rely on Wikipedia to take me somewhere else, to ‘real’ sources. Wikipedia doesn’t feel real to me, but it collects threads to a lot of real stuff.

The old rule of not relying on only one source remains. Paradoxically, Wikipedia, which is generated from innumerable sources, needs to be checked towards different sources before one can rely on it.

Weinberger concludes his section containing the McHenry quote with the following sentence:

Knowledge – its content and its organization – is becoming a social act [p.133].

I twisted when I read that. When was knowledge, its content and organization, not social? I’m certain dear Deirdre wrote somewhere (probably in ‘The Rhetoric of Economics’) that research is social; research is supposed to produce science, and if we’re strict about knowledge, it comes from science. Not all kinds of knowledge, for sure, but certainly the kind Weinberger is talking about. Research IS social. It’s not objective; it’s colored by the subjects involved and the social environment they do their research in. What Weinberger tries to tell us, I think, is that more people may take part in the process he calls knowledge (the social act). No initial requirements to participate are necessary, or rather, requirements (I’m thinking education; position; image) doesn’t matter, or matter less. Whether that is a good thing or not, I haven’t yet decided.

Related post:

What is Science?

January 15, 2009

Despite my earlier efforts, the strange usage of ‘science’ in the English language still obstructs the discussion over on Climate Progress. John McCormick writes

Here is a definition of the word ‘science’

“1. the systematic observation of natural events and conditions in order to discover facts about them and to formulate laws and principles based on these facts. 2. the organized body of knowledge that is derived from such observations and that can be verified or tested by further investigation. 3. any specific branch of this general body of knowledge, such as biology, physics, geology, or astronomy.”

Academic Press Dictionary of Science & Technology […]

Economics does nto [sic] fit the definition of science, in my opinion. So, scientific norms do not apply [when it comes to economics.]

McCloskey tracks the current use of ‘science’ back to 1867 (p. 20 in ‘The Rhetoric of Econmics,’ 2nd ed.). Earlier ‘science’ meant ‘studies,’  in line with its counterpart in other Indo-European languages. The weird thing is that today,  its counterpart in most languages hasn’t really changed meaning; it means ‘systematic inquiry’ and is not explicitly chained to ‘natural events.’ It is thus used to describe, e.g., philosphy and studies of poetry and language, as well as physics and chemistry. It is thus absurd that economics is a science in other languages, but not in English. What are we supposed to make of this? I let McCloskey explain (p. 21).

The point is that the foreigners have gotten it right. […] “Economics is a science” should not be the fighting words they are in English. The fighting lacks point because, as our friends across the water could have told us, nothing important depends on its outcome. Economics in particular is merely a disciplined inquiry into the market for rice or the scarcity of love. Economics is a collection of literary forms, some of them expressed in mathematics, not a Science. Indeed, science is a collection of literary forms, not a Science. And literary forms are scientific. […] The idea that science is a way of talking, not a separate realm of Truth, has become common among students of science since Thomas Kuhn.[*]

So, what’s important is that economics is scientific. Economics might not be a science in the U.S., but it is certainly scientific and scientific norms do apply.

* Thomas Kuhn (1922 – 1996) was maybe the most influental philosopher of science in the twentieth century. Anyone slightly interested in science, philosophy or generally should read his book ‘The Structure of Scientific Revolutions.’

Economics IS a Science!

January 14, 2009

In the comment section to Joe Romm’s third post on the evil of economists a very interesting comment surfaced. (My previous post links to Romm’s earlier attacks and some responses.) It is signed by ‘Asteroid Miner’ (comment no. 7):

Economists think that they are scientists. They are not. Science deals with NATURE, not man-made things like markets and money. Science requires and is based on public and replicable experiments. Computer simulations don’t count. Social sciences are suspect, but not as bad as economics. SCIENTIFIC EXPERIMENTS ARE NOT POSSIBLE IN ECONOMICS.

Economics presupposes the existence of a stable civilization and the invention of money. A stable civilization with money requires creatures that are at least marginally rational and intelligent and slightly knowledgeable. A stable civilization also requires an adequate food supply. The collapse of agriculture inevitably leads to the collapse of civilization and the collapse of money and economics. Economics is unable to go outside of its founding presuppositions. Global warming climatology MUST concern itself with the collapse of civilization and the possible extinction of the supposedly rational intelligent knowledgeable creatures. Climate change is therefore impossible for economists to imagine AS LONG AS THEY REMAIN ECONOMISTS.

Thus the problem of economists who speak on the subject of global warming. Being economists, they assume the impossible, which is that agriculture will not collapse, civilization will not collapse and Homo Sapiens will not go extinct. Being economists, they are unable to imagine anything outside of the basic presuppositions of economics. They have made those assumptions implicitly since long before their careers began. They cannot do otherwise. They are money oriented. It is a basic part of their personalities. They cannot change by themselves.

Our project, therefore, is to make economists quit being economists prior to the collapse of civilization. It is only by taking them outside of their economic world view that they can be shown how to imagine another world, a world without economics. We have to somehow show them the limitations of the boundaries of their world. We have to shock them into the realization that their world is a very small subset of reality.

My reply:

Asteroid: The English ’science’ has, since the late nineteenth century, been used in a new, weird, sense. Earlier, it meant ’studies.’ It’s counterpart in German (wissenschaft), French (science), and all other Indo-European languages mean ’systematic inquiry’ rather than something that deals with nature. Why the English term went off-track, I don’t know, but statements like ‘economics is not a science’ looks very weird to me (a foreigner). […]

What I see as the misuse of ‘science’ in English has irritated me for a while (and is related to The English Problem). It was then heartening to read Deirdre McCloskey‘s ‘The Rhetoric of Economics.’ On page 20 (second edition) and onwards she discusses and compares the use of ‘science’ to its counterparts in ‘all Indo-European languages.’ She also quotes Lord Kelvin, who in 1883 obiously helped make ‘science’ absurd:

When you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind […] It may be the beginning of knowledge, but you have scarcely in you thoughts advanced to the stage of science.

I conclude that economics is a science after all, only not in English.