New APPS: Art, Politics, Philosophy, Science

Until economists share data and replicate results, they should probably keep quiet about policy.

By now most folk will have heard about the paper by a group of UMASS-Amherst economists that showed that a famous paper with claims about the relationship of growth and debt, which (together with the book aimed at the public) played a non-trivial role in providing the academic justification for austerity policies, by famous economists Reinhart and Rogoff were based on mistakes in the treatment of data.  (Here is a response by Reinhardt & Rogoff, which is remarkably lacking in generosity to their critics and also lacking in humility about the magnitude of their error. It reads as if it was written by lawyers rather than academics-in-search-of-truth.)

George Gale pointed me to this news-story, which recounts how a PhD student, Thomas Herndon, "first started looking into Reinhart and Rogoff's work as part of an assignment for an econometrics course that involved replicating the data work behind a well-known study." Beyond the significance that politics may be guided by flawed science, here is a part of the story that transcends partisan politics; economics (like many other sciences) has terrible practices in sharing and replicating data (here's a link to recent scholarship on this.) My economist friend, David Levy, has been publishing about these issues for at least two decades (here's a link to a paper in Social Epistemology), so I am not optimistic that we will see a change in ethos in the field any time soon.

Update: Recall this earlier story about Jeffrey Sachs.

How corrupt is the Harvard Economics department, anyway? (And why are we philosophers so quiet?)

The behavior of Andrei Shleifer et al in Russia is a scandal that has never been adequately addressed by the Harvard economics department (and the economics profession more generally), and often wished away. This is not a small matter because the Harvard department has been a key source for advisers to government, important textbook writers, consultants to Wall Street, and opinionmakers. (And note that I have not even mentioned Larry Summers, or Martin Feldstein's role at AIG (the link leads you to a cute note on how the Harvard buddy system works), etc).

Of course, they are not alone. That is to say, at the top of the economics discipline there is a considerable rot that suggests that in many way the discipline behaves more like a racket than a science, as one of my favorite right-wingers, Gordon Tullock, argued in The Organization of Inquiry.

And here is the weirdness: philosophers have spent a huge amount of energy exposing psycho-analysis, intelligent design, and Marxism as pseudo-science, yet we remain remarkably reluctant to say anything about our good friends, the economists. (Of course, as we reported here, some of us live in a glass house.)

More on Mankiw, and his rhetoric of bluff (CORRECTED)

You may recall that I was rather critical of the Harvard economist Mankiw on this blog recently. In my piece I quoted Mankiw in a concessionary way, "it is also a standard result that in a competitive equilibrium, the factors of production are paid the value of their marginal product. That is, each person’s income reflects the value of what he contributed to society’s production of goods and services." I then argued, "Well, yes, this is true, and the theoretical work of "Gerard Debreu and Herbert Scarf" (1963) does allow one to see that "if the freedom to exit a society is taken as axiomatic, then the only permissible allocations of resources are the competitive market equilibria." I then went on to show why this provides no support for just-desert theory in the real world.

But as the distinguished mathematical economic theorist, M. Ali Khan (Johns Hopkins) (whose writings on the shared history of philosophy and economics are a must read to anybody serious about these matters) pointed  out to me, "the Debreu-Scarf] theorem is false (first noticed explicitly by Foley of the New School) in the presence of public goods." (See Foley's piece here; see especially the conclusion. See also Muench 1972) Mankiw's whole appeal to Debreu/Scarf should be understood rhetorically (now in pejorative sense): cite some esoteric/technical literature in order to silence opponents and assume that the real experts are too polite to call you out (or maybe he misremembered from graduate school?)!

UPDATE: In an early version of this entry, I wrote "Since Mankiw's argument tendentiously ignores the contribution of public goods." Professor Mankiw kindly and correctly points out that he does discuss public goods in his piece. (In particular, to argue for progressive taxation and transfers to the poor.)

In fact, in his piece, Mankiw discusses Lindahl's work, so it all the more puzzling he chose to make his argument in terms of Debreu/Scarf.

Weekly Philo Economics blog: on values in economics (or the New Welfare economics debate reconsidered)

One of the most exciting young philosophers of economics, Anna Alexandrova, recently called my attention to a blog "the Moral Heart of Economics," by EDWARD L. GLAESER (A Chicago trained Harvard Economics profesor) in the New York Times. Glaeser's piece makes a historical argument about Adam Smith, J.S. Mill, and Milton Friedman, and a separate conceptual argument about the nature of welfare economics.  The bottom line of both arguments is that "freedom" is treated "as a fundamental good, a thing to be valued for itself" in economics. (It turns out that in Glaeser "freedom" means more choice; more about this below.) Because that's 'how freedom is treated at the very heart of economic theory." Both arguments are flawed, and they are flawed for revealing reasons. (Last week I also criticized a Harvard economist, but this week my tone will be more businesslike. While Glaeser's rhetoric is self-serving mythology, he should be applauded for trying to think out loud about the moral foundations of economics.) I will start with the historical claims about Smith, Mill, and Milton Friedman, although I take no pleasure in correcting economists lack of understanding of the history and philosophy of their own discipline. So, some may want to skip to the argument about welfare economics, which I will discuss in light of a now forgotten but very intense debate between two then-future Nobel laureates, Paul Samuelson and George Stigler in 1943.

Philo-of-eco blog: Specialization without Trade (or naked self-interest of ignorant economists)

I may be in a vile mood this week (probably because the decision-theoretical mafia within philosophy does not deem my methodological-historical work on Chicago economics "philosophical"--about which another time.) Anyway, this week I aim my critical fire at the deplorable state of the debate among leading contemporary economists about the philosophic underpinnings of public policy. I will use the Presidential Address (at the Eastern Economics Association) by Gregory Mankiw as exhibit A. It is an instance of specialization without any (openness to intellectual) gains from trade--which provides me with the title of this blog. (In passing I'll call attention to Rawls' deep knowledge of economics.) The ad personam kicker of this week's  entry will be in the final paragraph below where I will suggest that Mankiw's naked financial self-interest may be a further proximate cause behind his superficial theorizing. But first let me show how when he comes to normative theory, he deploys standard economics theory in ideological fashion.

Mankiw (who has a widely read blog) teaches at Harvard; his most famous papers are contributions to so-called growth theory. (I have to admit that I view most of that work as dressed up curve-fitting, but at least it's empirical.) Anyway, his presidential address takes aim at utilitarian justification for wealth transfer in order to advocate a just deserts account.