RWER issue 54: Comment: Merijn Knibbe
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Go forth and observe:
answer to Peter Radford’s Whither economics? What do we tell the students?
Merijn Knibbe [Wageningen University, Netherlands]
‘Far from being disconnected from the market economy, poor households, including those living on less than one dollar a day, are deeply invested in financial transactions. Because these transactions are mostly informal, thus undocumented, they remain invisible to the one-time visitors and others who look at written records. But if one were to take the trouble of visiting households twice a month over the course of a year, recording the details of all financial transactions, then one would recognize how diligently poor people, using a variety of instruments, manage their portfolios’
Anirudh Krishna in his review of: Daryl Collins, Jonathan Morduch, Stuart Rutherford and Orlanda Ruthven, Portfolios of the poor. How the world’s poor live on $ 2 a day. Princeton University Press, Princeton, 2009. Science 326 (December 2009) 1634-1635.
Peter Radford asks us, in this journal, what we should tell our students, given the disarray of the science of economics (Radford, 2010). My answer is clear: “find the facts”. Fact finding is pivotal to scientific progress. The December 2009 issue of Science lists a number of recent scientific breakthroughs. All of these concern the discovery and investigation of ‘novel facts’. With this, I mean empirical ‘novel facts’, as well as new ways to observe and measure such data. It is telling, as well as sad, that, in an economics journal, ‘empirical’ has to be added. But is has. Radford rightly divides the present science of economics into the study of ‘economics’ and the study of ‘economies’. This schism is not just a matter of the inclination, education and focus of different economists (as is stressed in McCloskey, 2002). To an extent, it seems to be embedded in the very fabric of present day theory. In an article in a ‘Festschrift’ for Paul Samuelson, Hal Varian for instance states that, since its conception in the thirties of the twentieth century, the idea of revealed preference has made significant contributions to economic theory. But after an exhaustive investigation of the many attempts to measure ‘revealed preference’ and at the end of a career largely devoted to such attempts, he tragically exclaims: “We anticipate that in the future, revealed preference analysis will make a significant contribution to empirical economics as well (emphasis added, M.K.)” (Varian 2006). …..
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