Home > The Economics Profession > Economics departments — breeding generation after generation of idiot savants

Economics departments — breeding generation after generation of idiot savants

from Lars Syll

Modern economics has become increasingly irrelevant to the understanding of the real world. In his seminal book Economics and Reality (1997) Tony Lawson traced this irrelevance to the failure of economists to match their deductive-axiomatic methods with their subject.

It is — sad to say — as relevant today as it was eighteen years ago.

rocket-science-pic

It is still a fact that within mainstream economics internal validity is everything and external validity nothing. Why anyone should be interested in that kind of theories and models is beyond my imagination. As long as mainstream economists do not come up with any export-licenses for their theories and models to the real world in which we live, they really should not be surprised if people say that this is not science, but autism!

Studying mathematics and logics is interesting and fun. It sharpens the mind. In pure mathematics and logics we do not have to worry about external validity. But economics is not pure mathematics or logics. It’s about society. The real world. Forgetting that, economics is really in dire straits.

Already back in 1991, Journal of Economic Literature published a study by the Commission on Graduate Education in Economics (COGEE) of the American Economic Association (AEA) — chaired by Anne Krueger and including people like Kenneth Arrow, Edward Leamer, Robert Lucas, Joseph Stiglitz, and Lawrence Summers — focusing on “the extent to which graduate education in economics may have become too removed from real economic problems.” The COGEE members reported from own experience “that it is an underemphasis on the ‘linkages’ between tools, both theory and econometrics, and ‘real world problems’ that is the weakness of graduate education in economics,”  and that both students and faculty sensed “the absence of facts, institutional information, data, real-world issues, applications, and policy problems.” And in conclusion they wrote (emphasis added):

The commission’s fear is that graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues.

Sorry to say, not much is different today. Economics education is still in dire need of a remake. How about bringing economics back into some contact with reality?

 


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On the use and misuse of theories and models in economics

by Lars Pålsson Syll    $20    153 pages   Cover of On the use and misuse of theories and models in economics

Introduction
1. What is (wrong with) economic theory?
2. Capturing causality in economics and the limits of statistical inference
3. Microfoundations – spectacularly useless and positively harmful
4. Economics textbooks – anomalies and transmogrification of truth
5. Rational expectations – a fallacious foundation for macroeconomics
6. Neoliberalism and neoclassical economics
7. The limits of marginal productivity theory

 

  1. August 11, 2015 at 1:57 pm

    Here is analytic art of real economics expressed through a simple yet beautiful photo

    http://www.zerowastenews.org

    • August 14, 2015 at 9:28 am

      Three days on, c.f. https://en.wikipedia.org/wiki/Bernard_Mandeville.

      Is the bee’s way of life a step up in the evolutionary chain from the birds caring for their young? or are we an advance on the birds, with extended families and artforms more various and developed than solo singing? But surely the prime motivation of most of us is not greed but caring for our young, while contra Mandeville it is those who reject that responsibility who live like wasps, cuckoos and precarious Caesars in other people’s nests?

      Nice one, Garrett.

  2. paul davidson
    August 11, 2015 at 5:09 pm

    mainstream economics is so successful because it provides a rational for the wealthy and executives of businesses to do things without government interference and with as small as possible tax burden. It also provides legislators with the fig leaf to cover their exposure to lobbying pressure of those who can most afford lobbyists.

    Moreover , those economics departments that pursue “research” along mainstream lines which may help to prove the correctness of mainstream economics are most likely to get outside research grants — which results in a profit center for Deans and university administrators.

  3. Macrocompassion
    August 12, 2015 at 8:04 am

    As a retired aeronautical engineer, I wish to point out that rocket-science is not even as difficult to do as regular aeronautics, of which many successful engineers daily earn their bread.

    The problem is that the economists don’t use any serious science at all! They simply don’t understand the various steps necessary to begin their studies in a scientific way and they have no intention of trying to find out. It is as if their political inclinations blind them to the possibly that they could be wrong. And if this is called “success” according to Paul and others, then woe to us honest seekers after truth!

    Such ignorance is downright degrading to what I have painstakingly discovered to be a very real and exact science, as my recent book shows (“Consequential Macroeconomics–Rationalizing About How Our Social System Works”). I will gladly share a reviewer’s version an e-copy of this material with anybody who sincerely writes to me at chesterdh@hotmail.com

    • August 12, 2015 at 9:04 pm

      Potentially counter-productive
      Comment on ‘Economics departments — breeding generation after generation of idiot savants’

      You say: “The problem is that the economists don’t use any serious science at all!” That, of course, is correct and what they in effect do has been called cargo cult science by Feynman.*

      What you don’t seem to realize is that orthodox economics, the main object of your critique, has been developed by engineers, physicists and the like.

      “What happened after roughly 1870 was that the analogical barrier to a social mechanics was breached decisively by the influx of a cohort of scientists and engineers trained specifically in physics who conceived their project to be nothing less than becoming the guarantors of the scientific character of political economy: among others, this cohort included William Stanley Jevons, Leon Walras, Francis Ysidro Edgeworth, Irving Fisher, Vilfredo Pareto, and a whole host of others.” (Mirowski, 1991, p. 147)

      The same happens at the moment with the EconoPhysics crowd.** What these people do is to apply the tools that they have become acquainted with in their courses to economics, and this is essentially what their neoclassical forefathers did without much success (2013). Beginning with Veblen and Marshall, others have tried to apply biology, Darwinism, or the theory of evolution.

      For some reason all this borrowing from other sciences did not work. Just the contrary.

      “Thus many are inclined to blame inappropriate copying of physics for the willingness of neoclassicals to tolerate bizarrely unrealistic assumptions …” (Porter, 1994, p. 128)

      It seems to be pretty obvious that economists independently of their background have suffered in the past from a lack of scientific instinct, creativity, imagination and — last not least — serendipity.***

      Egmont Kakarot-Handtke

      References
      Kakarot-Handtke, E. (2013). Toolism! A Critique of EconoPhysics. SSRN Working
      Paper Series, 2257841: 1–13. URL
      http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2257841
      Mirowski, P. (1991). The When, the How and the Why of Mathematical Expression
      in the History of Economic Analysis. Journal of Economic Perspectives, 5(1):
      145–157. URL http://www.jstor.org/stable/1942707
      Porter, T. M. (1994). Rigor and Practicality: Rival Ideals of Quantification in
      Nineteenth-Century Economics. In P. Mirowski (Ed.), Natural Images in Economic
      Thought, pages 128–170. Cambridge: Cambridge University Press.

      * See the post ‘Economics as scientific South Seas’
      http://axecorg.blogspot.de/2015/08/economics-as-scientific-south-seas.html
      ** See the EconoPhysics blog
      www3.unifr.ch/econophysics/
      *** See ‘Secular intellectual stagnation’ on Lars Syll’s parallel blog
      https://larspsyll.wordpress.com/2015/08/10/economics-departments-breeding-generation-after-generation-of-idiot-savants/
      or here
      http://axecorg.blogspot.de/2015/08/secular-intellectual-stagnation.html

      • August 12, 2015 at 9:44 pm

        Yes, but – that was physcists being unhelpful. The force paradigm is bound to be unhelpful when economics is all about communication and the exchange and processing of information. Sure the laws of phsyics still apply, but we do things because we have been indoctrinated or persuaded, not because external forces manipulate our limbs.

  4. August 12, 2015 at 11:23 am

    Here the diagnostic label has rightly moved from “autism” to “idiot savant”, but this is still describing appearances, not providing a useful explanation of the causal mechanisms involved. Paul Davidson is spot on about those interested in perpetuating the problem, but what’s wrong with THEM, anyway?

    Although sympathetic to the French students’ label ‘autism’, I am familiar enough with this to have seen symptoms develop from an extreme fear of noise and anything but a few foods into a well-balanced but very literal-minded personality, adept at mathematics but lacking the social skills involved in understanding everyday banter. With the fear of loud noise went an extraordinary childhood memory for sound – an ability to reproduce weeks later every nuance of an audio book. The autistic Donna William’s personal experiences in “Autism: an Inside Out Approach” convincingly make the link to food allergies, but that is not plausibly the problem with economics – unless the allergen is a lack of truth. Denial and over-reaction to childish fear of the bogey-man – not having enough money – might possibly be.

    The ‘idiot savant’ label is what is liable to happen to people fed a diet of lies. It is not that such people are unintelligent or unreasonable. It is perfectly reasonable for children to trust their parents, but some intelligent ones may realise their parents have not actually been trustworthy. The question is, how were they persuasive in the first place? Had the truth been a matter of fact (like alcoholism) they would hide the evidence, and in recent economics we have had Fukuyama aiming to defeat the spirit of Marx by proclaiming ‘The End of History’, just as Hume had earlier attacked the ‘love’ ethos of Christ by proclaiming ‘Religion is Myth’. But more fundamentally the issue is a matter not of fact but interpretation. Is alcoholism a cause or a consequence of excessive drinking? Is morality to be based on religious Natural Law or human legislation? Hume paved the way for Free Trade not by eliminating the reality that causes have effects but by redefining morality: much as has happened recently to the legal definition of marriage and by then (1740) had already happened with the legal definition of money. If children believe that a banker’s IOU is a valuable for which you can be expected to pay (that you may rightly have your house or livelihood taken from you if you don’t pay): when they grow up it is no wonder if this bogey-man directs their thoughts to ensuring they have enough of it, and not to the natural consequences of the ways they go about that.

    Do we, then, need a more explanatory term than autism or idiocy? Here’s a seemingly popular argument for ‘ZOMBIE’ I made recently in our local UK newspaper.

    “All the letters last week rightly condemned Conservative councillors for preventing Malvernians offering hospitality to even a few of the millions of refugees displaced by wars largely of our Blair/Bush government’s making. It was good therefore to see your editorial (p.5) drawing attention to Chancellor Osborne’s “sleight of hand” dereliction of duty of care for our own vulnerable (p.23), imposing financial “austerity” on local government to cover Conservative deregulation of speculative finance and development.

    In computer science, a zombie is a computer connected to the Internet that has been compromised by a hacker, virus or trojan horse and can be used to perform malicious tasks of one sort or another under remote direction. … Most owners of zombie computers are unaware that their system is being used in this way”. [Wikipedia].

    In political science, then, is a zombie a councillor connected to a political party which has been compromised by financial hackers? Who 320 years ago replaced King James II with their stooge William of Orange, made the British people their Bank of Last Resort, and built into our Constitution the virus that a banker’s IOU (called money) is equivalent in value to what people buy with it?

    Since then Free Traders have sold the products of wage labour, bought up other nation’s real wealth with banker’s IOU’s, and by “money-pumping” cycles of inflation and deflation of the prices of real wealth like businesses and homes, concentrated money in a very few non-local financiers’ hands, grossly over-pricing “private” property to let in rather more.

    The appeal of such unearned income is the Trojan Horse unleashed and promoted in the UK and Europe by Mrs Thatcher and her ilk. It is not just Conservative councillors who are now acting like zombies; in a world we are rapidly ruining, so is our misguided Chancellor and the directors of politics, business and education generally: being not necessarily “bought” so much as pre-occupied with worthless banker’s money.

    Now the banks are using us as their Banks of Last Resort, but to what end? The money they lost gambling was simply their own IOU’s. Should we be repaying banks the value of the IOUs we need to borrow, or simply paying banks to account for our buying what we need, and our sufficiently earning our keep?”

  5. Robertito
    August 12, 2015 at 12:28 pm

    I like the emphasis here on graduate level economics. I have just dropped out of my honours year at an Australian university, and just about every student in my cohort of 20 was shocked at the difference between undergraduate and graduate economics. Somehow all the life and interest is sucked out of the discipline at the graduate level.

  6. August 13, 2015 at 5:51 am

    Reblogged this on markcatlin3695's Blog.

  7. August 14, 2015 at 12:21 pm

    How to stop idiot-breeding
    Comment on ‘Economics departments — breeding generation after generation of idiot savants’

    “It may be distasteful for recently trained economists to admit that there is a lot of silly philosophy underlying ordinary neoclassical economics, but I think such is the case.” (Boland, 1992, p. 203)

    Orthodoxy is based on the following set of premises: “HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub, 1985, p. 147)

    To recall, Arnsberger/Varoufakis have thoroughly debunked these orthodox hard core propositions (2006). From this follows that Heterodoxy — in order to stop idiot-breeding once and for all — has now to move to an entirely new set of foundational propositions. Not one of the HC1 to HC5 propositions can any longer be defended or applied. Every paper or textbook that contains one of them goes straight into the wastepaper basket.

    In order to build up the economics of the future, students first of all need a methodologically acceptable curriculum.* It is not helpful to replace silly orthodox philosopy by silly heterodox philosopy.

    Egmont Kakarot-Handtke

    References
    Arnsperger, C., and Varoufakis, Y. (2006). What Is Neoclassical Economics? The Three Axioms Responsible for its Theoretical Oeuvre, Practical Irrelevance and, thus, Discursive Power. Paneconomicus, 1: 5–18.
    Boland, L. A. (1992). The Principles of Economics. Some Lies my Teacher Told Me. London, New York, NY: Routledge.
    Weintraub, E. R. (1985). Joan Robinson’s Critique of Equilibrium: An Appraisal. American Economic Review, Papers and Proceedings, 75(2): 146–149. URL
    http://www.jstor.org/stable/1805586.

    * See cross-references
    http://axecorg.blogspot.com/2015/04/new-curriculum-cross-references.html

  8. August 15, 2015 at 9:22 am

    notice who wrote that JEL article—arrow, lucas, summers, stiglitz, etc.

    to me economics being too removed to be useful for understanding reality is not that different from any other academic-type endeavor. Does anyone understand politics, psychology, sociology…? Biology and physics, nor math are that useful for understanding many phenomena in those fields (or, say, climate science, or archaeology).

    i think what we have are a whole lot of partial explanations, some of which are heuristics, and some speculations in part (eg cosmology, superintelligence—see I J Good).

    Also there is ‘heterodoxy’. I was reading a book by Stiglitz today—interestingly he pointed out that both the ‘rational expectations’ (J Muth, lucas…) school and the ‘bounded rationality’ (herbert simon) school originated out of CMU. And, originally the people wrote papers together and then went their own ways.

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