by Alan Harvey, Institute for Dynamic Economic Analysis
A new study finds that, compared to other social scientists, economists consider themselves elites, smarter than others, not needing to explore outside their discipline, worthy of being listened to first when it comes time to fix things; and this view may actually be accepted those other social scientists, who place themselves and their disciplines at the fringe looking in.
Other findings suggest that a dominant view, or party line, is more widely shared within Economics than in other social sciences. It is enforced by a more strict hierarchy and by a narrower control group, associated with elite institutions. Prestige and compensation may ratify economists’ standing in the profession as much as competence or demonstrable results.
The study from the Max Planck Sciences Po Center on Coping with Instability in Market Societies, was authored by Marion Fourcade, Etienne Ollion and Yann Algan. Its title,
Key findings: Economics is:
- Male dominated
- Insular relative to other social sciences,
- Hierarchical, with an extremely tight management structure
- Well-compensated, with income opportunities from consulting, investments and corporate board positions
- Self-confident in its scientific foundations and its ability to fix things.
“The Superiority of Economists,” the title of the report, is an intentional double entendre. It indicates an elitism, a position of social superiority perceived to be based on value added, but often ratified more by high market demand for services and high compensation. A consequent self-confidence, along with insularity, fuels “a natural inclination toward a sense of entitlement.” This article is a summary review of that report. [Quotations are exclusively from the report.]
A history of Purity. For much of the post-World War II period, simplification and abstraction from complexity was the avenue to scientific purity in economics. Later, beginning in the 1990s, purity economics came to be identified with empiricism and a hard-nosed approach to causality.
The flaws of many of the simplifying assumptions and the weakness of the maths have already been explored in INSIDE (see Unlearning Economics, “Not my idea of a simplification” and “3 Steps to Clearing the Ground”, and Ted Carron’s “Love, High School and Learning Dynamics Early”). These pieces and others call into question the individual and causal relationships which are fundamental to the dominant mainstream economics. However rigorous Lazear’s language, it may be speaking to an entirely hypothetical world. The present study puts it, “Economists’ analytical style is hardly compatible with the basic premise of much of the human sciences, namely that social processes shape individual preferences, rather than the other way around,” and “the qualitative methods that underpin the work of many interpretative social scientists often do not square well with the formal aspirations of the vast majority of economists.” Characteristics which typify economists’ judgment criteria:
- A predilection for efficiency over fairness,
- The eliciting of preferences from behavior,
- The design of experiments around a narrow menu of choices.
- Relative inattention to history, seeing trajectories from the present forward. [Sociologists have the reverse intellectual attitude, looking at the present as the outcome of a set of past processes.]
Economists may not simply depict a reality out there, they tend also to make it happen by disseminating their advice and tools. In sociological terms, they ‘perform’ reality. “Aspects of economic theories and techniques become embedded in real-life economic processes, and become part of the equipment that economic actors and ordinary citizens use in their day-to-day economic interactions.” But it remains the case, as the authors say, that “Modern-day economists ascribe their standing to their reliance on precisely specified and parsimonious models and measures
Insularity. Findings documented or cited include:
- Economists have distinct opinions, beliefs and tastes compared with academics in other fields and with the broader American Public.
- Economists are less likely to make contributions to a public good.
- Studying economics inhibits cooperation.
- Economists are more comfortable and open than most about pursuing self-interest.
- A survey of American university professors in Economics, Sociology, Political Science, Psychology, Finance and History found that only in Economics did a majority disagree with the statement: “In general, interdisciplinary knowledge is better than knowledge obtained from a single discipline.”
- Economists cite each other far more than they cite other disciplines, even in the U.S. which is substantially less ecumenical across all fields than Europe.
Sapienza and Zingales, as paraphrased in the report, argue that “the more American economists agree among themselves, the more distant they grow from average Americans.” (It is one amusing irony that economists link arms and lock step in a framework that emphasizes personal choice and individuality.)
Deserved Status. An unwillingness to engage in debate on the substance, which many have noted in dealing with the dominant Neoclassical school, is evident in the behavior of the field as a whole toward other social sciences. But this unwillingness to engage or even acknowledge may indicate less a distrust in the model and more a social perception of superiority. In unequal situations those in power tend not to notice peripheral actors. At the same time they are unaware of the underlying reasons for their own positions. “They tend to rationalize power and inequality as a ‘just’ product of merit, whether effort or talent,” when it may derive more from social or financial position.
Hierarchy. “Economics as a field looks inward and toward the top of its internal hierarchy.” The intellectual framework within which economists think is integrated and coherent to a greater degree than in other social sciences. Economists rely on textbooks, textbooks typically written by faculty from elite departments, far more than other social sciences do. The tribal regime (hiring process) in economics is much more tuned to the perceived prestige of the department from which the student is drawn than is the case in other fields. That is more horizontally integrated, with reciprocity in recruiting expected. These conditions mean schools maintain their pecking orders over time. Economists tend to view their place in this order as “emergent, truthful indicators of some underlying worth, and consequently are obsessed with them.”
Publishing. Economics journals are similarly singular in their affection for prestigious university names and for authors that are faculty of a sponsoring institution. Also, as the authors note:
“… in no other social sciences can one find the extraordinary volume of data and research about rankings (of journals, departments and individuals) that economists produce.”
Professional Associations. The hierarchy and management discipline of a field is exemplified in the internal workings of its professional association. In economics this is the American Economics Association. AEA leaders inevitably are drawn from elite departments. Conference proceedings are controlled to a greater degree by these leaders. The leaders of professional associations for other social sciences are drawn from a much wider set of institutions through a much more democratic and inclusive process.
Finance. An extremely interesting graph in the report displays the interaction of economics with other disciplines. A count of extra-disciplinary citations indicates a serious engagement with mathematics in the post-War period, which peaked in the late 1960s and then declined to relative insignificance today. This may reflect the parallel development of a proprietary brand of maths within the profession. Certainly there has been no slowing in the development of mathematical theory. The single field that has flourished in the past twenty years as a source of citations for economists is Finance.
“Business schools, which control the production of certified managers (through the MBA degree), have evolved from practitioner-dominated programs struggling for academic legitimacy to become the largest employers of trained social scientists, now rivaling traditional academic departments in the size and distinction of their faculties.” Business schools now employ nearly as many economics PhDs as economics departments, which “has turned business schools into formidable players within economic science itself.” Laureates of the Sveriges Riksbank Prize in Memory of Alfred Nobel since 1990 include more from business schools than from economics departments.
Contemporary to this association with finance and business schools, economists began to reap higher levels of compensation, new connections and consulting opportunities. Economists now do better in terms of income compared to other academics, and that situation has improved noticeably over the past two decades, particularly for the best-paid members of the profession. With the rise of Finance also came a change in political bent, “In the 1980s,” the authors note:
“Suspicion of government action grew markedly within the field…. Financial economists [came to argue] forcefully that the purpose of corporations was to maximize shareholder value, and provided a scientific justification for the management practices favored by a new generation of corporate raiders, such as leveraged buy-outs, mergers and acquisitions, and compensating corporate stock options.”
Citing Luigi Zingales, the authors said:
“Economics articles were significantly ‘less likely to be positive on the level of executive compensation, and significantly more likely to be negative’ when none of their authors worked in a business school.”
Conclusion The summary image is of an insular profession, guarded by a tribal hierarchy, dominated by a few schools, which adheres to a narrow ideology, and teaches largely the same material. Economists have achieved a place of prominence and influence in the world unmatched by other social sciences, and in this position of superiority have declined to engage in a wider discussion. Many will recognize this image as applying also within economics, where devastating critiques go unacknowledged, bad practices go unchanged and self-confidence is unchecked. The final irony is that a whole institutional structure – from newspapers through congressional committees to international policy circles – looks to economists for answers in crisis, even when they have been proven wrong.
When compensation, prestige and tribal discipline replace results and intellectual debate, we have a reform that cannot be won on scientific terms.