I had a bit of an epiphany this weekend about economics. More accurately, I had an epiphany about why it is that economics rubs me the wrong way as often as it does.
Let me get the disclaimer out of the way up front: I’m not bugged by all economists. I’m probably not bothered by all economic theory or claims flowing from it. Heck, there’s a good chance, in the village of ScienceBlogs, that I am the village idiot as far as economics goes, and that what bothers me is misuse of economics rather than economics itself.
That said, I am still bothered.
What prompted my epiphany was an article in The Economist about women in the workplace in the UK. From that article:
The Labour government sees affordable child care as crucial to narrowing the pay gap. The Conservatives are following suit, trying to re-position themselves as modern and woman-friendly. In a speech on February 27th, George Osborne, the shadow chancellor, hinted that his party would subsidise a wider range of childcare options than the government does currently. He went on to say that it should not be the business of the state whether women choose to work or stay at home with their children.
He is right. But most British women do not want to work full-time and park their babies in nursery care all day, as mothers in some countries do. They would prefer to work part-time while their children are young, and perhaps have their partners do likewise. (Around two-thirds of British women with children under 11 work part-time.) Often, though, they cannot do this in their current jobs, but must move to a lower-paid, lower-skilled job, or leave the workforce altogether.
Too often this move to the “mummy track” is irreversible. According to the IFS, women’s hourly pay recovers only slightly by the time their children leave home, when it is 72% of men’s pay, and although their employment rate increases steadily as their children grow up, it never returns to the same level as men’s.
One could argue that people should not be protected from the consequences of their own choices. But female workers are needed to pick up the demographic slack as society ages, and low pay will make work seem less appealing to them.
It’s the last two sentences that set me off. Why should women who are doing the work of raising children have the option of working at something besides “lower-paid, lower-skilled” jobs? Not because they have the skills to do other jobs (or, you know, that it might be just not to screw over the people doing the heavy lifting of child rearing by shunting them into crappy jobs when they rejoin the world of work), but because they’re needed to “pick up the demographic slack”.
Is the only way to secure treatment as a full human being, worthy of respect, to produce an economic argument?
Aren’t there some things we know we ought to do, or pursuits we know we value, without economic considerations ever coming into it?
My main gripes with economics can be summarized as follows:
- I’m not convinced that the entities economists refer to in their economic models are real — at least, I’m not sure they’re as real as frogs or molecules or electrons. Some (such as “opportunity cost”) are sufficiently fuzzy that economists themselves seem unsure about how to pick them out.
- I’m not convinced that economic models actually succeed as models of real systems. (If the models are meant to be descriptive, I’m not convinced they’re describing real systems accurately enough that their predictions are reliable.) Sure, any time you’re modeling a complicated phenomenon, you have to abstract away lots of details — but you have to leave enough in that your model succeeds as a model of the phenomenon. My sense is that economists are still struggling with this.
- If the theories of economics are, in fact, intended to be normative, rather than descriptive, what force do they really exert? Why should I prefer an economic vision of how things ought to be?
It’s possible that my main animus comes from people with a political or social agenda treating economic theories as normative in ways that economists themselves would not. Or perhaps, it comes from people who try to tell me that the only kind of argument that moves people (and thus, the only kind of argument I should be moved by) is an economic argument.
I’m usually much less moved by economic arguments than other kinds of arguments. Is the problem with me? I beseech the economists who may be reading to disabuse me of my misconceptions about economics and help me get happy with the whole enterprise.
As a British woman, who now lives in the US, I have problems with the statement:
“But most British women do not want to work full-time and park their babies in nursery care all day, as mothers in some countries do.”
I’m also not a Mum so I can’t answer that directly. Surely that most women or even most people don’t want to do that, whatever nationality.
Yes, I agree, why should we work full time just because of a demographic short fall in capable men?
But then the Economist is politically Conservative, i.e. on the right.
Several tangentially related points:
The opportunity cost article is something that amazes most economists I know, since it’s a basic concept (and no economist I asked got the answer wrong). Nevertheless it does not represent the way most non-economists think, and we know that.
“Yes, I agree, why should we work full time just because of a demographic short fall in capable men?”
Because the demographic short fall will affect women too, if they rely on a pension provider in their old age. Clearly it’s an individual choice, and perhaps women need a monetary inducement (higher wages than men perhaps) to be tempted back into the labour pool, but that’s a different question altogether. Women need to work full time for the good of society, which includes other women, their children, and men.
I’m reading Judith Warner’s book right now. What she talks about in terms of childcare is that it’s not the cost always, but the quality. Most women (speaking for myself and my friends here) don’t mind leaving the kids in the care of good people. If there are rigorous standards in place, then women can be assured that the kids are well-cared for. Unfortunately, standards vary by state–and at times by price. If all childcare workers had certification requirements or something, that might be a step in the right direction. Additionally, all jobs are extending hours. There is still this concept that if you’re not working 50 hours a week or more, you’re not working hard enough. My current job is a 35 hour work week. I can live with my kids in care for 30-35 hours. 50 or 60, I don’t think so. So I think something needs to be done about the length of the work day, too. Standardize that and of course, hope that a cultural shift takes place that doesn’t stigmatize the people who limit their work week.
Just some ideas I’ve been playing with for the last week. Thanks for giving me a soapbox.
A-ha! I told you so. And now you described quite well why economics is not a science. Actually, I take it back – some of the stuff that gets Nobel Prizes is science, but apparently it never percolates down to textbooks or becomes part of the curriculum.
I think your beef here is not with economists but policymakers. Your preferred policy is for government to “secure [for every woman] treatment as a full human being, worthy of respect.” The article is talking about a different policy, one of ensuring financial support for an aging population. I can see how the wording would raise hackles. If I were editing the article, I would have worded it “To pick up the demographic slack as society ages, Britain needs as many active workers as possible, and systematic low pay for women will countermand this need by making work seem less appealing to them.” Not so punchy, but I think equivalent in meaning.
I am not an economist, but I believe that most of economics is done with a good-faith effort to be descriptive. And certainly many things economists talk about do exist: production, money, prices, markets, growth, development, just to name some. Of course there are lots of idealizations, but science does that all the time to focus and clarify. Think of frictionless planes or ideal gases, for example. The trouble is that measurement in economics is extremely difficult, so the question of how different reality is from ideality is already pretty hard. I think this is what gives much economic argument its normative feel. For example, if I believe that the British labor market is ideal, then I believe that pay is commensurate with productivity, and therefore women are getting paid less because they are less productive. And I might believe that it is plausible that taking time off to raise children could have a negative effect on women’s productivity. But I haven’t bothered to do the measurement. Is there a productivity difference? If there is, what accounts for it? Perhaps there is a systematic denial of access to productivity-enhancing capital to women returning to the workforce. It’s an empirical question (a set of them, really) that’s totally within the purview of economics. And a concsientious policymaker would want answers to questions like these. Because even if the stated goal is the fullfilment of the humanity of every member of society, the policy to realize the goal will have to be in whole or part economic.
Economics holds that people are moved not by economic arguments, but economic incentives. The arguments are about how incentives work and how to use them.
In my experience most physical scientists are uncomfortable with the wide margin of error inherent in economics. In physical science, reality is fixed within some small error determined by quantum mechanics – the challenge is to find this fixed point.
However, in economics reality is dynamic. Economic results depend on trying to describe a point in reality-space and generalising from this attempted description. This is further complicated by the fact that the people trying to do a piece of analysis can affect the analysis (sort of like resolving Schrodinger’s cat to a particular state by peeking). The margin of error is that much larger. It also makes it more fun.
None of this makes economics a non-science. It deals as much with the scientific method as any physical science.
I think you will enjoy this (see also this) and this.
in my experience most physical scientists are uncomfortable with the wide margin of error inherent in economics. In physical science, reality is fixed within some small error determined by quantum mechanics – the challenge is to find this fixed point.
bingo.
first, yes, there is a problem that economics is misused and abused in the public sphere. pundits and communicators to the public can spin nuanced, subtle and contextually framed economic arguments by stripping away the qualifications and parameters held constant in cautionary econometric models.
second, the ‘rational choice’ model is problematic. i think most economists do know that it is problematic, that rationality is bounded, and so forth. but, it is hard to always make this clear.
third, the analogy with physical science is apt, because think those in the life sciences who work in statistical domains would have a better understanding of the problems economists grapple with. tools like game theory and statistics span the non-molecular biology and the social sciences. the problem with economics (social sciences broadly) is that talking about people vs. drosophila is a big difference….
I have studied a small amount of economics and would like to come to its defence.
First. What is the alternative? Economics is hard, but do you stop studying economies because it’s too hard? Like all social sciences you don’t get results that you can rely upon – in particular you don’t get results you can rely upon under all conditions. In the 50s and 60s there seemed to be a pretty consistent trade-off between employment and inflation – then in the 70s it all went wrong. But it is not totally useless. I think most economists understand how to avoid a 30s style depression now.
Also I don’t think it is reasonable to accuse economics of only looking at economic objectives. There may well be other reasons for closing the pay gap – but that is a sociological or just straightforward ethical consideration. Economics is there to analyse the economic considerations – growth, employment, inflation etc. Most economics courses start with a discussion of the objectives of economics.
It is interesting to compare economics to some of the other sciences that find it hard to make predictions, for example climatology. Economicists are very aware of the limitations of their models. Climatology also has to deal with the results of many different variables of different types and does this by creating incredibly complex models which still do not capture all the many relevant variables. Some of the strongest critics of current climatalogy are economists, who are concerned that climatogy is repeating the mistakes they made in interpreting models a couple of decades ago.
I believe economists also have something to offer other sciences in handling uncertain and highly political subject matter. You don’t get nearly so many slanging matches between economists that I see in some controversial science – perhaps because they are used to not knowing the answers.
Cheers
A couple of responses from an economist:
The Economist isn’t an economic journal. It’s a news/opinion journal. The article you cited is by a journalist reporting and opining on political reactions to facts about the economy, but there’s very little ‘economics’ in it. Economic models are intended to be positive rather than normative, but the framework of economics can be and is widely used to conduct normative arguments, quite separate from the positive enterprise. That’s what you’re seeing in the article.
The entities in academic economic model aren’t real. They’re abstract goal-seeking decision-making agents whose simulated behavior is intended to provide insights into human behavior. That kind of modeling does indeed require radical simplification that raises deep issues about whether and how the results provide insights into real behavior. Economists struggle with this all the time. (There aren’t really agents in forecasting models, which codify a group of related statistical tendencies in large market economies. Their predictions have roughly the predictive power of weather models.)
When a community of goal-seeking decision-makers starts thinking systematically about how communities of goal-seeking decision-makers do in fact behave, they’re prone to introduce biases about how they should behave into basic assumptions built into their models. In my experience, that’s a real problem that never entirely goes away, no matter how hard I work at it. Rationality is one such bias, one that can be a blessing and a curse. From a purely scientific point of view, the assumption of rationality can be a very useful simplifying assumption for modeling complex group behavior, so long as its limitations are understood. It can also be used as a norm to condemn those whose rationality, in the eyes of the researcher, leaves something to be desired. But it can also used to defend the norm of individual freedom from those who would use perceived differences in ability to seize power.
You may be interested in listening to this series of podcasts: Economics is pseuodscience in six parts.
Actually, eight parts…