Paul Romer Issues a Clarification

He writes,

I wrote that the economists I criticize for using mathiness are engaged in a campaign of ACADEMIC politics, not one of national politics. Whatever was true in the past, the now fight is over ACADEMIC group identity.

Pointer from Mark Thoma. Read the whole thing. My remarks:

1. As I wrote in my earlier comment on Romer, I see monopolistic competition as prevalent. Perhaps the Chicago school would want to argue that even though in practice we do not see perfect competition, if you make predictions assuming perfect competition, you will typically be correct. But I do not want to speak for Chicago.

2. Romer seems to want to march under the banner of “science” in economics, and I am skeptical of that. Reader Adam Gurri pointed me to an entire book of essays that take such a skeptical position. I am not sure that the essays speak to me, but I am still pondering.

3. In my view, as the economics profession has grown stronger in math, it has grown weaker in epistemology. That is, the generations of economists that came after Samuelson and Solow lost the ability to ask “How do we know that?” They are content to re-use equations simply because they can be found in prominent publications, but (as Noah Smith has pointed out) not because they have been verified empirically, as they would be in physics or another hard science.

There is a slight overlap between Romer’s critique and mine. Romer is saying that economists are choosing models in order to maintain “group cohesion.” I say that they are choosing models based on appeals to authority.

What I wish to claim is that epistemology in economics is really difficult. It is more difficult than in physics. We have a much harder time testing our theories experimentally. We face insurmountable levels of causal density. We do not have a neat, clean answer to the question “How do you know that?” It appears to me that physicists can answer that question in ways that are much more straightforward and compelling. (I am thinking of physics at a high school level. Maybe at the research frontier physics also faces epistemological challenges.)

Because epistemology in economics is really difficult, I think that if you care about epistemology, you are going to find much published research in economics frustrating. That will be true for articles that avoid math as well for articles that use math.

This entry was posted in Economic education and methods, Mark Thoma is Indispensable and tagged , . Bookmark the permalink.

6 Responses to Paul Romer Issues a Clarification

  1. Andrew' says:

    Which is what seems so contradictory with his “more cohesion!” prescription. The professionals screwed up once, now they know how to do it.

  2. Adam says:

    Glad you’re checking out that collection! If I had to guess, I would bet that the chapters that will speak to you the most are Tyler Cowen’s on alternatives to Pareto, and the very last chapter of the nature of liberty. In particular, the last chapter looks at how Adam Smith considered the act of offering money to be making an argument; the argument that the exchange is in the other person’s interest.

  3. Urstoff says:

    I agree with you on economics being hard and not enough professional introspection taking place concerning how to distinguish true from false propositions. I think the same thing generally holds true in sociology, political science, and social psychology as well.

    Unfortunately, these skeptical points are often used by critics of the field to dismiss the findings of economics and substitute in their own unsubstantiated beliefs (e.g., economics is not a science, therefore free trade is bad). Economics may be in a bad way epistemically, but for the layman (not Arnold, obviously), it’s the only thing we’ve got. Near global skepticism about some particular field, however, just isn’t very palatable to most people given how important it is to their own political and ideological views.

    • Adam says:

      The collection in question is written predominantly by pro-free market people, though it also includes a few lefties. Most of them actually do think knowledge is possible in economics, just that the current positivist epistemology embraced by the field (at least those who think about epistemology at all) is completely outdated, long shown to be fallacious.

  4. Jack PQ says:

    I admit entirely misunderstanding Romer’s point, but now I think I get it.

    The problem is twofold: (i) slyly redefining certain concepts in such a way that the results appear to be based on widely-agreed upon assumptions and yet come out in a way that the author wishes; (ii) ruling out certain economic modeling choices not because of economic or math reasons but rather preconceived notions, thus effectively declaring certain possible models “illegitimate” and off-limits.

    If true, this is a sort of economic conspiracy. And I understand why Romer would be mad (he says he’s not, but he sounds mad).

    Sort of related: Romer was a classmate of Dr Kling’s and according to him the star student at MIT in their PhD program. Yet Romer’s PhD is from Chicago? Why did he switch?

  5. Adrian Ratnapala says:

    AK says that in economics epsitemology is harder than in high-school physics because social science faces higher causal density, but is openned minded about research level physics.

    There is an (admittedly imprefect) distinction between the mundane “how do you know that” type of epistemology and the of more ethereal questions like “what is knowing?” kind of epistemology.

    The whole point of a good physics experiment is to create a situation where the causal density is manageble. Research physicsts do spend an awful lot of effort on mundane epsitemology, that’s because they really expect and demand a satisfactory answer to “how do you know that”.

    As a consequence, physics then is left grappling with the ethereal epistemology. There, physics does not have satisfactory answers, though it can sometimes pose new questions.

Comments are closed.