Six signs you're reading good criticism of economics

After reading Chris Auld’s 18 signs you’re reading bad criticism of economics (I agree with most, although by viewing them as “signs” with exceptions), I was thinking about what signs someone should someone look for in a decent critique. So, here are my thoughts. Some are twists on Auld’s points, or could easily be turned into additional reasons that a criticism is likely bad, but they’re a useful initial filter.

1. The criticism is by an economist

There are a lot of exceptions to this rule in both directions (see Auld’s sign #18). Some of the best and most groundbreaking critiques of particular areas of economics have come from outside (just look at the list of Economics Nobel winners who aren’t economists). But as an initial sign, knowing whether the critic is an economist does a pretty good job, particularly for any screed that declares “here’s what wrong in economics”. There simply seems to be a base level of knowledge of economics required to give a decent critique. That knowledge is so rare outside of economics.

Take the common critique that all economists assume that people are self-interested rational automatons. There is a mountain of work in economics that relaxes this assumption, and most non-economists (and a few economists) have almost no awareness of it.

And sorry economists, this sign also works the other way.  There have been some great economic analyses of other fields, but if you’re reading an economic critique of another academic field – “if only they were more statistically rigorous like us” – there’s a good chance it’s breaching the equivalent 18 signs for that field.

2. They know the difference between academic economists, economic consultants, business, bureaucrats and politicians

When a criticism of economics actually identifies work of an academic economist and then seeks to pull it apart, that’s normally a good sign. If they quote Alan Greenspan, Ron Paul, Ayn Rand, a random McKinsey consultant or Jamie Dimon before tearing apart the current state of economics, its unlikely they understand the current state of economics.

Of course, if the critic does follow this rule, there is a good chance that the critique is not actually of economics but rather of some hack’s use of economics for their particular means. “Our stadium will produce 20,000 jobs!” We don’t hold evolutionary biologists responsible for eugenics do we?

3. They distinguish “good for business” and “good economics”

What is good for (existing) business is not necessarily good economic policy. There aren’t many economists who are happy about how the major financial players in the GFC emerged relatively unscathed. And conversely, opposing certain types of banking regulation does not mean that an economist simply wants to protect the banks. What’s good for business and good economics may align, but sometimes it doesn’t.

When an economic critique can distinguish between the two, they tend to do a better job at addressing the underlying argument made by the economist. The assumption that the economist is a “corporate shill” is never a good start for a rational debate (even if they are a shill).

4. They criticise a particular, clearly defined area or use of economics

Economics is full of ideas and sub-fields that could do with a good beating. A critique that takes on a particular idea or field has a chance of hitting on the core issues. Believe that economists should be better macroeconomic forecasters? Take on the economists who research macroeconomic forecasting, point out what is wrong with their approach and suggest how it could be improved. Don’t expand a single issue to all of economics, unless you have a coherent reason as to why the failure of macroeconomic forecasters implies larger problems (as John Quiggin tries to do).

Similarly, there is a big difference between generally criticising economics for the use of rational actors in a model, and criticising an economist using rational actors in a particular model or context. Much of the time, a rational self-interested actor is a simple assumption that does a good job. However, there are some contexts where it is inappropriate and should be called as such.

5. They criticise a specific economist

This is a twist of sign 4. Of course, if that person happens to be Adam Smith, Friedrich Hayek or Milton Friedman, then this sign no longer applies. Chances are that they’ll go on to breach sign 4 by implying that economics is built purely on the back of the alleged problem child they have identified (and likely misinterpreted and possibly never even read).

 6. They recognise that economics and values cannot be untangled, no matter who is doing the analysis

Economics draws heat as it deals with areas where people have strong opinions, regardless of whether they are an economist. And economists can be biased. We can push our favoured theories while ignoring evidence to the contrary, always supporting “our team”. But to claim that “if only evolutionary biologists or anthropologists or physicists were pulling the levers we’d hit on the rights answers” suggests a lack  of self-awareness (which is unfortunately also lacking for many economists).

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If the above signs are present, it’s more likely to be a coherent critique that will draw an interesting response instead of turning into a higher-level flame war that these types of discussion usually trigger. And of course, there is the possibility that you’ll get a poor defence from the economist, but the signs of a poor defence will have to be the subject of another list (Unlearningecon has put together a list that could serve this purpose, of which I’d agree with around two-thirds if I read them sympathetically and as “signs”).

Having said the above, it pays to be humble. One day one of these screed writers might trigger the overthrow a dominant economic paradigm from outside, and people will laugh at what we today call economics. It’s worth looking past the signs that you are reading a bad criticism to see if there might be a charitable way of reading the argument and taking it on board.

17 comments

  1. The criticism over economists thinking that people are rational, self-interested automatons always annoyed me the most. No, economists don’t think that people are consciously thinking, “Hmm, if the marginal cost is X, and the marginal revenue is Y, then I should do this”. It’s just behavior that shows up along rational incentive lines when you examine it.

  2. The problem is that economists present economics as a science, when really its just a sub-field of anthropology.

    1. Actually, in the same sense that all physical sciences can be considered sub-fields of physics, I would say that all the social sciences (including anthropology) can be considered sub-fields of psychology.

      Since complex emergent behaviors exist between each layer, this in no way disparages any of the layers. Each one has its own complicated rules of behavior to untangle (from what little I see, Chemistry isn’t inherently easier than Physics, and Biology isn’t inherently easier than Chemistry, etc.).

  3. Well, Stephen, in economics we can formulate well-posed hypothesies and test them empirically, which is a trait that distinguishes scientific disciplines from un-scientific ones. Granted, testing theories and hypothesis is more challenging in economics than it is in the “hard” sciences, and for a variety of reasons, but that is a different matter.

  4. The thing is, even being rational does not mean being correct. A ratio is considering two or more variable to find a solution and most people do make analysis before making a decision, their inner preparedness and some random factors will lead to good or bad calls.

  5. I find that many of the authors of anti-economics jeremiads are upset at the discipline because, as it is generally practiced today, it is not politics, it is not philosophy, it is not sociology and it is not history.

  6. How about this for a hypothesis that economics isn’t a science:

    1. If economics were a science, then the masters of that science could use said mastery to reliably predict future economic events.

    2. Because they can predict future economic events better than others, it is in each economist’s rational self-interest to use that knowledge to become filthy rich.

    3. Economists aren’t filthy rich.

    1. Is seismology or meteorology a science? After all, seismologists can’t predict earthquakes and meteorologists do worse than assuming climate averages more than two weeks out.

      In one sense, the absence of filthy rich economists (although Keynes made a fortune twice) is vindication of economists who generally suggest that financial events are inherently unpredictable.

    2. It’s important to bear in mind that what we are interested in predicting keeps changing to whatever is today hard to predict. Five thousand years ago or so, the Egyptian priests figured out how to predict when the Nile would flood. Very, very important but, today, also very boring. Predicting that, say, a wage and price freeze would be a bad idea is boring today, but it seemed like a good idea at the time in 1971 when the President of the United States ordered one.

  7. If good criticism of economics is confined to economists then the discourse, investigation and texts all stem from people like yourself who hold the belief that they possess valid methodologies, concepts and knowledge to provide further valid knowledge.
    Tautology?
    Well, if you desire academic progress and recognition affirming your superior insight and epistemological relevance, you will probably have to consult with those who do not depend for a living on understating theoretical inconsistencies, academic rivalries, politically laden research grants and incoherent justifications by different ‘schools of thought’ per economic policy failure. In this regard, this nobel prize is highly instrumental in demonstrating the state of this branch of science…

    1. It’s not that valid criticism only comes from economists. That is just generally the case. To make a decent critique of the methodologies, concepts and knowledge of economics, you need to have at least some understanding of what they are. Unfortunately, that understanding is rare absent an education in economics.

  8. “They recognise that economics and values cannot be untangled, no matter who is doing the analysis”

    I don’t know, I think the profession could at least try to implement a social science equivalent of medicine’s double-blind studies with a little division of labor. For example (and this is just off the top of my head, so I’m sure there would be some issues to solve to actually make it work):

    Have one person create the model. Have a second person actually run the model and gather the results, where the second person never directly interacts with the first person, is not told what the variables in the model actually represent in the real-world, and is also not told what results are expected.

    Note, if the model is such that it would be obvious for that second person to see through this, we could introduce another step where the variables are run through a transformation. Also, the second person can also serve as a check on whether the first person still publishes results that they didn’t like.

    I am not an academic economist, so I’m not aware whether something like this is already in place, but it’s my impression that the norm right now is for that second person to be the same as the first person, or a TA or grad student of the first person.

  9. One sign of good criticism of economics is if it calls economists to task for ignoring the principles of economics, such as, say, supply and demand, or evaluating policies ceteris paribus. Consider the immigration debate. In much of the world, opinion has been shifting toward a more restrictionist stance on immigration due to the obvious failures of the high immigration policies of the first decade of the century. In the United States, however, the bipartisan elite establishment has been in united about how America needs more immigration. The handful of economists who actually study the subject, such as Borjas at Harvard, have dissented, but the vast majority of celebrity economists who aren’t experts on immigration have mouthed the usual Ellis Island cliches, without even pausing to consider how what they are saying makes no sense within the framework of microeconomics.

    1. You could almost develop a version of the first rule where good criticism within economics is best done by those who work within that area. Ignorance across fields is common. Plus, once economists get out of their field, one of the first things to be discarded can be the economics.

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