Come the Revolution

EconTalk Extra
by Amy Willis
Noah Smith on Whether Economic... Robert Frank on Dinner Table E...

At the suggestion of YOU, our followers, EconTalk host Russ Roberts sat down with Bloomberg View columnist and professor of economics Noah Smith about whether economics is a science, how people's minds are changed, and more.

Let's hear what you have to contribute to our conversation...Share your thoughts with us below. And stay tuned next week for our annual survey of listeners!


1. Early in the conversation, Roberts admits he has an ideology. If you have listened to EconTalk for a while, how would you describe Roberts's philosophical and methodological worldview? How would you describe Smith's based on this conversation?

2. What determines whether a particular discipline constitutes a science? How do Roberts's and Smith's views on this differ? (Bonus: Would you consider the stimulus package an example of a true natural experiment? Explain.)

3. What about minimum wage? Is there "science" we can rely on that can guide policy makers? What did Smith mean when he said, "It is interesting, and it is something."

4. Read the Sims and Leamer responses to Angrist (and perhaps revisit Angrist's EconTalk appearance here.) How would you describe the "credibility revolution" in economics after reading them? To what extent do you believe such a revolution has occurred? (We get that this question requires a bit more "legwork...So we'll be happy to send some shiny new books to some of you...You know, for the effort...)

5. In the aftermath of this episode, a lot of commenters pointed out that science advances one funeral at a time. This suggests economics and the hard sciences are not that different--it is hard for people to change their mind but younger scientists and social scientists are able to look at scientific evidence more impartially than older established researchers. Roberts would argue that the fundamental question is the nature of the evidence and the role of ideology in assessing that evidence even for younger researchers. How might Roberts make his case? Do you agree with the argument?

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COMMENTS (9 to date)
Stephen King writes:


You ask what individual study has led those with opposing views to change their minds and admit that they were initially incorrect. But that is not how economics - or science - evolves. Rather, beliefs tend to change slowly over time, and are modified. Those who are "wrong" will tend to adjust their beliefs but not throw them out.

But change occurs within economics due to better empirical evidence.

My best example? In the 1970s and early 1980s there were still economists who strongly favoured central planning, opposed private property and claimed this would lead to a better economic outcome. The experience of China, the USSR and (to a more limited extent) India means that I cannot think of any economist who would be viewed as even vaguely mainstream and have these views today.


Tom Coss writes:

How many people would play Golf if the only successful and acceptable drive off the T are those which land in whole? Is this the "scientific" precision with which we are to judge successful Economics?

Unlike physics, Economics requires biologic actors who are more analog than digital and wholly human. These actors, as Russ often cautions, tend to get over their skies, becoming too dogmatic and too certain; often building to support the illusion of certainty increasingly sophisticated math and computer models of dubious value.

None of this is required when success is defined by simply getting on the right green, and this is what Economics does very well. On the green conditions are clearer, here subtle options can be seen, appreciated and experimented with. Economics is an approach game where no one econometric club satisfies all conditions. I think Russ would say that the science of the club does not excuse the skill and the touch of the swing, and that both are greatly enhanced by the humility of the swinger.

kczat writes:

I thought Noah's criticisms of theoretical physics were off base. It is not problematic that there are some physicists who think that physical laws might be different in different parts of space. In fact, that sort of thinking is precisely what theoretical physicists are paid to do: think of ways that our current understanding might be wrong, explore the consequences, and (eventually) come up with an experiment that would show which model is correct.

The fact that there are theoretical physicists working on seemingly crazy ideas is not a blight on physics. To me, that is actually a sign of a flourishing science.

Likewise, the fact that there are economists who have radically different ideas is not problematic. That is as it should be in a science. The problem in economics, I think, is that economists with different views cannot convince each other who is right. In physics, proponents of a new model can think up experiments that others agree will decide the issue, and then someone can go run it to find out who is right.

Greg G writes:

When a Congressman changes his mind and switches to a popular position we disagree with, we will tend to see him as an unprincipled opportunist. If we agree with that very same change of position we will tend to see it as reflecting an admirable open mindedness and desire to represent the will of his constituents.

All learning is a form of bias. It's a way of not always having to start with no knowledge on every decision. Bias is a slightly pejorative way to describe this process. Learning is a positive way to describe it. In all cases we are required to make decisions long before arriving at total metaphysical certainty.

I would describe Russ's worldview as being inclined to think that government action is more likely to make things worse than better in most cases. Noah is more neutral on that question and finds it less interesting in the abstract and more interesting when applied to specific cases. I am reminded of Oliver Wendell Holmes saying, "General principles do not decide concrete cases." I think both men would agree with that more or less.

Russ puts a lot of emphasis on how few people really change their minds in the face of new evidence. He is right about this. Post hoc excuses and counterfactuals always provide an escape for all parties. As in,"Yes, my prediction was wrong, but the results would have been even worse if my opponents advise had been followed."

Noah is more inclined to think evidence does make a difference. How you feel about this dispute will depend a lot on whether or not you are looking at individuals over time, or the consensus in the discipline over time. The consensus is moved by evidence a lot more than individuals are. I remember in the 70's a lot of economists disagreed on what caused inflation. Some thought general inflation was caused by oil prices. Gerald Ford tried to fight inflation with W.I.N. buttons. Today there is very little dispute about what causes inflation.

As I said in the main comments section, I don't think that saying you think "incentives matter" really informs us of anything. I have no idea what an incentive that didn't matter would even look like.

Amy Willis writes:

@Greg, you make a REALLY interesting point about the Congressman...Why ARE we suspicious in this case but not others? Can't they, too, be swayed by the sort of evidence that Smith is talking about?

Also, I don't find the use of "bias" as you describe it pejorative...This is one of the questions that kept coming to my mind (and noted by Russ) throughout this episode...That is, can anyone engage in any type of analysis completely absent any bias? I do think this is perhaps different from ideology, but bias as you mentions it seems fundamentally human to me.

John Breslau writes:

Science is prediction (Greg above might say science is the bias towards predicting an outcome given a scenario, but same thing).

Noah's pragmatism, and apparent lack of guiding principles, makes his economic thinking not scientific, but more artistic.

For instance, if someone were going to drop an object from a building, they might ask a physicist how long it will take to fall. The physicist will reply "It depends". "It depends on what?" "Well, it depends on the air resistance, etc." The physicist will list specific factors. Given some of those factors, he will make a prediction. He believes that while each situation is unique, guiding principles still apply.

In short, I think an economist is no longer an economist when he stops thinking that he can predict future economic behavior; that each situation is so unique that no guiding principles apply, and thus no prediction could possibly be rendered,

An economist is an ideologue when he applies one standard to one proposition (he believes in negative demand curves implicitly when speaking about how taxing cigarettes will make people smoke less), yet another standard to a different situation (he states that he is unsure if a higher minimum wage, which is analogous to a tax on low wage labor, will reduce participation in the labor for those who are making less than the proposed new minimum wage).

The moment an economists says "Well... each situation is different, you really have to feel your way around it", then they aren't scientists, they are artists, more akin to someone who analyzes poetry, discusses modern art, and discusses music. That doesn't demean the discipline (I'm a musician myself), but commentary isn't science; prediction is.

Derek writes:

I don't know about all this alternate universe stuff, but if I'm working on something and it is giving me information that I don't expect, I don't think that Maxwell, Faraday, Charles or Boyle were maybe misguided. It is something wrong with the equipment.

That British guy put a space vehicle on an asteroid because the laws of physics are understood quite well and what needed to be done was predictable. The challenge was technical, not one of physics.

Economics is nowhere near, and to suggest policy based on essentially faith based hocus pocus is frankly malpractice.

I got annoyed listening to this misdirection. A standard way of avoiding an answer that you don't want to give is to baffle with horse pucks.

Or that one doesn't have the faintest idea what one is talking about.

Tanya writes:

I am a medical statistician with a degree in economics. This was an interesting episode, but I disagree with Noah's point that all scientific work requires a leap of faith that appropriate controls were done. The onus is on the researcher to demonstrate the the appropriate controls were done by publishing them, and no quality journal would accept work without appropriate controls. There is a leap of faith that the work has not been falsified, but thankfully the rate of this behaviour is quite low.

In my opinion the only true 'natural experiments' involve naturally arising control data (like the lottery example mentioned) everything else is a 'case study' with all the limitations that entails.

In the natural sciences all hypothesis are taken as wrong until proven otherwise (according to the somewhat arbitrary rules we have set up through p values and significance testing, which I won't get into). This is just not how a lot of fundamental concepts in economics work. We cannot ever 'prove' that people always maximise their utility, or that they reveal their preferences. Therefore it must be believed in the absence of evidence, which is not scientific.

M R Hodder writes:

Russ says above

"My best example? In the 1970s and early 1980s there were still economists who strongly favoured central planning, opposed private property and claimed this would lead to a better economic outcome. The experience of China, the USSR and (to a more limited extent) India means that I cannot think of any economist who would be viewed as even vaguely mainstream and have these views today."

"My best example? In the 1970s and early 1980s there were still economists who strongly favoured wide and free gun ownership. The experience of ( input - names of recent mass child killers in USA ) means that I cannot think of any economist who would be viewed as even vaguely mainstream and have these views today.

Same method of reasoning but very different conclusions reached in USA? Perhaps we should blame the people that use the guns rather than the guns - or those that apply the beliefs?

( I am British and have no affliation with the NRA! )

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