I’ve blogged a few times recently about Thomas Piketty and the making of intellectual superstars. I find his elevation to “rock star” status fascinating, not least of all the deeply performative nature of this silly epithet, revealing as it does many interesting trends about the status of intellectuals in contemporary circumstances. The case has become even more fascinating with the alleged takedown of his data in the FT last night:
Now, in a move that has delighted his manifold critics on the right, who view Piketty’s tome as a dangerous, modern-day successor to Karl Marx’s Das Kapital, the 43-year-old French economist has found himself attracting a less welcome form of attention. The Financial Times has suggested that Piketty’s work contains a series of errors that appear to fatally undermine large parts of his thesis. The normally restrained paper claims that some of the data Piketty uses to support his arguments about yawning inequality in Britain and Europe are dubious or inexplicable. Some of this, the paper suggests, may be down to straightforward transcription errors. More damningly, the FT claims, “some numbers appear simply to be constructed out of thin air”.
The paper goes as far as to suggest its findings are similar to those last year that undermined the work of the Harvard economists, Carmen Reinhart and Kenneth Rogoff, which analysed the relationship between growth and debt and was subsequently found to have been based on a flawed spreadsheet.
Bloomberg described the claims as a bombshell and there has been no shortage of commentators suggesting the story is huge. Some on the right have also been gleeful, suggesting the FT‘s story will scupper Piketty’s chances of landing a Nobel prize. But, as the dust settles, even many of his critics have been reluctant to claim that Piketty has been left badly wounded by an impenetrable row over the selection and interpretation of data, nor do they accept that the FT‘s claims have done much to damage his over-arching thesis.
Much as I expected, I got 50 pages into the book before getting distracted by other things and haven’t been back to it since. I’m deeply aware of not having read the book when reading the coverage of the FT’s attack. I’m also wondering how many other people commenting upon it have actually read the book in depth. I find myself nodding approvingly at Krugman’s critique of the critique, vaguely aware of feeling ‘my side’ is under attack, despite this being a book I only bought because I was intrigued by all the hype surrounding it. I find the whole Piketty affair fascinatingly strange. It all seems so obviously overblown and yet the issues at stake are clearly consequential. Nonetheless, there’s a subtle theatricality pervading the endless stream of verbiage being generated in response to this book, as if the book could in reality consist of 600 blank pages without making a difference to the sentiments underlying the detailed arguments.
I’m really not very clear about what I do think is going on here, perhaps explaining why I’m so gripped by it, but I’m certain I’ll be rehearsing this in my mind for years to come as a case study for considering the causal power of ideas within social life. I think it illustrates an acceleration of the process by which ideas can find material sponsors, concerned to promulgate a way of understanding a contested phenomena and promote it socially. There’s also something interesting going on about the way in which the meditation of this process by the blogosphere contributes to its rapidity, amplifying certain voices through a dynamic which is superficially democratic (bringing lots of people into the process) but basically exclusionary, given pervasive tendencies (e.g. not having read the actual book for quite understandable reasons) which leaves opinion formation in the hands of Krugman and comparable ‘thought leaders’.
I love the line “this isn’t a book about Gordon Gecko, it’s a book about Gordon Gecko’s son or daughter”.
I don’t think this is a particularly meaningful statement. But it’s certainly an attention grabbing one. I encountered it earlier when Salon picked up on a post by Adam Grant on Psychology Today:
Why does the invisible hand want to slap you across the face?
Because it belongs to a douchebag.
But before all you econ majors get your demand curves in a twist, hear what the good professor has to say.
Citing research by Cornell professor Robert Frank, Grant makes the compelling case that economists are neither generous, nor cooperative. And that’s because they’ve swallowed one of Adam Smith’s main tenets: people act out of rational self-interest.
Emphasis here on the self.
In short: economists don’t feel bad about acting in their self-interest because — well — the economic theories tell them that they should be selfish.
This is the same Adam Grant who’s achieved an impressive degree of visibility at a relatively young age, not least of all because of the snappily counter-intuitive thesis propounded in his last book that ‘giving’ is a route to career success. As befitting the youngest tenured professor at the Wharton Business School*, his claim about economists is one grounded in empirical research:
Less charitable giving: In the US, economics professors gave less money to charity than professors in other fields—including history, philosophy, education, psychology, sociology, anthropology, literature, physics, chemistry, and biology. More than twice as many economics professors gave zero dollars to charity than professors from the other fields.
This raises the obvious question of causation: does economists make people horrible or are horrible people drawn to economics? Obviously, it’s likely to be a little of both. It seems glaringly self-evident to me that self-selection is at work in shaping the characteristics of people within different disciplines (not least of all because I have a few hundred surveys from my PhD that demonstrate precisely this). There is a sense in which it is meaningful to talk about ‘physics people’ and ‘english literature people’, though these are of course fuzzy folk typologies which barely meet the status of being an empirical generalisation. Where I think they become more plausible though, is in making sense of the mentalities likely to be found amongst professionalised members of disciplines i.e. though who keep on self-selecting all the way to grad school and beyond. So could we assume on this basis that the processes identified amongst economics students are likely to apply with a greater intensity amongst professional economists? Here’s what Grant suggests with regard to the former:
To figure out whether economics education can shift people in the selfish direction, we need to track beliefs and behaviors over time—or randomly assign them to economics exposure. Here’s what the evidence shows:
1. Altruistic Values Drop Among Economics Majors
At the very beginning of their freshman year, Israeli college students who planned to study economics rated helpfulness, honesty, loyalty, and responsibility as just as important as students who were studying communications, political science, and sociology. But third-year economics students rated these values as significantly less important than first-year economics students.
2. Economics Students Stay Selfish, Even Though Their Peers Become More Cooperative
When faced with choices between cooperating and defecting, overall, 60% of economics majors defected, compared with only 39% of non-economics majors. For non-economists, 54% of freshmen and sophomores defected, while only 40% of juniors and seniors did. The economists, on the other hand, did not decrease in defection significantly over time. Roughly 70% defected across the board. Non-economists became less selfish as they matured; economists didn’t.
3. After Taking Economics, Students Become More Selfish and Expect Worse of Others
Frank and his colleagues studied college students in astronomy, economic game theory, and economic development classes. Self-interest was a fundamental assumption in the game theory class, but had little role in the economic development class. In all three classes, students answered questions about benefiting from a billing error where they received ten computers but only paid for nine and finding a lost envelope with $100. They reported how likely they would be to report the billing error and return the envelope, and predicted the odds that other people would do the same.
When the students answered these questions in September at the start of the semester, the estimates were similar across the three classes. When they answered the questions again in December at the end of the semester, Frank’s team tracked how many students decreased their estimates. After taking the game theory course, students came to expect more selfish behavior from others, and they became less willing to report the error and return the envelope themselves.
“The pernicious effects of the self-interest theory have been most disturbing,” Frank writes in Passions Within Reason. “By encouraging us to expect the worst in others it brings out the worst in us: dreading the role of the chump, we are often loath to heed our nobler instincts.”
4. Just Thinking about Economics Can Make Us Less Caring
Exposure to economic words might be enough to inhibit compassion and concern for others, even among experienced executives. In one experiment, Andy Molinsky, Joshua Margolis, and I recruited presidents, CEOs, partners, VPs, directors, and managers who supervised an average of 140 employees. We randomly assigned them to unscramble 30 sentences, with either neutral phrases like [green tree was a] or economic words like [continues economy growing our].
Then, the executives wrote letters conveying bad news to an employee who was transferred to an undesirable city and disciplining a highly competent employee for being late to meetings because she lacked a car. Independent coders rated their letters for compassion.
Executives who unscrambled sentences with economic words expressed significantly less compassion. There were two factors at play: empathy and unprofessionalism. After thinking about economics, executives felt less empathy—and even when they did empathize, they worried that expressing concern and offering help would be inappropriate.
I recall encountering more work exploring this issue in the past and I really wish I’d saved the references. It also leads me to wonder if economists have a unusual proclivity for empirically studying themselves and, if so, what this says about the discipline in general and these findings in particular? As naval gazing as sociologists tend to be, they also seem to spend much less time studying themselves… at least until I persuade someone to part with the money that would allow me to spend my early 30s writing The Sociology of Intellectual Faddishness. Encountering Grant’s post has also left me wondering if I should do something more substantive with my PhD surveys, originally just an overly-elaborate preliminary to my sampling strategy, given that they shed light on this issue in an interesting way. The survey instrument I used measures style of reflexivity and they were distributed to the compulsory first year modules for English Literature, Sociology, Physics and Business students. For anyone interested, the results are discussed in the methodological appendix of Margaret Archer’s The Reflexive Imperative.
*Writing this post also led me to discover that he’s only 4 years older than me, which is a piece of information now lodged in my brain that I’m not really sure what to do with.
An interesting post by Diane Coyle on the LSE Impact Blog offers a useful counterweight to those who engage in economist-bashing as a matter of reflex. Though I’m sure I’ve probably lapsed into this on occasion, it’s something which increasingly bothers me. The idea that ‘economics’ does nothing more than embrace political orthodoxy and/or sell itself as an ideological force to the powerful is simply bad sociology and it obscures a much more complex picture which I think it’s crucial for us to understand. Coyle usefully summarises the recent public history of economics in the UK, which sociologists could learn a lot from:
In the UK, the strong presence economists have in public debate about policies ranging from public service reform to monetary policy, HS2 to the Euro crisis, arguably stems from a media initiative launched in 1997, prompted by a cover story in The Economist: “The puzzling failure of economics.” Romesh Vaitilingam started the Royal Economic Society’s media initiative after that – I was then a journalist on The Independent, and was one of the economics writers he contacted. From then on, many economic researchers came to realise that there are some simple but essential lessons for disseminating research successfully – albeit still ignored by other academics.
For example, you have to use normal English, not professional jargon, to explain research. Statistical results require particularly careful explanation as not only the readers but also the journalists are often not statistically literate. You need to be aware of the constraints under which journalists operate, working to tight deadlines (especially in broadcasting), limited to at most a few hundred words, and above all pitching their story in competition with many other candidates. So there is a knack to explaining research in a straightforward, concise but not exaggerated manner, and this is why media training is one element of achieving impact.
The landscape of public debate has changed enormously since 1997, and blogs in particular have come to play a highly influential role in economics. Some of the best-known count as important media in their own right, including Paul Krugman’s Conscience of a Liberal, or Marginal Revolution run by Tyler Cowen and Alex Tabarrok. There are in addition now a number of blogs that publish columns by a range of economists presenting the findings of their academic research – as in the highly influential VoxEU – or providing academics with a platform to provide informed comment on the issues of the day – such as Project Syndicate. Many academic economists, financial market participants, practitioners and journalists now blog and tweet. The online public debate about economics is consequently extremely lively, albeit also manifesting some of the negative aspects of the online world, including a tendency to over-simplify (140 characters is not much) and polarise into opposing ‘camps’.
In the context of economics this discussion seems to lead inevitably to the question of influencing economic policy. In an important sense I think the scope of sociological engagement can and should be much wider than this. Not least of all because the concomitant complementarity (where significant amounts of research in economics logically entail certain conclusions about economic policy) is far more marginal for sociological research. But I think this is a strength rather than a weakness, in so far as that it leads quite naturally (in my mind at least) to a minimalistic criterion for public engagement – sheer interestingness or ‘making the familiar strange’ perhaps? Though I obviously think there’s more to public sociology than public engagement.
As I wrote about earlier in the week, I’m in complete agreement with David Mellor’s argument that “we don’t need to debate public sociology anymore; we need to get good at it”. Coyle’s blog post points towards how much more practically orientated the response of UK economists to a loosely homologous set of circumstances has been. One thing that particularly struck me was the alliance building she points to between academic economists and ‘economics writers’. Are there self-identified ‘sociological writers’? If not, why not? I’m certain there must be active writers with undergraduate or postgraduate degrees who for whatever reason no longer identify as sociologists despite having their sensibilities shaped by the discipline. If so then it’s important to build productive relationships with them but also to understand what patterning, if any, there is in the dissipative tendencies exhibited by the intellectual identities of those who have studied sociology but no longer do so within a university.
According to Mike Savage’s Identities and Social Change in Britain Since 1940 there were 1,530 academic economists within the UK system in 2003-4 of which 57% were research active. In contrast there were 1,400 sociologists of which 63.1% were research active. Yet as Savage suggests, “if the ‘social’ disciplines of social anthropology, sociology, social policy, and social worker are grouped together, they become clearly the numerically dominant part of the social sciences, with over half of the core social science staffing” (Savage 2010: 131). The lack of ‘impact’ vis-a-vis economics here is puzzling and important to understand. My objection to facile invocations of the ideological role of economics to explain it stems largely from a belief that such ‘explanations’ are an obstacle to understanding what’s really going on here. There’s an element of truth to them but they simplify in such a way as to entirely obscure the practical differences of strategy and tactics which can be identified in how academic economics, in contrast to other social sciences, negotiates the public context within which it is embedded. I think there’s an awful lot that can be learnt here but that the response should not simply be to try and copy, say, the Royal Economic Society’s media initiative. I guess what interests me is that there seem to have been people outside academic economics working towards its popularisation in a way which does not seem to have been the case with other social science disciplines – I’d like to understand why this is the case, if I’m correct that it is, as well as how this ‘communicative gap’ can be bridged.
This wonderful post by Simon Wren-Lewis, who is far and away my favourite economics blogger, gets to the heart of austerity politics and its implications for economics as an academic discipline. The underlying question has long fascinated me: are economic ideas adopted by political actors as clothing for pre-existing policies or do these ideas actually shape political agendas in their own right? As Keynes purportedly remarked, “even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist”. It’s an instance of a broader theoretical question about the autonomy of culture: how and to what extent are ideas causally efficacious? But dealing with the question at that level of abstraction isn’t enormously enlightening, which is why I find such a concrete instance of these issues (the role of economic ideas in formulating and justifying austerity politics) so interesting. Krugman offered an interesting perspective on this after the Reinhart and Rogoff scandal,
But what did go wrong? I’ve been seeing a lot of comments along the lines of “They’re all just tools of Pete Peterson”; so I guess I should say that this is, in these cases, way too crude an interpretation.
Notice that I say “in these cases”. There are indeed plenty of economists who are essentially hired guns for interest groups, and they don’t all work at right-wing think tanks. But the temptations that led to the current affair are, I’d argue, nowhere near that crude.
Start with R-R. The fact is that Carmen and Ken are fine economists. Carmen has been doing terrific empirical work on banking crises for a long time. Ken is arguably the world’s leading international macroeconomic theorist. In fact, the main reason I knew that the case for fiscal policy remained strong even in the context of New Keynesian models was that I carefully read the canonical text by Obstfeld and Rogoff.
So what happened here? My interpretation is that after writing a very good book, R-R dashed off a careless paper on debt and growth that was so much what the VSPs wanted to hear that it made them instant celebrities in a way they hadn’t been before — and they didn’t know how to say stop the merry-go-round, we want to think about this a bit harder. The temptation involved was one of fame and becoming a part of the alleged real world, not some crude mercenary consideration.
I think his point is an important one: we need to recognise that think tanks provide a mechanism for the consolidation of ‘hired guns’ (as part of a broader process of restructuring in the ‘market place of ideas’) but that self-interest can serve to mobilise academic endeavour in ways which extend far beyond ‘crude mercenary considerations’. But as Wren-Lewis observes, pursuit of this individual self-interest may prove extraordinarily damaging for the discipline as a whole:
As I argued in a recent post, what we have here is a combination of two things. First a strong political force that wants deficit reduction to be the focus of policy because it sees this as a useful way of reducing the size of the state. Second, public perceptions that try and understand events in terms of what they know: their own borrowing and spending decisions. So the need for immediate austerity becomes the dominant policy almost everywhere. I get frustrated sometimes that some colleagues, naturally concerned about the details of academic debate, cannot see the bigger picture here. The bigger picture is the marginalisation of our discipline – used when it suits a particular political purpose, but ignored otherwise. If policymakers and the pundits just pick up economic ideas when its suits them, and when the analysis or facts do not suit them just make stuff up (examples from US and UK), economic analysis just becomes fodder for speech writers. That reduces the discipline to an academic game, and soon those same people will ask: why are we paying people just to play games?
So how do we get macroeconomics back into fiscal policy making? First, we need to sort between politicians and political parties that are quite happy with the current state of affairs, and those who are not. Those who are not need to fight fire with fire, replacing one bit of homespun thinking with another which gets us closer to how policy should be made. One way of doing that is to replace the ‘state as an overextended household’ idea with the ‘state as an innovative firm’.
I find his proposed solution quite compelling. Rather than nervously attempting to triangulate their way out of a corner that the Conservatives have backed them into, the forceful promulgation of an alternative metaphor (the state as “a firm that decides to undertake these investments by borrowing when borrowing is cheap”) could be an effective strategy for Labour. But what really interests me about this post is his diagnosis of the underlying political situation facing economics as an academic discipline. Tom Medvetz has offered a really astute analysis of the underlying structural changes that have transformed the interface between the academy and politics in the United States over the last half century:
While social scientists with little left to prove in the academy can afford to reinvest their academic capital in pulibc debate – and often do – rank-and-file scholars have little incentive to follow this route […] the growth of think tanks over the past forty years has played a pivotal role in undermining the relevance of autonomously produced social scientific knowledge in the United States by fortifying a system of social relations that relegates its producers to the margins of public debate. To the degree that think tanks arrogate for themselves a central role in the policy-making process, they effectively limit the range of options available to more autonomous intellectuals, or those less willing to tailor their work to the demands of moneyed sponsors and politicians […] The rise of think tanks must therefore be set analytically against the backdrop of a series of processes that have contributed to the growing subordination of knowledge to political and economic demand – including the reassertion of control over the economy by holders of economic capital, the development of specialised forms of political expertise, the growth of the mass media as a conduit for the imposition of market forces into politics, the corportization of the university, and the withdrawal of the state from the financing of public education. The question posed acutely by the rise of think tanks in America concerns the social value of social scientific knowledge itself: Put simply, should money and political power direct ideas, or should ideas direct themselves?
Tom Medvetz, Think Tanks In America 225-226
The diagnosis offered by Wren-Lewis concerns, from this perspective, the long term implications for academic economists of the tendency to, as Medvetz describes it, “engage in policy debate by imitating the style of intellectual production institutionalized in the space of think tanks”. While it’s not possible to prevent policymakers and pundits from ‘picking up’ economics ideas when it suits them, this deleterious trend rapidly intensifies with each aspirational economist who actively embraces this situational logic in the pursuit of self advancement (or ‘relevance’). Could the impact agenda be seen as an attempt to institutionalize this strategy within the academy, rather than merely leaving it to the power of incentive structures emanating from outside academic institutions? Even acquiescence to it helps perpetuate the process. The only solution would be for more economists to engage in public debate, including on Twitter and blogs, though as Medvetz points out, this is a strategy primarily open to those who have ‘little left to prove in the academy’.