Still traveling (and catching up on reading), but had to post the following from the Telegraph's International Business Editor, Ambrose Evans-Pritchard, in response to poor (at best misguided, at worst brain-washed, now beleaguered) Richmond Va. Federal Reserve Economist, Kartik Athreya (link to paper here).You can get a sense of how beleaguered here, here, here and (I especially like this comment by Rajiv Sethi) here.
Evans-Pritchard is harsher on the profession than I would be:
Economics should never be treated as a science. Its claims are not falsifiable, which is why economists can disagree so violently among themselves: a rarer spectacle in science, where disputes are usually resolved one way or another by hard data.
It is a branch of anthropology and psychology, a moral discipline if you like. Anybody who loses sight of this is a public nuisance, starting with Dr Athreya.
I suspect he's harsher because he hasn't spent as much time among psychologists, sociologists, and anthropologists as I have. We may not bring much to the table, but at least economists have a strong sense of the potential value of efficient production and allocation. Recognizing the importance of a budget constraint is also not a bad place to start from in examining both human behavior, the aggregate behavior of markets and economic actors within them, and the welfare and wealth of nations.
On the other hand, Evans-Pritchard's view that Athreya is advocating that
Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).
Seems right on. Athreya's position is not that much different from the profession's own (implicit) attitudes about whose voice should count in economic policy (at least up until the recent financial sector problems). His specific critique of Elizabeth Warren as a voice that should be ignored seems remarkably similar to voices that urged that Brooksley Born be stopped from regulating derivatives in the late 1990s. The "priest" who is common to both the Rajan and Born episodes appears to be Larry Summers. (I'll leave it to my disciplinary brethren to decide whether there is information in that.)
The tempest within the econ blogosphere that poor Mr. Athreya has triggered has, IMHO, a much deeper and philosophical undercurrent that I am not able to do justice to in a brief post written between stops. It relates to very fundamental questions about economic methodology, about the ways in which conjectures about economic actors and economic outcomes become theory and how those theories are evaluated and judged relative to other theories.
Evans-Pritchard alludes to this when he says that "[economics'] claims are not falsibiable."
I will simply close by saying that within the discipline, a hard core of theory has evolved, with sometimes too little attention paid to the historical and institutional contexts that gave rise to the phenomena upon which the theory is based. Over time and in the absence of falsifiable propositions, the preservation of theoretical consistency has tended to dominate and counter trends that would otherwise tend to reconcile theory with reality. The isolation of theory from reality, bolstered by a liturgy conducted in a language that few outside the religion understand, may have, in turn, allowed certain aspects of the theory to be uncritically co-opted by certain groups to further their causes at the expense of the general public's interest and general welfare.
New eyes, untrained and unbiased by indoctrination into the hard core of economic theory and its accompanying heuristics and corollaries, may well be exactly what economics needs to become a true and more useful science.
hat tip to rjs for supplying the Evans-Pritchard link.