Golden Oldies and the present Dark Age of Social Sciences

Thanks to Matze, I finally ended up reading an article which I’m sure I had opened before but couldn’t remember anything from, I suppose it was a victim to one of my old laptop’s many out-of-battery shutdowns. It’s „Golden Oldies (Wonkish)“ by Paul Krugman, who I usually enjoy reading but find slightly too absorbed in contemporary economic policies. Not so this time, where he deals a blow to contemporary Economic Science that in most part applies to other social sciences as well, especially Psychology.

His argument is basically that the assumption of rationally maximized utility (elaborating the obvious flaws of which has been a favorite area of research in Economics recently) has come to much greater influence than it deserves because it is conductive to a certain way of doing science, which earns merit in the world of scientists:

But notice that I’ve framed this in terms of “reasonable” behavior; it’s a lot harder to tell these stories in terms of perfectly rational, maximizing behavior.

One response — a pretty good response — is, “So?” After all, maximization isn’t a fact about human behavior, it’s a gadget — an assumption we use to cut through the complexities of psychology and all that, one that can be very useful if it clarifies your thought, but by no means an axiom or a law of nature.

But maximizing models have a special appeal for modern academic economists: they require solving equations! They’re rigorous! They make it easy to show that you’re doing “real research”. And so maximization tends to acquire a bigger importance in economic thought than it deserves.

And he continues to claim that an essential part of what goes on in economic life has been lost in this process, because it didn’t go well with the preferred way to do research. Sadly, the part that would (have) helped a lot in dealing with (preventing) the Financial Crisis:

But from the 1970s onwards, what happened was that the drive to base everything on maximizing behavior narrowed the profession’s thinking — and, crucially, led first to a de-emphasis, then to a total forgetting, of the great insights about interaction. We created an economics profession which believed that Keynesian economics, and for that matter Bagehotian finance, had been “proved wrong”; whereas all that had really happened was that those things proved hard to model in terms of perfectly rational maximizing agents. Again, so?

I believe this to be true at least also in my field, Psychology — the current choice of method (which is, like Economics, centered around computation and modeling) is blind to many important aspects of what is going on in life.

The problem here is obviously how merit is ascribed by fellow researchers, how quality is defined. Social sciences (in which I include Economics, whether or not economists like that) are still trying to copy the (natural) Sciences in this respect. But I am hopeful, with people like this Nobel laureate speaking up. I wish we had a voice like that in Psychology.

But then, I feel that at least we are actually taught alternative ways of doing science, if only marginally. Are there any alternative methods in Economics waiting to be promoted?

Datum: Dienstag, 10. Mai 2011 18:03
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