Heterodox Economics Newsletter

Issue 227 March 12, 2018 web pdf Heterodox Economics Directory

A highly interesting and sometimes irritating feature of modern economics is its tendency to develop practices that not only ignore, but rather invert standard epistemological guidelines for doing "good science". One such instance relates to the question whether we should aim tocritically assess the empirical validity of our most basic assumptions. In this context the standard view in philosophy of science is that, if possible, this should be done eagerly as it is one of the best ways to further corroborate existing theories or find some errors in them.

However, in economics, this view is often inverted which is exemplified by in the insistence on "microfoundations in macroeconomics" and associated focus on DSGE-models as the only way to go in modern macro. Here, the reliance on a series of rather shaky basic assumptions - like the representative agent, utility maximizing investment decisions or the Euler Equation for determining consumption spending - is typically interpreted as a criterion of excellence. In this case, what should be subject to the greatest scrutiny is, instead, taken as a sign of objectivity, or in the words of Noah Smith, a probably more neutral source:

"I've often thought that macroeconomists should be more careful about checking their "intermediate results". In other words, macro theorists tend to make a bunch of assumptions, throw a bunch of equations into a model, see what comes out at the end, and then (loosely) compare those final results to the data. But usually, those equations lead to smaller-scale "intermediate results" that can be tested directly. This Euler Equation is an example. I say, test the parts, not just the whole. Why not?"

Another instance of ignorance towards basic understandings of good scientific practice, is the economists tendency to defend one's turf against alternative ideas and conceptions instead of trying to constructively engage with what is perceived as "input from outside". While this tendency is well-known to heterodox economists, a recent instance refers to the broader issue of ethics in economics and relates to a review of the TheOxford Handbook of Professional Economic Ethics published by the eminent Journal of Economic Literature (JEL)in its book review section. While reviews in the JEL are known to be sharp, this one is especially so, implicitly chastizing the authors as "idealists [that] advocate entirely impractical or unattainable actions" (p. 216). While such a criticism would surely be legitimate in principle, the problem here is that this statement amounts to stark misrepresentation of the books actual content and thereby violates a basic standard of academic conversation, namely not to misrepresent the object of one's criticism. In this context, I would urge you to have a look at the JEL's review and the related reply by the Handbooks's editors published in the recent issue of Econ Journal Watch. Doing so really sharpens the intuition about the degree and intensity of prevailing groupthink in economics, the means and attitudes used to defend this way of thought as well as the biases emerging from such an attitude.

Eventually, let me emphasize that you should not let these reflections distract you from this issue's actual content, which not only features a series of highly interesting Conferences, Journals and Books, but also contains entries on four different summerschools (here, here, here and here) dedicating to the younger cohorts of heterodox economists. These entries also complement the notes on further summerschools in heterodox economics as published in other recent issues of the Heterodox Economics Newsletter (here, here and here).

All the best,


© public domain

Table of contents