Errors in economics a reason for modesty: Baumol

NYU's William Baumol thinks economics "is particularly vulnerable to mistaken ideas contributed from the outside." His article, Errors in economics and their consequences, appeared in a special issue of Social Research on errors (hat tip: Political Theory Daily Review). His concluding remarks:

If the arguments of this paper are not themselves in error, what I have shown is that the economics profession can, indeed, sometimes show the layperson the error of his or her more common-sense thoughts. But not always. Sometimes the errors and the route toward correction go the other way. This observation is not meant in any way to denigrate the work of my colleagues. After all, it is only through careful analysis that one can discover where it is the specialist who has been wrong and where the often exceedingly fallible common sense of those with no formal training in the field has turned out to be closer to the underlying reality.

We have also seen that misunderstanding in the field of economics can have consequences beyond pushing researchers and teachers in misguided directions. Perhaps as much as any discipline, erroneous economic analysis and conclusions can elicit policies severely damaging to the public interest. And, in this, I believe that we economists do have something to answer for. We are all too prone to put more faith in the implications derived from our quite appropriately simplified models, and to draw from those implications policies that really only apply universally in the artificial world of the constructed model.

The recommendation to ourselves that seems appropriate here is advocacy of somewhat enhanced modesty when we do offer advice, and more ready willingness to remind our listeners that, though we are offering the best advice we are in a position to provide, they must recognize that the recommended course may yet prove dangerous to the public health.

Comments

[Lord]

And I thought the purpose of economists was to offer the advice the emperor wanted to hear in hopes of reward. Silly me.

[A. PERLA]

"If the arguments of this paper are not themselves in error, what I have shown is that the economics profession can, indeed, sometimes show the layperson the error of his or her more common-sense thoughts."

I'll buy that, as long as we admit the reverse is equally true.

A lot of economic thinking/research coming out of the Ivory Tower is so remote from the reality we live as to make it laughable. And, since it is based upon statistical analysis or sampling techniques or data mining, it takes on an aura of veracity that it does not merit.

I don't think we've yet seen the day when statistical analysis really knows how to aptly describe human economic behaviour.

And, thank God for that on behalf of mankind.

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