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Can We Call Them “Neoclassical Deniers”?

May 29th, 2007 · 1 Comment

Chris Hayes has a long and somewhat muddled piece about “heterodox” economists in The Nation. The upshot is that an ossified neoclassical “mafia” is conspiring to marginalize people with all sorts of dissident views. (It could, mutatis mutandis, easily be a National Review piece on global warming skeptics.) But it’s a little tricky pinning down exactly what the problem is supposed to be. As proof of his subjects’ pariah status, Hayes notes:

Despite the fact that as many as one in five professional economists belongs to a professional association that might be described as heterodox, the phrase “heterodox economics” has appeared exactly once in the New York Times since 1981. During that same period “intelligent design,” a theory endorsed by not a single published, peer-reviewed piece of scholarship, has appeared 367 times.

Except, as Hayes later goes on to observe:
The term “heterodox”–like, say, “infidel”–is necessarily imprecise; it categorizes people by what they don’t believe rather than what they do.

The thing is, a label like “intelligent design,” despite all the variety within that particular branch of pseudoscience, describes a relatively well-defined set of propositions. You can speak more or less coherently of “the evolutionist view” and “the intelligent design view,” even if that’s a radical oversimplification. That’s probably less the case with “heterodox economics.” More importantly, the failure to use this particular term for a class of dissenters is not the same as the refusal to air dissenting voices. There are almost certainly hundreds of New York Times articles on specific economic topics, such as the minimum wage, in which the views of a dissident minority with a heterodox view on that topic are duly presented alongside the consensus view. And frankly, that seems like a rather more useful way of doing it than invoking a whole grab-bag of “heterodox” ideas that may or may not have a great deal to do with each other or cut in the same direction on any given issue.

After spending the first half of the article lamenting how put-upon and marginalized are the heterodox, Hayes spends the second half noting the great acclaim some heterodox economists and ideas have received. He notes, for instance, that Kahneman and Tversky won a Nobel for their work in behavioral economics. (Conspicuously absent, however, is fellow Nobel laurate Vernon Smith, since he would upset the cartoon battle between “autistic” free-marketeers and bold heterodox empricists whose work supports policies more congenial to Nation readers.) Oddly, Hayes thinks this is a point in his favor:

But at the same time some mainstream economists dismiss heterodox work as quackery, others claim that the mainstream has actually assimilated many of the heterodox critiques. (You’ll note that these two responses, both fairly common, are also logically incompatible.)

Well, they would be logically incompatible if heterodox were a clearly defined set of propositions to be taken or rejected as a bundle. Except, remember, the term is “necessarily imprecise,” comprising a wide variety of different critiques. What this actually shows, it seems, is that the economics profession is perfectly willing to accept well-grounded research that adds new wrinkles to the old model, and not just irrationally hostile to anything that upsets their cherished paradigm. And this is more or less how science is supposed to work, no?

The question posed near the end of the article, then, is whether neoclassical economists are just adding new wrinkles when they ought to be switching paradigms altogether—adding epicycle after epicycle to a Ptolemaic model in a vain attempt to fend of Copernicus. Is the neoclassical conception of a rational, utility-maximizing homo economicus is so hopelessly misguided that it needs to be thrown out even as a starting point? We’re not given much reason to think this is the case. First, recall that the model doesn’t actually require individuals to be explicitly performing elaborate game theoretic calculations every time they buy a pack of Juicy Fruit. It just needs to be the case that they behave this way on average (perhaps because they’re following evolved rules-of-thumb that embed a rationality that’s not explicitly articulated) and that the errors come out in the wash. That still leaves room for “heterodox” researchers to find systematic biases that need to be incorporated into the model. But even the language of “bias” suggests the utility of the rational-calculator baseline. If you want policy to correct for forms of bias that lead to market failures of various kinds, you still want a model of what a well-functioning market would look like.

So in sum: The picture Hayes paints is of a discipline that is happily embracing and rewarding various methodological innovations, but unmoved by arguments that trade requires more technocratic management. I’m guessing the latter is what guarantees that whining about a repressive orthodox clique will continue to get spun into sympathetic profiles.

Tags: Economics



1 response so far ↓

  • 1 Julian Elson // Jun 2, 2007 at 11:05 pm

    Picking a bona fide autistic (aspie) free market economist (Smith) as an example of why free market economics isn’t autistic might be a misstep, but I see your point.

    It seemed to me that Hayes’ definition of heterodoxy is “significant methodological or axiomatic disagreement with mainstream economists, so long as that disagreement has left-wing implications.” You don’t see much praise for the heterodoxy of Austrians from Hayes — which isn’t to say that he *should* have: just that the fact that he doesn’t seems like it’s because he regards heterodox economics as automatically meaning “economics with more lefty political implications than the mainstream,” and thus wouldn’t consider economics with more righty political implications to be heterodox.