Saturday, October 02, 2010

Behavioural Economics and Humanities

I had an interesting email from a student constructively criticising me for dismissing the value of studying English literature for understanding behavioural economics. The context is a class where some of the students have joint majors - the value of studying political science, law and philosophy for studying behavioural economics is very obvious and I spoke a bit about the overlap between behavioural economics and these fields. Some of the students have English as their other major and I waved this away without going into potential overlaps. As pointed out by the student to me afterwards, there may be a lot of crossovers that are worth thinking about. He himself pointed to the training that literature students receive in deconstructing arguments and, in particular, linking text back to wider systems of power and social control. The email stimulated me to think further about the crossover between behavioural economics and literature, and below are a few random connections.

- Jon Elster is one of the most widely cited and influential authors in behavioural economics. He is a philosopher and social scientist who, among other things, wrote the epic work on time discounting "Ulysses and the Sirens". Elster has often argued for greater linkage between social sciences and humanities. His works frequently draw from deep literary metaphors and he often uses social science theory as a hermeneutic tool to uncover the meaning of texts and paintings.

- The importance of narrative is increasingly being talked about in economics. In particular, George Akerlof has been arguing that narratives have a causal role in the maintenance of group economic inequality and business cycles. His recent book Identity Economics, co-authored with Rachel Kranton, outlines their ideas in this area.

- Deirdre McCloskey has argued for decades that economics is a rhethorical science, by which she means that economic persuasion relies as much on stories and arguments as it does on statistical evidence. As far as I am aware, nobody has yet attempted to deconstruct the type of metaphors and narratives arising from behavioural economics. As it becomes the mainstream, it will be interesting to see how this will happen. The dominant neoclassical account of human decision making led to the "homo economicus" metaphor and has been critiqued thousands of times. We can think of a few instances where the new less than perfect vision of people has been critiqued e.g. Gigerenzer famously argued that the heuristics and biases literature created a distorted and unfavourable account of human decision making. Rubinstein has viciously attacked what he perceives as the arbitrariness and frivolity of a lot of behavioural economics, particularly neuroeconomics.

- The student mentioned continental philosophers such as Foucalt and Derrida in his email. Continental philosophy tends not to get a great time on this blog (I can picture Kevin rubbing his hands and choosing his weapon as I type). In the comments, Rob has been arguing in various guises that policy applications of behavioural economics are Orwellian ideology in disguise. There is not much in economics textbooks to help us understand the connection between theory, empirics and power structures/ideology etc., Particularly when we get into thorny issues such as social justice and individual freedom then relying solely on statistical evidence hits sharp limits.

- A number of people have looked at how paradigms are formed in economics. Mark Blaug, in particular, stands out as someone who has grappled with big questions underlying the philosophy of science aspects of economics. His book "The Methodology of Economics" is long overdue a spin at our book club. The entry by Daniel Hausman in the Stanford Encyclopedia of Economics deals with many of the philosophical problems at the heart of economics.

- Heterodox Economics is an umbrella terms for a wide range of approaches to economics that exist mostly outside of mainstream Economics departments and journals. This is a very broad church incorporating Marxist and feminist economists, eco-economists and a wide range of other schools of thought. A student-led group developed a movement know as post-autistic economics that heavily criticise mathematical formalism in economics and the atomistic depiction of the individual decision maker. Their journal Real World Economics review publishes many articles that draw from postmodernism and related areas.

- In my own current work, I am struggling with how to integrate qualitative research methodologies into studying well-being and economic decision making. For example, we are currently drafting a paper based on focus group interviews with about 100 people who have been made redundant. There is so much information in these interviews that is interesting and valuable yet it is very difficult for someone trained mostly in econometric methods to capture what is happening and even more difficult to write it up in a way that other economists will care about.

So I guess all of the above areas are points of contact that students from a literature background will have strong insights into.


Kevin Denny said...

I know foucalt about Derrida. I won't say anything there as its such an easy target: all that shower are obvious obscurantists and mountebanks.
I deplore any group coining the phrase "post autistic economics" as it trivialises a very real and profound developmental problem just as people woefully and routinely misuse the phrase "schizophrenic" to mean any form of contrast no matter how banal.

Liam Delaney said...

We dealt with the autism one before Kevin. It is partly a bad translation from the French. They initially stuck to their guns and now they are generally useing "real world economics" as their tag. I take your point on that Kevin but they are worth reading and, in general, the rebellious spirit that they instilled was a positive contribution to making economics more vital and relevant for students.

Kevin Denny said...

"Real world economics" while not offensive like its predecessor implies I presume that what the rest of us are doing is somehow unreal or surreal? Right.

Liam Delaney said...

It is aimed as a critique of how we teach economics. Quiggin has a book out called Zombie Economics which attacks many of the same things.

Kevin Denny said...

Autism, zombies, humanomics, freakonomics blah blah. I find this all rather tiresome but I guess it sells. Anyway I am just an reconstructed post-post-modernist.

Liam Delaney said...

I have your point Kevin - you don't like catchy titles. I am more or less with you on that. But the PAE stuff wasn't an attempt to sell something - they were making a valid intellectual point (albeit clumsily with the title). At some stage, the ideas in that cluster should be talked about on this blog rather than just debating their choice of name. In particular, there has to be room in the university for some undergraduate economics modules that are not taught through calculus and that are more grounded in philosophy. It is possible to get through an economics degree in Ireland at present without ever hearing of John Rawls or Jeremy Bentham. I don't think undergraduate economists need to read continental philosophy but it is completely lopsided that they learn so much about calculus and econometrics and don't even get a basic introduction to ethics, philosophy of science, history of economic thought and so on. I know you can point to exceptions where these are taught (e.g. Cormac O'Grada's course). But these are exceptions and in general the trend is away from these types of courses. One positive consequence of the bust is that a lot of senior folks are calling for these types of courses to be reintegrated into the economics curriculum.

Kevin Denny said...

I am not against a broad education and yes students should know about Rawls,Bentham, Ricardo etc. On the other hand I am not sure that our students end up knowing too much calculus and econometrics- speaking as one who tries to teach our students calculus. So we reduce that stuff at our peril. If our graduates go to good PhD programs (& yes only a few do) they will typically find the level of mathematics challenging.
The other peril is that its essential to have the right expertise. Many years ago I sat through some rather poor courses (& one very good one) on the topics you mention. This probably biased me for life against the subject. So if you can't do it well better not at all I would say.
The trend away from this material may partly reflect this lack of interest by the profession. It doesn't bother me that much as I tend to share that indifference: its hard enough to keep up with developments in contemporary economics.

Liam Delaney said...

Again Kevin - I find it hard to disagree with you that anybody giving a course in anything at all should know their stuff and prepare well, and communicate clearly and so on - whether they are teaching a "broad" module or teaching any economics module. I am sure you had both bad and good courses in mathematical economics when you were a student also.

The second point is more relevant, namely that graduate schools, and arguably employers, place a high value on students who have taken and done well in advanced mathematical courses and, being honest, courses in things like history of economic thought, ethics etc., are heavily discounted. I think about that issue and I have a lot of suggestions about how you could tackle it while also broadening the curriculum. They are definitely not mutually exclusive aims. For example, you could identify and fasttrack students clearly showing the potential and interest to conduct advanced graduate studies in economics. This is one for another post but economics students taking maths modules happens too infrequently in Ireland and this would also help on that front. And you have already pointed out that this is a relatively small percentage of students who could be catered for in such a way. I have in mind bright non-research focused students who want to learn broadly about economics for the purpose of understanding the world more. You seem more or less happy with the current state of how economics is taught to undergraduates but I can't agree. I don't have any UCD-specific thread in my comments here. I am talking in a general sense. If you are a good mathematician then Economics is a very welcoming undergraduate. If you are interested in philosophy then you will have very little outlet in most undergraduate economics degrees and this is lopsided.

As a publishing academic it is not surprising that you prefer to devote more time to the flow of knowledge rather than the stock but I am not sure the flow of journal articles in a given year is where 18 year olds should be starting.

Liam Delaney said...

In fact Kevin, we seem to agree. I am not suggesting much more than what you started with. But at present, this isn't happening.

"I am not against a broad education and yes students should know about Rawls,Bentham, Ricardo etc"

Kevin Denny said...

Us agree? I dunno... Seriously, I think the content (in terms of topics etc) of the UCD degree is fairly close to the norm and I am happy enough with that.
Where I think the problem is that we are not focused enough on enabling students. So we teach students the theory of this and that but whether students can actually do stuff afterwards is another matter. Our assessment is heavily exam based for a start. Could one of our graduates take some data and do a good analysis on the basis of it or take some current economic event and write a cogent analysis? I suspect a lot couldn't: we don't really train them to (& I am not an exception to this trend).
As for the maths content issue, its not just post-grad schools that will value this.I think employers will value quantitative skills too and numerically they are more important.
One reason for lack of emphasis on enabling is lack of resources although I am not sure that is the only reason.
But if there was a good way to introduce the material you have in mind then I would be all for it. I don't understand your stock/flow point, I certainly don't think undergrads should be reading journal papers.

Liam Delaney said...

Stock/Flow just refers to your remarks about preferring to keep up with current trends. As you agree, it is better for undergrads to learn the basic stock of knowledge rather than keeping up with precise latest flows of developments in particular disciplines.

I agree that what we do in UCD is pretty much norm and I had not UCD in mind as a target for criticism.

Agree with you on how economics is assessed. Dave Madden and myself have been doing exactly what you suggest in terms of getting the students to do case studies and present and, in general, have to talk more about what they have read. It has definitely gone very well so far in the sense that everyone seems up for it and the standard has been very high. It is hard, as you know, to do this for very large class sizes but not for final year single honours students.

I am playing with the idea of a broad curriculum course on economics aimed at a wide social science and philosophy audience. I think it is a big ommission from the standard curriculum. I will keep the blog posted.