Economics, Shmeconomics (was RE: IP Protection ...)

[Matt Jensen]

On Sat, 30 Jun 2001, Clay Shirky wrote:

> This is just a re-statement of the same sweeping generalization. You
> have offered no evidence that economists "on the whole" have treated
> the subject tautologically, and up til this post, you didn't even use
> that qualifier. 

I think I have.  I apologized for a lack of qualifiers in my other post,
and I may have gotten casual as the thread wore on, but if you read the
thread again from the beginning, I think you'll find I offered many
qualifiers.

> By using vague terms like 'on the whole' you are doing nothing more
> than seeking to deny any possible countervailing evidence, because you
> can always say "Oh yes, sure, there are of course those economists
> doing serious work with field experimentation and psychology, but I am
> discounting their contributions to zero in order to defend my thesis."

Not at all.  I'm saying what I think the general state of opinion is in
the field of Economics.  I've also said from my early posts on that there
are some economists who depart from the majority, and I encourage them.


> Do you mean to say that only 20% of economists are doing interesting
> work? I'd point to computer science and ask if you thought the numbers
> were so different.  Do you mean to say 99% of economists behave
> thusly? Then I'll keep dragging out mainstream pieces from places like
> the NYT that demonstrate significant mainstream interest in the areas
> of inquiry you deny are being seriously pursued.

If, as I claim, the majority of workers in a field hold to a certain
opinion, it is reasonable to say that is where the field *generally* is
today.  I don't know if it's 99%, or 60%, but it's a majority.

To pull a few quotes from the NYT article on Thaler in February:  [1]

"According to the standard or neoclassical school (essentially a
20th-century updating of Adam Smith), people, in their economic lives, are
everywhere and always rational decision makers; those who aren't either
learn quickly or are punished by markets and go broke. Among the
implications of this view are that market prices are always right and that
people choose the right stocks, the right career, the right level of
savings -- indeed, that they coolly adjust their rates of spending with
each fluctuation in their portfolios, as though every consumer were a
mathematician, too. Since the 1970's, this orthodoxy has totally dominated
the top universities, not to mention the Nobel Prize committee.  ...

So serious was Thaler's challenge that Merton Miller, the late Nobelist
and neoclassical deity, refused to talk to him; Thaler's own thesis
adviser lamented that he had wasted a promising career on trivialities
like cashews. Most economists simply ignored him. 

But the anomalous behaviors documented by Thaler and a band of fellow
dissenters, including Yale's Robert Shiller and Harvard's Lawrence
Summers, Clinton's last treasury secretary, have grown too numerous to
ignore. "


The way I read that, Thaler and friends are getting more attention these
days, but they are still the minority.

By the way, the fact that the "sunny-day trading" study got some play in
the press, while most economic research doesn't, does *not* mean most
economists are interested in this stuff.  It means most newspaper readers
might find it entertaining.  It's really printed as a human interest story
in the business section.  The fun component in behavioral economics
probably means it gets more mainstream press than academic attention
(relative to conventional economic topics).

-Matt Jensen
 http://mattjensen.com
 http://NewsBlip.com
 Seattle

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[1] http://www.nytimes.com/library/magazine/home/20010211mag-econ.html