This morning's Wall Street Journal had a letter to the editor from Luis Suarez-Villa, a professor of social ecology at the University of California - Irvine: Harvard
President Larry Summers is now discovering what many economists find
out to their dismay when they venture out of the old-boy network that
is American economics. Musings that are considered "normal" among
economists tend to be regarded as insensitive or even prejudiced in
many other disciplines. At the root of his remarks is the fact that Mr.
Summers's thinking is grounded in a discipline that has little sense of
fairness and moral obligation, where discriminatory situations are
often accepted as the result of Darwinian mechanisms that should be
left untouched. Mr.
Summers could have blamed his training in economics for his insensitive
remarks, based on the discipline's inability to understand fairness and
shed its pseudo-scientific ways. Economists
are scientists in that we seek explanations for things that we observe
and we seek predictions based on our explanations. For example,
suppose we observe that a woman is earning less than a man. Economists
want to know
why. We don't start off by immediately saying "IT MUST BE
DISCRIMINATION!" Instead, we try to reason through the various things
that could affect what we observe to learn to what extent
discrimination and non-discriminatory voluntary choices (among other
things) affect what we observe. That way, if policies are necessary to
correct something, they can be more efficiently targeted. Aristotle said "The law is reason without passion."
That may be an accurate way to describe the law, but it is just as
accurate, if not more-so, to describe economics in the same fashion.
It's not that we have little
sense of fairness. It's that we realize that we aren't the moral
stewards of the world - and we
realize that one person's fairness is another person's foul. Why is it
fair to raise the minimum wage and thereby throw people out of work?
Why is it fair to attack Sam's Club for selling gasoline at a low price
just to maintain the profit margins of small gas-station owners? We
also realize that by trying to codify notions of fairness, more often
than not, inefficiencies creep in that end up doing more harm than good.
What does it mean to be pseudo-scientific? By using the scientific method,
people observe a phenomenon, develop a hypothesis about what was
observed, and gather data - experimental or not - to test the
hypothesis. It is not necessary for each and every person who examines
a subject to utilize each and every step of the scientific method. One
researcher may gather data and realize that there is some systematic
relationship between two things. Another researcher, may develop a
theoretical explanation about what was observed, and another researcher
may gather a different set of data to see if the systematic
relationship is at play there. What matters in using the scientific
method is that all three steps, observation, hypothesis generating, and
hypothesis testing, get used. Economics utilizes every single bit of
the scientific method, so I don't know what is meant by "pseudo
scientific" (other than being an obvious put-down).