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Posts Tagged ‘Nobel Prize in economics

nudging the economists (guest post by juan pablo pardo-guerra)

It is the best of prizes. It is the worst of prizes. Let me focus on the latter.

On Monday, the renowned behavioral economist Richard Thaler was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel Prize in Economics. For the Washington Post, the award made “economics more human—and real”. For The Atlantic, it was a much-deserved recognition for someone whose “career has been a lifelong war on Homo economicus”. There may be much to celebrate, but there is even more to ponder.

Thaler’s award speaks to three problems in economics and its relation to the ‘real world’ it inhabits. Firstly, it is disparaging that the prize recognizes research showing “that people can be influenced by [mostly social] prompts to alter their behavior” given that other sections of the social sciences have been doing this for, well, just about forever (e.g. seems there was this French dude called Gabriel Tarde…). This year’s Nobel Prize was as much a recognition of behavioral economics within the intellectual firmament of the discipline as a legitimation of economic imperialism: a finding is only truly relevant if published by an economist (corollary: being an economist from Chicago helps).

This year’s Nobel Prize is problematic for a second reason. Behavioral economics does not seem to be in the same league as the politically troublesome contributions of some of the more controversial previous laureates (think: Milton Friedman or Robert Lucas), but as a matter of fact, it sort of is. Though it might make economics “more human—and real”, the behavioral turn doesn’t make away with the ontological commitments of discipline, privileging market processes and individual action as the fundamental sources of virtue. Consider the metaphor of the ‘nudge’, central to the type of applied behavioral economics that made Thaler’s research so publicly relevant. Rather than questioning the economics of general equilibrium, ‘nudging’ is a proposal in calculated engineering: we can build policies that create outcomes similar to those of theory by gently walking slightly irrational, bounded economic agents through the correct ‘architectures of choice’. I am not saying that this is not positive: I am sure that creating psychological incentives so that people increase their investments in retirement will eventually help them; but so would a stronger social security net and a stronger, better funded state welfare apparatus. At the end of the day, the metrics of success in behavioral economics are uncritical of how the economy is built and remit to the ‘less human’, more market-centered, and ‘more surreal’ varieties of economic analysis that behavioral economists like Thaler so bemoan at a first degree of approximation.

Thirdly, the economics prize showcases and arguably reproduces the lack of diversity and intellectual variety in the discipline. Historically, the economics prize is overwhelmingly white and male. Only one woman received the prize to date—Elinor Ostrom, “for her analysis of economic governance”; the same is true for non-white economists—represented by Amartya Sen for his “research on the fundamental problems of welfare economics”. So while economics might expand its reach in colleges, universities, and government offices throughout the world, the Nobel committee reminds us year after year that there is pretty much one type of economics that is better than the rest. It has a race; it has a gender. This is quite regrettable, particularly in a year when discussions about gender in economics were so prominent in the news. There is no dearth of women or minorities in economics—example: Maureen O’Hara’s work in market microstructure theory is perhaps more relevant and intellectually important than Eugene Fama’s somewhat passé discussions of asset prices and market efficiency from the 1970s that were recognized with the Nobel Prize in 2013. (Harvard’s Carmen Reinhart also jumps to mind).

So this was the best of prizes (for Thaler—kitchen remodel) and the worst of prizes (for the rest—economics won’t change much), a missed opportunity to nudge the discipline in a slightly different direction. Perhaps this is asking too much from a committee that represents all too well the gendered dynamics of economics in Sweden (I could not find a female committee member, but I might be wrong): in 2005, Statistics Sweden only identified one full professor of economics in the entire country. How’s that for an architecture of choice?

Juan Pablo Pardo-Guerra is an assistant professor of sociology at UCSD. His research explores the connections between markets, cultures and technologies.

 

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Written by jeffguhin

October 11, 2017 at 12:26 am

challenging the supremacy of economics

note: this is my first post in a while and I’m a bit rusty.  I accidentally hit “publish” on a decidedly un-publishable version of this in the midst of editing and writing earlier. Sorry for the confusion.

I was asked a few weeks ago to comment on the fact that a French economist has been awarded the Nobel Prize this year.  Frankly, the answer I gave was kind of lame:

… Sean Safford, an associate professor of economic sociology at Institut d’Études Politiques de Paris, the elite institute for political studies known as Sciences Po, said the awarding of the prize to Mr. Tirole, a professor of economics at the University of Toulouse in France, was notable for coming at a time of economic malaise and brain drain, when so many of the country’s brightest are emigrating elsewhere in Europe or to the United States. “The average French person, who is struggling to pay the bills, is not going to rejoice,” he said.

I’ve been mulling over what I meant to say since then.  It started to come together when I read Paul Krugman’s lengthy reflection yesterday on a recent working paper by my colleagues Marion Fourcade and Yann Algan who, along with their co-author, Ettienne Ollion have written a little incendiary bomb of a paper titled The Supremacy of Economics. The paper documents the striking dominance that economics has achieved since the 1980s over sociology and political science in the United States.  I read The Supremacy of Economics immediately on the heals of another of Marion’s papers, this one with Rakesh Khurana which documents the rise of financial economics within American business schools.  Taken together the two papers paint a clear picture establishing that the discipline of economics — and financial economics in particular — has taken a confidently dominant position at in the United States which has given it unprecedented sway in the halls of policy-making and of commerce and proposes a compelling account of how it got there.

Krugman calls the tone of The Supremacy of Economics “jaundiced”.  I would call it wistful.  You get the sense that it could have gone another way if it weren’t for the social skill of certain individuals and the interlocking of particular ecologies at particular points in time.  (If that wasn’t the tone Marion and the others meant to convey, then I’ll claim it for myself.)

If that alternative is possible anywhere, it should be in France where I now live and work, since — as is the case with its food, its wine and its health care system — here in France the nexus of academic, political and business elites is different.  Very different.

In contrast to the story that Marion and her various colleagues tell about the US, academic disciplines (including economics) have not — yet — assumed the central role in France that they have in the American scene.  As Bourdieu observed with far far greater skill than I could, French grandes ecoles are unapologetic factories of elite self-reproduction.  Most teachers are graying wizened poobahs of their field.  Politicians and policy-makers teach other politicians and policy-makers.  Engineers teach other engineers.  And researchers basically teach and train other researchers on how to be researchers, and thats all.  Period.

As Marion and Rakesh show, American business schools in the 19th and early 20th centuries were organized along lines not all that different from the French model.  There may have been economists at the helm, but the predominant logic was vocational in the sense that the teachers were mainly practitioners who saw their roles as socializing a younger generation to the norms of the field as situated within prevailing moral values of the day.  (Moreover, the “economists” were of the old-school institutionalist variety, not today’s preening quant-jocks).

This begs the question: How did the academics break this pattern to lay claim to teaching, consulting and advice-giving well beyond their home “territory” in America?  And how, ultimately, did the (financial) economists come to dominate it?  The story Marion and Rakesh tell is fascinating and it is well told.  It involves strategic action, social skill and a healthy dose of help from the Ford Foundation all couched within a nuanced theory that mingles Fligstein, McAdam, Bourdieu, MacKensie, Callon and Abbot almost in equal measure.  Briefly put, there are two major steps that led America down that particular path.   The first was the appearance of an alternative model pioneered at Carnegie-Mellon.  Seeking to establish itself in a field dominated by Harvard and Wharton, Carnegie-Mellon hewed to a boldly discipline-based approach to business education.  This alternative was amplified by the Ford Foundation which was seeking to differentiate itself within its own competitively saturated field.  In the aftermath of the Great Depression, it was understood that previous models of training the elite had produced disappointing results.  The Foundation latched on to Carnegie-Mellon’s idea and worked to diffuse it throughout the field.  The second step brings in the University of Chicago which ran with the idea of discipline-based teaching, but focused it much more sharply on economics and in particular, on financial economics.  The GSB then became the leading player in the “performative” turn which has brought financial economics into boardrooms, Wall Street, the halls of government and of course, the annals of social science.

Which brings us back to France.

France today faces what the Times (constantly) refers to as “persistent malaise.”  The economy is flat. The European project is stalled.  Its political elite are perceived as out of touch.  There is a sense that the system around which France has been organized since 1946 is… just kind of disappointing.  And this has led to a broad reflection on the process by which this country produces its political elite.

Sciences Po, where I work, sits at the center of that debate.  In the years after the Second World War, General De Gaulle gave Sciences Po a special status that made it the primary path to entering the bottom rung of France’s administrative and political elite, the Ecole Nationale d’Administration.  Sciences Po’s teachers were largely drawn from the ranks of the political elite itself.  But the school has moved in recent years to beef up its academic credentials and in large part that shift has been justified by a familiar narrative: it is the disciplines, with a dispassionate and theoretically grounded approach, that should take the lead in defining the curriculum of elite education.  (As an example: Dominique Strauss-Kahn taught Sciences Po’s main introduction to economics course up until his appointment at the IMF.  Today its taught by… Yann Algan).

Here’s the thing, while Marion and Rakesh expertly situate their account within a smartly argued and largely persuasive theory of “linked ecologies”, I could not help feeling that there was an element of chance involved in the ultimate rise of financial economics in the US: The University of Chicago happened to become home to a troika of free-market true believers which included Milton Friedman.  The result, ultimately, leads us to The Supremacy of Economics.  Could there have been an alternative?  One that was less dogmatic?  One in which the other disciplines were not isolated and ultimately relegated to the junior leagues?

This brings me back to a French economist winning this year’s Nobel.

When I arrived at Sciences Po, I was impressed by the idea that sociology, political science and economics stood on a more equal footing here than had been the case, certainly, when I was on the faculty of the Chicago GSB.  I felt the conditions existed here in which a real dialogue across these disciplines could produce a richer, more compelling approach.  It was a place where what we call “economic sociology” could find a fresh home.

I still hope that.  But that outcome is by no means inevitable.  Winning the Nobel Prize in economics this year and the phenomenal success of Thomas Pickety’s book raise the profile of economics in this country precisely at a moment when political, business and academic elites are questioning the system and looking for the kinds of concrete answers that disciplinary economics provides.  In other words, the conditions exist for the intermingling of intellectual streams which seems possible here to breakdown and head down a path toward a European version of The Supremacy of Economics.

Yet the very existence of the paper that motivated this post is a prime example of the kind of dialogue which seemed (and still seems) possible here suggestiing that that outcome could turn out differently.  After all, Marion is a prominent young sociologist of world-class capabilities, Yann Algan is very much her equal in economics and the paper was written during Marion’s two-year sabbatical at Sciences Po.  But the lesson that I take from Marion and Rakesh’s work is that economic sociology — or whatever you want to call this more egalitarian approach to social science — needs to “perform” itself.  And it does that by building a curriculum capable of producing the next generation of elites.

My bottom line is: If economic sociology is to amount to anything, this kind of cross-disciplinary dialogue must continue and it must mature into something that does more than simply critique the hegemony of economics.  What it must turn into is a curriculum.

The opportunity is there.  But is economic sociology ready for prime time?  (Oh, and does anyone have a good contact at the Ford Foundation?)

Written by seansafford

December 3, 2014 at 10:49 pm