A review of Dani Rodrik’s book ‘Economics Rules’

Clive Crook of Bloomberg View has used the premise of Dani Rodrik’s latest book Economics Rules to highlight issues with the field of Economics. He agrees with the points that Rodrik makes in his new book, but goes on to further point out an important disparity that is seemingly becoming more and more apparent in economists’ writings for the general populace and their beliefs in seminar room discussions.

Dani Rodrik’s new book asks what’s wrong with the discipline and how to put it right. It’s full of good insights, and has some sage advice for producers and consumers of economic knowledge. If you’re at all interested in economics you’ll want to read it. But I think it mischaracterizes one important aspect of the problem.

Rodrik is one of the most open-minded economists I can think of. Even to a fault. He says that the answer to most economic policy questions is, “It depends,” and he’s right. But that’s not much help to policy makers (or voters) seeking guidance now — rather than five years from now, when sufficient research on the particular case in question, conducted to scientifically adequate standards, is in.

In the real world of policy, rules of thumb are often a practical necessity.

Anyway, the problem with economics is not that its practitioners are too much in thrall to their preferred model, whatever it may be. Nor is it that they disagree about which model works best: In any scientific discipline, scholars may disagree on purely scientific grounds about which theory to rely on. That’s fine. The problem with economics is that economists too often let values, rather than economics, guide their choice of model, and then pretend (or perhaps believe) they haven’t done so.

The economists’ tenth commandment expresses the point very well: “Substituting your values for the public’s is an abuse of your expertise.” Especially, I would add, if you deny that’s what you’re doing.

Rodrik sees the point, therefore, but the book makes too little of it. That tenth commandment seems to appear out of nowhere.

Economic-policy choices necessarily implicate both subjective values and objective reasoning. There’s no avoiding it. Yet economists who address the wider public on these questions are mostly terrible, just terrible, at keeping the values and the science separate.

If you’re an advocate of greater economic equality on moral grounds, you’ll be inclined to choose and promote models — for supposedly scientific reasons — which imply, for instance, that a higher minimum wage won’t reduce employment. If you attach a lower priority to greater equality, you’ll likely favor models that suggest the opposite.

Economics in the seminar room is less susceptible to this syndrome than economics on the op-ed page — but economics on the op-ed page is how most people experience economics and its practitioners. In that space, the promiscuous, half-conscious mixing of subjective and objective gravely undermines the credibility of economics as a science. Since economics as a science has so much to offer, that’s quite a loss.

Originally published at logiconomics.wordpress.com on October 13, 2015.