Ten Commandments for non-economists (and economists!)

This is taken from Economics Rules by Dani Rodrik. The book itself holds twenty commandments in all, but it seems some clever person online decided to extract ten that apply to non-economists. The list is incrediblely humbling, but balanced as well.

I thought I’d share some comments to elaborate upon these commandments lest they themselves get too simplified in the reading.

No…wait that’s not the book cover.
There we go…
  1. Economics is a collection of models with no predetermined conclusions; reject any arguments otherwise.
  2. Do not criticize an economist’s model because of its assumptions; ask how the results would change if certain problematic assumptions were more realistic

Economics isn’t meant to be taken as reality, but a simplification of it or a beautification of it. Maps or paintings would be analogous.

Good economists aren’t the ones with fewer assumptions, they are the ones who make as many of their assumptions as clear as possible. Every social scientist has assumptions.

All models respond to altered assumptions. Some assumptions are also more important than others. If you assume the addition of an accessible hospital in a rural setting will improve health outcomes (which many would), ask about fundamental assumptions of appropriate health-seeking behavior, relevant services, level of health outcomes before instituting the hospital, and information availability about these services that probably are core drivers towards that outcome. Even about availability of complementary services (like ambulatory care).

Not about diminishing returns to utility maximization for patients!

3. Analysis requires simplicity; beware of incoherence that passes itself off as complexity

4. Do not let math scare you; economists use math not because they’re smart but because they’re not smart enough.

5. When an economist makes a recommendation, ask what makes him/her sure the underlying model applies to the case in hand.

6. When an economist uses the term “economic welfare,” ask him/her what he/she means by it.

There are clear points and subtle points in these. Societal realities are really hard to mimic in models. Math offers a way to look at reality that offers insights (similar to the map analogy above). We agree with mathematical models to reflect reality on a number of scientific hypotheses, theories,a dn laws.

Economists aren’t smart enough to replicate reality in their work. Reality in social science is incredibly complex and may not be explained by a neat equation. However, the more complex the argument gets, the more incoherent it can become. However, just because it seems incoherent in its complexity doesn’t mean it’s a bad model — sometimes it is simply a difficult model to understand for economists and non-economists alike, but it may still hold reasonable truths. Nonetheless, as the math gets more and more complicated beware of incoherence. Sometimes the jargon can intimidate and shroud the lack of sensibility in the model.

Also, more complicated models don’t mean incoherent models. Much like simpler models don’t mean coherent models.

Judge the model for what it is. Ask how. Ask why. Ask for proof or ways to get proof on the existence of underlying mechanisms. Ask relevance. This is good practice for economists and non-economists alike.

Economic welfare or socioeconomic/political conditions are all terms which appear to say a lot, but say very little. Ask for specific measurable indicators, outputs or outcomes. The answer should not be social or individual utility.

7. Beware that an economist may speak differently in public than in a seminar room.

When assumptions hide in public to promote an idea. Often times economists (like many sellers of ideas) may embellish said ideas to get the sell. Sometimes this is a statement in the form of a book title like Why Nations Fail, which while the book presents a clever empirically vetted argument, the model doesn’t fully explain why nations fail. Books like The Limits of Institutional Reform in Development do not sell even if they are absolutely detailed and full of relevant, practical knowledge at half the number of pages on…how to navigate the complexities within institutional structures.

Public statements can be simpler, more consumable, and more radical.

Keep in mind that if they’re not simpler — listeners and readers snooze. Heuristics tend to rule conversation.

This is a big reason by Ezra Klein of Vox.com held his shark tank episode with the World Bank to argue that they need to better sell their research. Insofar he said that his whole business model is based on the arbitrage existing due to how economists or social scientists don’t know how to present their work to an audience.

Of course his argument is problematic as well. Though Vox.com itself recognized it through a post on what journalists get wrong on social science.

8. Economists don’t (all) worship markets, but they know better how they work than you do.

Sure. But I’d be worried here about the bar for calling oneself an economist to proclaim that they know markets better than you do. There are folk who have taken perhaps up to introductory economics (even if it is at the graduate level) and then claim to be economists. Also, if you’re in the import/export trade, you may well know more about markets than your neighbourhood economist. Though likely not more than the guys over at CID on economic complexity. So it depends.

9. If you think all economists think alike, attend one of their seminars.

10. If you think economists are especially rude to non-economists, attend one of their seminars.

More often economists find themselves only hugging each other. So hug an economist. Or better yet, get to know one.

And if an economist ever, in the presence of their partner, mentions that their model assumes weakly monotonic preferences (or that more is preferred) — ask them about how that fits in with their obvious local satiation with their partner.

(Even if they don’t have local satiation with their partner. That’s besides the point.)