The innocent eye test?

I’ve been around economics long enough now that, upon reading the latest defense of economics as a science, I just have to chuckle. Or I would, if the implications were not so devastating.

The latest comes from Harvard professor Raj Chetty, who cites the recent surge of work based on randomized experiments and big data as evidence that economics is finally becoming a real, empirical science (like, in his view, medicine).* As if the facts and testing hypotheses—the results of what we might call the innocent eye test—were going to settle the ongoing debates about the causes and consequences of economic problems such as poverty, unemployment, and inequality.

I remember when it was exactly the opposite that was supposed to guarantee the scientificity of economics, which reached its zenith with the formal modeling of neoclassical general equilibrium theory. Then, it was rationalism; now, it’s supposed to be empiricism.

In both cases, the supposedly scientific nature of economics is bound up with an absolutist epistemology, which is invoked to establish a clear separation between science and non-science (which, as I explained to students the other day, if you say it quickly, becomes nonsense). Attempting to make that separation presumes both a strict dichotomy between theories and facts and a one-way determination of one way by the other. (Thus, either innocently gazing at the facts determines the appropriate theory or deductions from the theory determine the rational order of the facts.)

The alternative, of course, is a nonabsolutist theory of knowledge according to which the theories and facts mutually determine one another. This is a kind of relativism according to which economics is made up of different groups of theories and facts—neoclassical theories and facts, Keynesian theories and facts, Marxian theories of facts, and so on. (Thus, for example, the most recent Nobel Prize in economics was shared between the mainstream efficient and inefficient market hypotheses and not to an alternative view, which I would call the “crisis market hypothesis.”)

It’s actually a partisan relativism, since given the effects of different approaches to economics, it is important to consider the economic and social consequences of the different groups of theories and facts in assessing their validity. And then to choose which one makes sense.

The more general point is that theoretical differences in economics matter, for how we think about the world and how we choose to intervene in it. As it turns out, the shifting battle over which absolutist theory of knowledge provides a firmer foundation of economic science is a sideshow. But a sideshow with enormous implications in determining which facts and which theories are allowed into the conversation—and which, of course, are excluded.

That’s why the innocent eye test is, in the end, not so innocent.

 

*The analogy to medicine is perhaps more weighted than Chetty imagines, since it is still governed by an oath to keep the sick “from harm and injustice.” As George DeMartino has forcefully argued, there is no such ethical injunction in economics.