Economics: Tendencies Toward 'Cargo Cult' Science

In a recently updated exposé titled Why Economics is on the Wrong Track ('book form' here [PDF], 32 pp., 2002 or find it and other McCloskey' books here) Deirdre McCloskey explicitly notes two "secret sins", argued as peculiar to economic (well, almost). These sins, which we will get to shortly, are bad enough to fill this post. But there is another sin worthy of mention. While not labeling it a sin "peculiar to economics" McCloskey notes that the economics profession, like too many others, while being both "institutionally ignorant" and "historically ignorant" is quietly dismissing its "history of economics" professors:

… Outsiders would likewise be amazed at the Historical Ignorance of the economist. They think that the scientific evidence about economies before the past few years would surely figure in an economist's data. It doesn't. One graduate program after another in the 1970s and 1980s cut the requirement that students become familiar with the economic past. I myself managed for twelve years to fend off the day of execution at the University of Chicago (now do you see the pattern?). The very month I left the department in disgust the barbarians inside the gates sent the economic history requirement to the guillotine, and since then Ph.D.s in economics from the University of Chicago have joined those at Minnesota, Princeton, and Columbia in ignorance of the economic past. At the same time almost all American graduate programs (my own fair Harvard was proudly among the first to do so) were abandoning the study of the past of economics itself. People call themselves economists who have never read a page of Adam Smith or Karl Marx or John Maynard Keynes. It would be like being an anthropologist who had never heard of Malinowski or an evolutionary biologist who had never heard of Darwin.

See also Tsvi Tisk's Utopianism Come of Age: From Post-Modernism to Neo-Modernism:

… I am absolutely dismayed at the ignorance so many professionals have of their own professions: economists and businessmen who do not know economic history or the history of economic ideas; engineers who do not know the history of technology; doctors who do not know the history of medicine or medical paradigms; teachers who do not know the history of education or educational ideas; politicians who do not know the history of politics or political ideas; scientists who do not know the history of science and scientific paradigms etc.

This lack of historical perspective and ability to critically analyze ones own professional self, in the context of ones own historical period, often results in an astounding hubris.

Note that McCloskey serves up a few more "sins" not solely attributable to economics and economists that you need to ferret out from Why Economics is on the Wrong Track. Let's look at the "sins" peculiar to econoimcs.

Two Sins Peculiar to Economics

• "qualitative theorems"
• "statistical significance"

For McCloskey, and me, the first sin is that qualitative economic theorems too often seem to have a life of their own, divorced from the contextual realities of the world. The second sin is that "statistical significance" is used as a shield to convince the gullible that "qualitative theorems" and the data that flesh them out are indeed important. Moreover, many economics practitioners aren't even aware that the 'shield' is in play, believing instead that they are being 'scientific' in ther writeups.

More below, but first, let's introduce the fourth sin via Michael Emmett Brady, in a comment from Truck and Barter on a post titled McCloskey is Oh So Wrong About Statistical Significance:

McCloskey and Ziliak [Measurement and Meaning in Economics: The Essential Deirdre McCloskey ] are correct, but they have overlooked a much more serious problem for econometricians and econometrics. Benoit Mandelbrot has spent over 50 years demonstrating that the normal distribution is not an accurate or reliable representation, in general, for most time series economic data. It is interesting that neither Frisch, Tinbergen, Koopmans, Haavelmo, Marshack et al., ever did ANY goodness of fit test on their time series data to see if the normal distribution was a sound representation of the data. Of course, Keynes asked Tinbergen very politely to demonstrate that his data sets were "...HOMOGENEOUS, UNIFORM, AND STABLE.." over time back in 1939.

No econometrician has ever shown that their time series data pass any goodness of fit test. The test Keynes suggested be used in the A Treatise on Probability on pp.420-421 was the Lexis Q test. Let's hope that future econometricians don't provide the "answer" given by Paul Cootner to Mandelbrot in 1964, which was that they were going to continue to assume normality in spite of the fact that the actual data fit the Cauchy distribution [at] best because it would be too hard to apply the Cauchy. -- February 11, 2006 6:40 PM

{edited lightly by Iverson PS. One could do worse than to read through (maybe after I retire?) Brady's "best books" on "how one should study and organize the data and observations that comprise the social sciences."}

Brady's comment is similar, I believe, to Nassim Nichalos Taleb's "ludic fallacy". Taleb's "narrative fallacy" inter-relates with McCloskey's sin "qualitative theorems" which, when embedded in journal articles become a particularly uninteresting (except to the gullible) form of story-telling. We introduced both Taleb's "fallacies" a few weeks ago.

Note: For completeness, I must mention that this terrain has been traversed many times in many ways. Here are two:

'Grand Theory' and 'Methodism' Traps

• C. Wright Mills. 1959. The Sociological Imagination: Mills suggests that too often social scientists fail to deal with things contextually, instead opting for either "Grand Theory" (unanchored to real world observation, truth-testing, etc.) or "Abstracted Empiricism"—others call this "Methodism"— (dogmatic pursuit of narrow-niche endeavors that have more to do with applying data to elegant mathematical models (or even filling up "spreadsheets" or "taxonomic structures") than which testing the fit of method to real-world endeavors.
• Andrew Sayer. 1984. Method in Social Science—A Realist Approach: Sayer devotes the appendix to detailing pitfalls of falling into either naïve "narrative" or naïve "analysis" traps.

McCloskey on "Secret Sins" (from Why Economics is on the Wrong Track)

McCloskey elaborates on both "sins peculiar to economics", with a brief introduction extolling the virtues of economists. I've added emphasis (red):

… Economists are for one thing serious about the public interest, and are often the only people defending it with any sort of lucidity and persuasiveness against the special interests. The model of worldly philosophy was originated in crude form by the early pamphleteers and political arithmeticians (among them Daniel Defoe). Adam Smith a half century and more later brought it to perfection.

And if you like engineers you will like many economists. Engineers are attractive people, hard working (you have to be hard working to absorb all that engineering math), earnest and practical, bent always on Solving the Problem. True, they are often simpleminded. But simplicity gets the job done. Lots of economists are engineering types.

Or lawyer types. Like lawyers the economists are good arguers, which is good when you need a good argument ("How do you want it to come out?"). Economists can debate each other and yet not lose their tempers and not make irrelevant appeals to rank. Economists like lawyers are clear-minded, professionally. They are used to getting to the point and staying there. The humor of economists, unhappily, is often cynical, as it is also among lawyers, seldom generous, but that's true in many fields of the intellect.

But, above all, economics is about important matters. It would be remarkable if the economics-since-Marx that most non-economists would rather not read had nothing worthwhile in it. After all, thousands of apparently intelligent (they certainly think so) economists have labored away at it now for a century and a half.

I beseech you, dear reader, think it possible that economists, even Chicago-School economists, even Samuelsonian economists, have some important things to say about the economy.

The Two Real Sins, Almost Peculiar to Economics

A real science, or any intelligent inquiry into the world, whether the study of earthquakes or the study of poetry, economics or physics, history or anthropology, art history or organic chemistry, a systematic inquiry into one's lover or a systematic inquiry into the Dutch language, must do two things. If it only does one of them it is not an inquiry into the world. It may be good in some other way, but not in the double way that we associate with good science or other good inquiries into the world, such as a detective solving a case.

I am sure you will agree: An inquiry into the world must think and it must look. It must theorize and must observe. Formalize and record. Both. That's obvious and elementary. Not everyone involved in a collective intelligent inquiry into the world need do both: the detective can assign his dim-witted assistant to just observe. But the inquiry as a whole must reflect and must listen. Both. Of course.

Pure thinking, such as mathematics or philosophy, is not, however, to be disdained, not at all.
Euler's equation, e^πi+1 = 0, really is quite remarkable, linking "the five most important constants in the whole of analysis" (as Philip Davis and Reuben Hersh note), and would be a remarkable cultural achievement even if it had no worldly use. But certainly the equation is not a result of looking at the world. So it is not science; it is a kind of abstract art. Mathematicians are proud of the uselessness of most of what they do, as well they might be: Mozart is "useless," too; to what would you "apply" the Piano Sonata in A? I have a brilliant and learned friend who is an intellectual historian of note. He and I were walking to lunch in Iowa City one day and I said offhandedly, assuming he would of course know this, that mathematics was one of the great achievements of Western culture. He was so astonished by the claim that he stopped short and argued with me there on the sidewalk by the Old Capitol Mall: "Surely math is like plumbing: useful, but hardly in touch with deeper things; hardly a cultural achievement!" I tried to persuade him that he felt this way only because he had no acquaintance with mathematics, but I don't think I succeeded.

Nor is pure, untheorized observation to be disdained. There is something in narration, for example, that is untheorizable (though it is surprising to non-humanists how much of it can and has recently been theorized by literary critics). At some level a story is just a story, and artful choice of detail within the story is sheer observation-not brute observation, which is a hopeless ambition to record everything, but sheer. I have another brilliant and learned friend, an economist, who tells the story of how as a boy in Amsterdam he decided one day to embark in all seriousness on Social Observation. He was about ten years old when this ambition overcame him, so he equipped himself with a notebook and a pen and went to a big street and started to, well, observe. He decided to note down the license number of every car that passed. For many hours he kept it up, thrilled to be at last a real observer of society. But of course when he got home and looked at the results it occurred to him that the data were meaningless. They were brute facts unshaped by any meaningful human question, or emotion, or interest. One wishes every scholar learned this at 10 years old.

So pure mathematics, pure philosophy, the pure writing of pure fictions, the pure painting of pictures, the pure composing of sonatas are all, when done well or at least interestingly, admirable activities. I have to keep saying "pure" because of course it is entirely possible—indeed commonplace—for novelists, say, to take a scientific view of their subjects (Balzac, Zola, Sinclair Lewis among many others are well known for their self-conscious practice of a scientific literature; Roman satire is another case; or Golden Age Dutch painting). Likewise scientists use elements of pure narration (in evolutionary biology and economic history) or elements of pure mathematics (in physics and economics) to make scientific arguments. I do not want to get entangled in the apparently hopeless task of solving what is known as the Demarcation Problem, discerning a line between science and other activities. It is doubtful such a line exists. The efforts of many intelligent philosophers of science appear to have gotten exactly nowhere in solving it. I am merely suggesting that a science like many other human practices such as knitting or making a friend should be about the world, which means it should attend to the world. And it should also be something other than miscellaneous facts, such as the classification of animals in the Chinese Celestial Emporium of Benevolent Knowledge noted by Borges: (a.) those that belong to the Emperor, (b.) embalmed ones, (c.) those that are trained, (d.) suckling pigs, (e.) mermaids, and so forth, down to (n.) those that resemble flies from a distance. Not brute facts. And not mere theory.

So I am not dragging economics over to some implausible definition of Science and then convicting it of not corresponding to the definition. Such a move is common in economic methodology—for example in some of the less persuasive writings of the very persuasive economist Marc Blaug. I am merely saying that economists want to be involved in an intelligent inquiry into the world. If so, the field as a whole must theorize and observe, both. This is not controversial.

An economist at a leading graduate program listening to me will now burst out with: "Great! I entirely agree: theorize and observe, though of course as you admit we can specialize in one or the other as long as the whole field does both. And that, Deirdre, is exactly what we already do, on a massive scale. And we do it very well, if I don't say so myself. We do very sophisticated mathematical theorizing, such as in the Mas-Collel, Whinston, and Green textbook (1995), and then we test the theory in the world using very tricky econometrics, such as Jeffrey M. Wooldridge, Econometric Analysis of Cross Section and Panel Data (2001). You can see the results in any journal of economics. Some of it is pure theory, some econometrics. Theorize and observe."

To which I say: Bosh. She and her colleagues, when they are being most highbrow and Science-proud, don't really do either theorizing or observing. Economics in its most prestigious and academically published versions engages in two activities, qualitative theorems and statistical significance, which look like theorizing and observing, and have (apparently) the same tough math and tough statistics that actual theorizing and actual observing would have. But neither of them is what it claims to be. Qualitative theorems are not theorizing in a sense that would have to do with a double-virtued inquiry into the world. In the same sense, statistical significance is not observing.

This is the doubled-formed and secret sin, and this the moment:

Eve
Intent now wholly on her taste, naught else
Regarded, such delight till then, as seemed,
In fruit she never tasted, whether true
Or fancied so, through expectation high
Of knowledge, nor was godhead from her
thought.

It is not difficult to explain to outsiders what is so dramatically, insanely, sinfully wrong with the two leading methods in high-level economics, qualitative theorems and statistical significance. It is very difficult to explain it to insiders, because the insiders cannot believe that methods in which they have been elaborately trained and which are used by the people they admire most are simply unscientific nonsense, having literally nothing to do with whatever actual scientific contribution (and I repeat, it is considerable) that economics makes to the understanding of society. So they simply can't grasp arguments that are plain to people not socialized in economics. . (Bibliographical note to the insiders and the more adventuresome of the outsiders: Chapters 10-13 in Knowledge and Persuasion in Economics [1994] and Chapters 7 and 8 in The Rhetoric of Economics [2nd ed. 1998]).

Hear, oh outsiders. I've told you how popular qualitative, Why-Whether reasoning is in economics. It takes this form: A implies C. Got it? Simple, huh? The crucial point is that the A and the C are indeed qualitative. They are not of the form "A is '4.8798'." They are of the qualitative form, "A is 'everyone is motivated by P-Only considerations'," say, which implies "free trade is neat." No numbers. You realize your lover will be annoyed by the neglected birthday to some degree, but we're not talking about magnitudes. Why/Whether. Not How Much. The economic "theorists" focus on what mathematicians call "existence theorems." With such and such general (or not so general, but anyway non-quantitative) assumptions A there exists a state of the imagined world C. A typical statement in economic "theory" is, "if information is symmetric, an equilibrium of the game exists" or, "if people are rational in their expectations in the following sense, buzz, buzz, buzz, then there exists an equilibrium of the economy in which government policy is useless."

Okay, now imagine an alternative set of assumptions (like the ones used earlier to "disprove" the Free Trade Theorem), A'. Look at that last item closely. If you're going to venture into the wonderful world of this really tough, macho math we economists deal in daily you are going to have to train yourself to look closely at symbols: notice that the alternative assumption has a little mark just after it, not in math called a "single quotation mark" but a "prime" (it's just a notation to distinguished one set of things—in this case assumptions—from another; it has nothing to do with prime numbers). A' is read "A prime." Naturally, if you change assumptions (introducing households who do not operate on P-Only motivations, say; or [I speak now to insiders] making information a little asymmetric; or [ditto] introduce any Second Best, such as monopoly or taxation; or [ditto] nonconvexities in production) in general the conclusion is going to change.

Natch. There's nothing deep or surprising about this: changing your assumptions changes your conclusions. Call the new conclusion C' (a test of whether you're paying attention, class: How is it read? Answer: "C single prime"). So we have the old A implies C and the fresh, publishable novelty, A' implies C'. But, as the mathematicians say, we can add another prime and proceed as before, introducing some other plausible possibility for the assumptions, A'' (read it "A double prime"), which implies its own C''. And so forth: A''' implies C'''. And on and on and on and on, until the economists get tired and go home.

What has been gained by all this? It is pure thinking, philosophy. It is not disciplined by any simultaneous inquiry into How Much. It's qualitative, not quantitative, and not organized to allow quantities into the story. It's like stopping with the conclusion that forgetting your lover's birthday will have some bad effect on one's relationship—you still have no idea how much, whether trivial or disastrous or somewhere in between. So the pure thinking is unbounded. It's a game of imagining how your lover will react endlessly. True, if you had good ideas about what were plausible assumptions to make, derived from some inquiry into the actual state of the world, the situation might be rescued for science and other inquiries into the world, such as the inquiry into the probably quantitative effect of missing a birthday on your lover's future commitment to you. But if not—and I'm telling you that such is the usual practice of "theoretical" pieces in economics, about half the items in any self-respecting journal of economic science—it's "just" an intellectual game.

I have expressed admiration for pure mathematics and for Mozart's concertos. Fine. But economics is supposed to be an inquiry into the world, not pure thinking. (If it is to be justified as pure thinking, just "fun," it is not very entertaining. No one would buy tickets to listen to a "theory" seminar in economics. Believe me on this one: as mathematical entertainment the stuff is really crummy.) The A-prime/C-prime, existence-theorem, qualitative-only "work" that economists do is like chess problems. Chess problems usually do not have anything to do even with playing real chess (since the situations are often ones that could not arise in a real game). And chess itself has nothing to do with living, except for its no doubt wonderful purity as thought, à la Mozart.

What kind of theory would actually contribute to a double-virtued inquiry into the world? Obviously, it would be the kind of theory for which actual numbers can conceivably be assigned. If Force equals Mass times Acceleration you have a potentially quantitative insight into the flight of cannon balls, say. But the qualitative theorems (explicitly advocated in Samuelson's great work of 1947, and thenceforth proliferating endlessly in the professional journals of academic economics) don't have any place for actual numbers. So the "results" keep flip-flopping, endlessly, pointlessly.

The history of economic "theory" since 1947 (and, as I said, in non-mathematical form since 1747, too) is replete with examples. Samuelson himself famously showed in the 1940s that "factor prices" (such as wages) are "equalized" by trade in steel and wheat and so forth—as a qualitative theorem, under such and such assumptions, A. It could be an argument against free trade. But shortly afterwards it was shown (by Samuelson himself, among others) that if you make alternative assumptions, A', you get very different conclusions. And so it went, and goes, with the limit achieved only in boredom, all over economics. Make thus-and-such assumptions, A, about the following game-theoretic model and you can show that a group of unsocialized individuals will form a civil society. Make another set of assumptions, A', and they won't. And so on and so forth. Blah, blah, blah, blah, to no scientific end.

Such stuff has taken over fields near to economics, first political science and now increasingly sociology. A typical "theoretical" paper in the American Political Science Review shows that under assumptions A the comity of nations is broken; in the next issue someone will show that under A' it is preserved. This is not theory in the sense that, say, physics uses the term. Pick up a copy of the Physical Review (it comes in four versions; pick any). Open it at random. You will find mind-breakingly difficult math, and physics that no one except a specialist in the particular tiny field can follow. But always, on every page, you will find repeated, persistent attempts to answer the question How Much. Go ahead: do it. Don't worry; it doesn't matter that you can't understand the physics. You will see that the physicists use in nearly every paragraph a rhetoric of How Much. Even the theorists as against the experimenters in physics spend their days trying to figure out ways of calculating magnitudes. The giveaway that something other than scientific is going on in "theoretical" economics (and, alas, political science) is that it contains not, from beginning to end of the article, a single attempt at a magnitude.

So: Secret Sin Number One: qualitative theorems.

"But wait a minute, Deirdre," the Insider Economist breaks in (he is getting very, very annoyed because, as I told you, he Just Doesn't Get It). "You admitted that we economists also do econometrics, that is, formal testing of economic hypotheses using advanced statistical theory. You, as an economist, can hardly object to specialization: some people do theory, some empirical work."

Yes, my dear young colleague. Since I have been to your house and noted that you have not a single work on economics before your own graduate training I suppose you are not aware that the argument was first made explicit in 1957 by Tjalling Koopmans, a Dutch-American economist at Yale (Nobel 1975), who in his Three Essays on the State of Economic Science recommended just such a specialization. He recommended that "theorists" spend their time on gathering a "card file" of qualitative theorems attaching a sequence of axioms A', A'', A''', etc. to a sequence of conclusions C', C', C''', etc., separated from the empirical work, "for the protection [note the word, students of free trade] of both."

Now this would be fine if the theorems were not qualitative. If they took the form that theorems do in physics (better called "derivations," since physicists are completely uninterested in the existence theorems that obsess mathematicians and philosophers), good. Then the duller wits like Deirdre McCloskey the economic historian could be assigned to mere observation, filling in blanks in the theory. But there are no blanks to fill in, no How Much questions asked, in the theory that economists admire the most and that has taken over half of their waking hours.

Still, things would not be so bad, so sunk in scientific sin, if on the lower-status empirical side of academic economics all was well. The empiricists like me in their dull-witted way could cobble together actual scientific hypotheses, simply ignoring the "work" of the qualitative theorists. Actual players of chess could ignore the "results" from chess problems. In effect this is what happens. The "theories" proffered by the "theorists" are not tested. In their stead linearized models that try crudely to control for this or that effect are used. An empiricist could therefore try to extract the world's information about the price sensitivity of demand for housing in Britain in the 1950s, say.

But the sin is double. The empirical economists also have become confused by qualitative "results." They, too, have turned away from one of the two questions necessary for a serious inquiry into the world (the other is Why), How Much. The sin sounds improbable, since empirical economics is drenched in numbers, but the numbers they acquire with their most sophisticated tools (as against their most common tools, such as simple enumeration and systems of accounting) are it turns out meaningless.

The confusion and meaninglessness arises from a particular technique in statistical studies, called "statistical significance." It has become since the cheapening of computation in the 1970s a plague in economics, in psychology, and, most alarmingly, in medical science. …

The point here is that such silliness utterly dominates empirical economics. In a study of all the empirical articles in the American Economic Review in the 1980s it was discovered that fully 96% of them confused statistical and substantive significance (look at The Rhetoric of Economics, 2nd ed.; or at Stephen Ziliak and Deirdre McCloskey, "The Standard Error of Regression," Journal of Economic Literature, March 1996; check it out on JSTOR; we are writing a paper examining the same journal in the 1990s; bad news: the sin has gotten more prevalent, not less).

The problem is that a number fitted from the world's experiments can be important economically without being noise-free. And it can be wonderfully noise-free without being important.

On the one hand: It's completely obvious, you will agree, that a "statistically insignificant" number can be very significant for some human purpose. If you really, truly want to know how the North American Free Trade Agreement affected the average worker in the United States, then it's too bad if the data are noisy, but that's not the point. You really, truly want to know it. You have to go with what God has provided. And on the other hand: It is also completely obvious that a "statistically significant" result can be insignificant for any human purpose. When you are trying to explain the rise and fall of the stock market it may be that the fit (so-called: it means how closely the data line up) is very "tight" for some crazy variable, say skirt lengths (for a long while the correlation was actually quite good). But it doesn't matter: the variable is obviously crazy. Who cares how closely it fits? For a long time in Britain the number of ham radio operator licenses granted annually was very highly correlated with the number of people certified insane. Very funny. So?

In short, statistical significance is neither necessary nor sufficient for a result to be scientifically significant. Most of the time it is irrelevant. A reseacher is simply committing a scientific error to use it as it is used in economics and the other social sciences and in medical science and (a strange one, this) population biology as an all-purpose way of judging whether a number is large enough to matter. Mattering is a human matter; the numbers figure, but after collecting them the mattering has to be decided finally by us; mattering does not inhere in a number. The point is just common sense. It is not subtle or controversial. But thousands of scientists, and among them almost all modern economists, are utterly confused about it.

Physics and chemistry, though of course highly numerical, hardly ever use statistical significance (check it out for yourself: I have in the journal Science, for example). Economists and those others use it compulsively, mechanically, erroneously to provide a non-controversial way of deciding whether or not a number is large. You can't do it this way. No competent statistical theorist has disagreed with me on this point since Neyman and Pearson in 1933. There is no mechanical procedure that can take over the last, crucial step of an inquiry into the world, asking How Much in human terms that matter.

My argument is not against statistics in empirical work, no more than it is against mathematics in theoretical work. It is against certain very particular and peculiar practices of economic science and a few other fields. Economics has fallen for qualitative "results" in "theory" and significant/insignificant "results" in "empirical work." You can see the similarity between the two. Both are looking for on/off findings that do not require any tiresome inquiry into How Much, how big is big, what is an important variable, how much exactly is its oomph. Both are looking for machines to produce publishable articles. In this last they have succeeded since Samuelson spoke out loud and bold beyond the dreams of intellectual avarice. Bad science—using qualitative theorems with no quantitative oomph and statistical significance also with no quantitative oomph—has driven out good.

The progress of economic science has been seriously damaged. You can't believe anything that comes out of the Two Sins. Not a word. It is all nonsense, which future generations of economists are going to have to do all over again. Most of what appears in the best journals of economics is unscientific rubbish. I find this unspeakably sad. All my friends, my dear, dear friends in economics, have been wasting their time. You can see why I am agitated about the Two Sins. They are vigorous, difficult, demanding activities, like hard chess problems. But they are worthless as science.

The physicist Richard Feynman called such activities Cargo Cult Science. Certain New Guinea tribesmen had prospered mightily during the Second World War when the American Air Force disgorged its cargo to fight the Japanese. After the War the tribesmen wanted the prosperity to come back. So they started a "cargo cult." Out of local materials they built mock airports and mock transport planes. They did an amazingly good job: the cargo-cult airports really do look like airports, the planes like planes. The only trouble is, they aren't actually. Feynman called sciences he didn't like "cargo cult sciences" (he was, ill-advisedly I think, going after sociology: apparently he was not acquainted with the considerable amount of good, non-statistical-significance yet quantitative and empirical and theoretically meaningful sociology, such as long ago that of C. Wright Mills). By "cargo cult" he meant that they looked like science, had all that hard math and statistics, plenty of long words; but actual science, actual inquiry into the world, was not going on.

I am afraid that my science of economics has come to the same point. Paul Samuelson, though a splendid man and a wonderful economist (honestly), is a symbol of the pointlessness of qualitative theorems. Samuelson, actually, is more than merely a symbol—he made and taught and defended the Two Sins, at one time almost singlehandedly. It was a brave stance. But it had terrible outcomes. Samuelson advocated the "scientific" program of producing qualitative theorems, developing qualitative-theorem-generating-functions (I am making an insider's statistical joke: ha, ha; such is economic humor), such as "revealed preference" and "overlapping generations" models" and above all the machinery of Max U. He was involved also (it turns out somewhat surprisingly) in the early propagation of significance testing, the "scientific" method of empirical work running on statistical significance [technical remark: sans loss functions], through his first Ph. D. student, Lawrence Klein (Nobel 1980). Two sins, one scientist.

So it is only fair to call both the sins of modern economics Samuelsonian. It is rather similar to the situation in linguistics: their Great MIT Leader is Noam Chomsky (definitely, unlike Paul, not a splendid man). Chomsky's mechanical approach to grammar, fiercely denying pragmatics and therefore the main finding of the humanities in the twentieth century, blocks progress. So too economics. Until economics stops believing, contrary to its own principles, that an intellectual free lunch is to be gotten from qualitative theorems and statistical significance it will be stuck on the ground waiting at the cargo-cult airport, at any rate in its high-end activities uninterested in (Really) How Much. High-end theoretical and econometric papers will be published. Careers will be made, thank you very much. Many outstanding fellows (and no women) will get chairs at Princeton and Chicago. But our understanding of the economic world will continue to be crippled by the spreading, ramifying, hideous sin.

Woe, woe is me. Oy vey ist mir. Pity the poor economists. The sins of economics come from pride in formalization, the making of great machines and monsters:

. . . and called me Sin, and for a sign
Portentous held me; but familiar grown,
I pleased, and with attractive graces won
The most averse.

And pity, I repeat, poor old Deirdre, who appears to be doomed to keep making these arguments, showing more and more plainly that the two main methods of academic economics are nonsense, without being believed.

Cassandra, you know, was the most beautiful of the daughters of Priam, King of Troy. The god Apollo fell for her and made her a prophetess. In exchange he wanted sexual favors, which she refused. So he cursed her, in a most malicious way. He had already given her the power of prophecy, to know for example what would happen to a science that refused to ask seriously How Much. His curse was to add that though she would continue to be correct in her prophecies, no one would believe her.

    Cassandra [to Trojan economists proposing to bring the wooden horse into the city]: The horse is filled with enemy soldiers! If you bring it into the city, economics is lost! Please don't!

    Leading Trojan Economist: Uh, yeah, I see what you mean, Cassie. Good point. Enemy soldiers. Inside. City lost. Qualitative theorems useless for a science. Statistical significance without a loss function equally useless. Economics ruined. Thanks very much for your prophecy. Great contribution. Love your stuff. [Turning to colleagues] Okay, guys, let's bring that sucker in!

McCloskey and Stephen Ziliak are to publish Ziliak and McCloskey, The Cult of Statistical Significance: How the Standard Error Costs Us Jobs, Justice, and Lives (University of Michigan Press) late in 2007. They show that statistical signficance, though routine in economics, psychology, medicine, and increasingly in the courts, is nonsense when used alone (as it almost invariably is), and has been known to be nonsense in this partial use since it was invented — often by the very inventors, such as Edgeworth and Gosset (the "Student" of Student's-t).

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[c!]

McCloskey, rather condescendingly, gives an interesting take on what science is and is not. He harps on that all-important-but-always-easy-to-forget point: "correlation does not equal causation." I can't comment on how close he is to the mark on his critique of economics (as I've only taken one economics course), but I wonder if we can't gain some insight into these things from a personal and institutional viewpoint. As follows: academics, I think, are seduced by the idea of simple and elegant "theories of everything." I know that I am. The search for a Grand Unified Theory in physics continues, etc. On its face, I don't think that this is silly... we all live in one universe, one material reality, which darn well might conform to one set of laws. I seriously doubt, however, that we'll ever be simulating the particles of the universe in order to determine how it and everything in it evolves... assuming, of course, that determinism is where it's at in the first place.

All models, of course, are approximations of reality; we don't need to model the motion of every air molecule to get a sense of how an aircraft design might perform, for instance. The question is: where do the models hold, and where don't they? I don't know if this sort of survey has been done in economics, but it seems to be a good first step in reflection. From there, heterodox economists can move beyond critiquing the mainstream and start creating alternative models. I'm not well-versed in the post-autistic economics literature, so perhaps you have a better sense of who is doing these things.

[Seth Baum]

In my experience, history has a way of finding its way into courses even when they're not explicitly history courses. The macroeconomics course I recently took, which I doubt was exceptional in this regard, was largely a survey of the history of macroeconomic thinking, and even if it was not structured as a history course, it did include a modest amount historical readings. The engineering courses I've taken over the years often sprinkled in historical footnotes as they were relevant to course content; I particularly enjoyed the personal reminiscings of the faculty members about their own experiences over the years. That I never took a history of engineering course (indeed, none were offered) did not, in my estimation, leave me a worse engineer. Lastly, the AP Physics course I recently helped teach was essentially a tour through the history of physics.

Economics, like, say, philosophy, may differ from science and engineering in that much of the knowledge is timeless instead of progressive. Whereas in science and engineering, it often suffices to point to the most recent work, which will have the previous work embedded in it, in economics, the previous work may be so completely off in a different direction that it demands attention.

For example, I would rarely city whatever classic physics publication was the origin of my work. For example, I used Maxwell's equations in my electromagnetics thesis, but I never referenced or even read Maxwell. Maxwell's equations are so thoroughly accepted that it's often appropriate to mention and use them without source. On the other hand, I did trace much of the thesis's more specialized work to its source, and an interesting history emerged from this process. Still, because the phenomena being described (here, electromagnetic wave propagation) are timeless with respect to societal change, there is less need for knowledge to be situated in a historical context.

Meanwhile, I've found great attention to history paid in the economics literature. Work like this on discounting
http://www.mit.edu/people/shanefre/TimeDiscandPref.pdf
is not uncommon. Perhaps because the nature of economics is so much more a function of the society that practices it, I see much more attention to history paid than I did in engineering.

That's not to say that economics couldn't or shouldn't pay more attention to its history. But to say things like "It would be like being an anthropologist who had never heard of Malinowski or an evolutionary biologist who had never heard of Darwin." seems unfair to both natural science and economics.

[Dave Iverson]

C! says: ". . . where do the models hold, and where don't they? I don't know if this sort of survey has been done in economics, but it seems to be a good first step in reflection."

That is to some extent what we try to do here, for example re: cost benefit analysis. http://forestpolicy.typepad.com/ecoecon/costbenefit_analysis/index.html

C! continues: "From there, heterodox economists can move beyond critiquing the mainstream and start creating alternative models. I'm not well-versed in the post-autistic economics literature, so perhaps you have a better sense of who is doing these things."

The Post Autistic Economics network journal, at http://www.paecon.net/ , is open-acess to the public, as is the journal some adaptive management theorists (linked to the Ecological Economics crowd) write in: Ecology and Society (formerly Conservation Ecology) http://www.ecologyandsociety.org/archive.php

I wish all journals were open to the public. Our conversations would be better-informed.

This little blog, by the by, is not meant to keep everyone up to speed on ecology and economics cross-poliinization. Instead, we just serve up a few tidbits here and there and try to keep things a bit edgy as we do.