More on Economics and the Contiguous Disciplines

28 June 2006 at 12:01 pm 1 comment

| Peter Klein |

Monday’s post on the accusation that contemporary economists focus too heavily on “puzzles,” rather than real problems, elicited a number of interesting responses. Tom Schenk alludes to Coase’s suggestion that economists are shying away from their traditional areas of interest because they can’t solve the standard problems. Coase is worth quoting in full:

Economists are extending the range of their studies to include all of the social sciences. . . . What is the reason why this is happening? One completely satisfying explanation . . . would be that economists have by now solved all of the major problems posed by the economic system, and, therefore, rather than become unemployed or be forced to deal with the trivial problems which remain to be solved, have decided to employ their obviously considerable talents in achieving a similar success in the other social sciences. However, it is not possible to examine any area of economics with which I have familiarity without finding major puzzles for which we have no agreed solutions, or, indeed, questions to which we have no answers at all. The reason for this movement of economists into neighbouring fields is certainly not that we have solved the problems of the economic system; it would perhaps be more plausible to argue that economists are looking for fields in which they can have some success.

Steve Sailer, who has gained a reputation as Steve Levitt’s most vocal critic (1, 2), suggests that the problem is not the application of economic analysis to neighboring disciplines per se, but rather economists’ tendency to apply their tools to subjects in which they lack the necessary background knowledge and expertise. “My objection to Levitt’s work is not that he’s wasting his vast analytical powers on trivial subjects, but that his analytical powers have too often been found inadequate for the magnitude of his subjects.”

In a follow-up email Sailer puts it this way:

[T]he freakonomists who are turning themselves into general purpose social scientists tend to be worse at the non-economic social science than the specialists in the field.

For example, Levitt “discovered” that legalzing abortion had reduced crime by looking at crime rates in 1985 and 1997 and noticing that they had gone down, which he attributed to the legalization of abortion from 1970-73. But not being a criminologist, he had totally failed to observe that crime rates among teenagers had shot upward between 1985 and 1993-94, which is the exact opposite of what his theory predicted. . . .

Similarly, when Levitt ventures into psychometrics, he’s limited by his not knowing very much about psychometrics, all that doesn’t stop him from promoting grandiose conclusions about nature and nurture.

The truth is that a Ph.D. in economics doesn’t give somebody much special insight into pronouncing on venerable problems in non-economic fields.

To what extent is this complaint — that economists don’t know enough about strategy or organizations or leadership to make contributions to those fields — behind the critics of economics we’ve discussed on this blog many times? Is the complaint justified?

Entry filed under: - Klein -, Management Theory, Methods/Methodology/Theory of Science, Strategic Management. Tags: .

A Brief History of Time (in Management) What’s In a Name?

1 Comment Add your own

  • 1. C. Grammich  |  30 June 2006 at 10:36 am

    I don’t have anything to add on this–and anything I might think to add was probably covered in your later post on what I’d call physics envy among social scientists–but thanks for the Sailer links. I got quite a chuckle out of “Occam’s Butterknife” . . .

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Authors

Nicolai J. Foss | home | posts
Peter G. Klein | home | posts
Richard Langlois | home | posts
Lasse B. Lien | home | posts

Guests

Former Guests | posts

Networking

Recent Posts

Categories

Feeds

Our Recent Books

Nicolai J. Foss and Peter G. Klein, Organizing Entrepreneurial Judgment: A New Approach to the Firm (Cambridge University Press, 2012).
Peter G. Klein and Micheal E. Sykuta, eds., The Elgar Companion to Transaction Cost Economics (Edward Elgar, 2010).
Peter G. Klein, The Capitalist and the Entrepreneur: Essays on Organizations and Markets (Mises Institute, 2010).
Richard N. Langlois, The Dynamics of Industrial Capitalism: Schumpeter, Chandler, and the New Economy (Routledge, 2007).
Nicolai J. Foss, Strategy, Economic Organization, and the Knowledge Economy: The Coordination of Firms and Resources (Oxford University Press, 2005).
Raghu Garud, Arun Kumaraswamy, and Richard N. Langlois, eds., Managing in the Modular Age: Architectures, Networks and Organizations (Blackwell, 2003).
Nicolai J. Foss and Peter G. Klein, eds., Entrepreneurship and the Firm: Austrian Perspectives on Economic Organization (Elgar, 2002).
Nicolai J. Foss and Volker Mahnke, eds., Competence, Governance, and Entrepreneurship: Advances in Economic Strategy Research (Oxford, 2000).
Nicolai J. Foss and Paul L. Robertson, eds., Resources, Technology, and Strategy: Explorations in the Resource-based Perspective (Routledge, 2000).

Follow

Get every new post delivered to your Inbox.

Join 244 other followers