Why Are Economists So Misunderstood?
Economics Has an Image Problem
Here is a puzzle.
I’m at a social gathering that includes some doctors. One doctor is discussing a prescription drug for a particular ailment. I interrupt with a lengthy discourse on the medication, explaining that the doctor’s understanding is faulty. He has misunderstood the most important applications of the drug. His analysis of the side effects is absurd. I patiently explain to the other bystanders that the doctor is simply wrong.
This scene, of course, has never occurred. And yet in many a social gathering I have heard doctors explain to me that the minimum wage is good for the poor; it raises their wages at no cost in reduced employment. I have had doctors patiently explain to me that my understanding of the energy market is faulty, that there is no competition there, simply the greed of big multinational oil companies that jack up the price of gasoline from time to time and only lower it to mask their sinister ability to exploit us.
So here’s the puzzle. Why do doctors feel competent to contradict economists on economic matters while economists would never contradict doctors on medical matters?
There’s a simple explanation. Doctors are more confident than economists in their ability to understand the world around us. Doctors feel that they hold the power of life and death. This induces a certain measure of self-esteem leading to the occasional intellectual overreach.
There may be something to this theory, but I doubt many doctors would contradict an engineer about the safety of a particular bridge or correct an astronomer’s assertion on the identity of a particular constellation.
We are left with a more depressing conclusion. Doctors (and plenty of other folks) don’t respect economists as credible sources of information on many economic topics. I used to think that this was the inevitable result of being a social scientist rather than a “real” scientist. No doubt the imprecision of economics has something to do with our relatively low standing in the eyes of the public relative to the practitioners of more reliable disciplines, such as physics and chemistry.
But lately I’ve started to wonder if there is a more fundamental misunderstanding at work. That misunderstanding is about the very essence of the field of economics. I’ve come to realize that most people, even intelligent, educated people, have not the faintest clue as to what economists do or what the discipline of economics has to contribute to an understanding of the world around us.
I got an inkling of the problem one time when on an airplane, the woman next to me asked what I did for a living. I mentioned that I wrote books on economics. Too bad my husband isn’t here, she said. He loves books on the stock market. I wanted to reply that I was glad her husband had stayed home, given that I have no interest in books on the stock market. I held my tongue, but I learned a lesson that I have heard confirmed in subsequent conversations with even highly educated strangers—most people think economics has something to do with personal finance or the stock market. At best, non-economists think economics is all macro, dealing with GDP, interest rates, and the money supply. Most non-economists find these topics either intimidating or boring. No wonder that most people are unaware that economics has something to say about what Alfred Marshall called the “ordinary business of life.” That side of economics, the micro side, the side that focuses on human behavior at either the individual level or in groups, has been dwarfed by the emphasis on financial news, interest rates, and the stock market.
You can see part of the problem when you mention the word “markets” to a non-economist. He immediately thinks of the stock market rather than the slightly surreal concept of economics where buyers and sellers are linked by prices.
What Is to Be Done?
So what can we do to give non-economists an idea of what economics is really about? The simple answer, of course, is to teach more people economics. But it’s a Catch-22. If people have a preconception that economics is about financial matters and if people are either intimidated or bored to tears at the prospect of a lecture on finance, then this solution is unlikely to help. It’s a little like the old “Saturday Night Live” skit about Smucker’s jam. How do you market a product with such an unattractive name? With a name like economics, you know it must be fascinating!
A more attractive and practical answer is to pick a different name for the field, a name that gets away from that embedded term “economic,” which reasonably enough, makes people think of financial matters. When strangers ask me what I do for a living, I’ve stopped saying that I teach economics. It’s a conversation stopper unless you’re talking to a fan of the stock market.
I’d prefer to say that I study human behavior. But most people assume that means psychology. So I now tell people I teach spontaneous order. Instead of ending the conversation, I usually get a follow-up question asking about spontaneous order. That gives me a chance to talk about the insights of Adam Smith’s invisible hand and Hayek’s discussion of how markets make use of information.
My idea of talking about spontaneous order is just one way to improve the reputation of what George Stigler called the queen of the social sciences. Many of you understand that economics is about more than just the stock market or interest rates. I’d like to hear from you about how you think economics might improve its image problem. E-mail me your suggestions (or send them to me c/o FEE). If any of them appeal to me I’ll use them at cocktail parties and highlight them in a future column.
Comment by Bill on 16 September 2009:
We study how people respond to incentives.
Comment by James Madison Fan on 16 September 2009:
How about, “I’m a Widget herder?”
Comment by Dr. Steve on 16 September 2009:
You pose an interesting question.
First, economics needs to disassociate from “social science”. Almost any thing I can think of with “social” in the title has lost credibility.
I think of psychology/psychiatry as abnormal or pathologic behavior.
Economics is normal behavior, whether individual or as a group.
By the way, this doctor has enjoyed his self education in economics. 40 years ago when in college I had no idea what it was all about. Of course if I had been taught what was going around most colleges then, I still would be ignorant.
Comment by Cliff on 16 September 2009:
If you were to say, ‘I study the behavior of the free market, and the impact of government taxation and interference’, I think you would never fail to start an animated conversation.
Comment by Joe D. on 17 September 2009:
The key problem with economics today is none of the economics books defines the terms:
1. Wealth
2. Currency/Money
Once wealth is defined, currency will become unit of measure of wealth. The currency becomes valid medium of exchange and store of value only when wealth is defined and the issuer “promises to deliver x unit of wealth” if not every currency including gold currency is ponzi scheme – means when the system crashes people holding the currency will end up losers and history shows that ponzi schemes always collapse and economists call it business cycle. In fact using gold as currency is the longest running ponzi scheme in the world.
More precisely “without defining wealth absolutely” economics is like mathematics without concept of zero and mathematics existed for 1000′s of years without concept of zero!
Today’s economics predicting human behavior = astrology predicting human behavior. Try asking Ben Bernanake what will be the exchange rate of US$ and 1 barrel of oil next week……
Comment by J Gruszynski on 19 September 2009:
Your argument is a pathetic example of \"Appeal to Authority\". A typical form of \"rhetorical fallacy\" aka \"using rhetoric to lie rather than argue on points\".
Would I challenge a doctor as you describe? Hell yes! Anyone who doesn\’t do so isn\’t actually managing their own health at all.
Do doctors have experience and often special pockets of knowledge? If they \"practice\" sure, but even in most cases that \"edge\" is likely not even in a very scientifically sound form.
Do doctors use double-blind methods with proper controls to test medication efficacy with individual patients (every patient has a idiosyncratic response to medications – you do know that, yes?) or do they use the diagnostic flyer that the pharma rep dropped off last week that likely has been crafted to promote pharma products being sold?
What you really are looking for is the power to make people \"STFU\" whenever you want simply because you have PhD or are a professor at a \"brand\" name university. It has nothing to do with intellectual honesty, truth or best interests of anyone but yourself.
This isn\’t a case of \"economists being so misunderstood\". When the arguments are of this type, we understand economists _all too well_ and that really ticks you off – you\’ve been found out.
Those of us, myself an engineer and MBA, who invade \"your\" bailiwick routinely operate at a much more scientific, empirical and internally consistent level of interaction with our own professional knowledge and lore than is evident with economists generally. When we hear, see and read sloppy thinking and bad model use or making, we speak up, because we all have to live with the consequences of fools in business and government listening to fools in academia.
Comment by Tom Rooney on 21 October 2009:
J Gruszynski’s ill-reasoned post not only drags the level of discussion down — s/he commits the very acts of argumentative vandalism (“using rhetoric to lie,” intellectual dishonesty, and sloppy thinking) that s/he is supposedly so concerned about.
Gruszynski falsely accuses Roberts of “Appeal to Authority,” when in reality it is Gruzsynski him/herself who commits that particular fallacy.
It is a false accusation; consider this description of the Appeal to Authority fallacy: “To quote a respected authority on an issue in his own field is a legitimate kind of argument, for in many situations we are forced to rely on the opinions of authorities. This kind of argument becomes a fallacy, however, when we cite an authority on an issue unrelated to his field of competence.” (taken from the classic text Applied Logic by Little, Wilson, and Moore, used in universities across the country for years).
Roberts is talking about the statements of a trained economist who happens to be the Chair at a university known for economics about /economic subjects/ — that’s perfectly legitimate argument. (And before Gruszynski launches into another tantrum-like response, notice I and the authors said “argument,” implying something that a person could still disagree with, but only with proper facts, not other logical fallacies like Gruszynski’s response is strewn with — see below)
But twice in Gruszynski’s response, s/he asks us to take his/her word as an engineer on matters unrelated to engineering — both medicine and economics. (And before Gruszynski launches into something about MBA work being kinda-sorta related to economics and maybe even requiring an econ class or a few, that’s still trying to quote a specialty as expert outside its specialty — essentially saying “STFU because I have an MBA, bub”)
As for the rest of what Gruszynski writes, s/he commits each of the following fallacies: poisoning the well, oversimplification, special pleading, misuse of analogy, attitude fitting, and argumentum ad populum — not to mention simply unfounded statements.
The poor quality of argument found in Gruszynski’s post is the very reason why I hardly ever scroll down to the comments below legitimate articles, in newspapers or whatever. If s/he wants to bring his/her argument up to the level of reasonable adults, I’m all for it — until then, I’ll stick to teaching teenagers how to blog more responsibly than Gruszynski.
Comment by Kim Henriksen on 3 November 2009:
Being a layman in regards of economic myself, I would actually like to have a conversation with economists.The problem though, regarding to your article, is that it is the economical macro structures I would be interested in. How the insight of Adam Smith’s invisible hand corresponds with the insight of Garrett Hardin’s classical article “The Tragedy of the Commons” for example.
If you’re not interested, maybe you could answer this question though: How would a stable, zero growth population, do in the market? Would growth still be possible? Seriously, I don’t know the answer. And if the answer should be no, wouldn’t it logically suggest a huge problem for any growth based economical system? Yet again refering to Hardin.