Economics is "often a triumph of theory over fact"

So says Alan Blinder, professor of economics at Princeton and former vice-chairman of the Federal Reserve Board, in this article from today's New York Times.  Here is an excerpt.

“There is much too much ideology [among professional economists],” said Alan S. Blinder ... .  Mr. Blinder helped kindle the discussion by publicly warning in speeches and articles this year that as many as 30 million to 40 million Americans could lose their jobs to lower-paid workers abroad. Just by raising doubts about the unmitigated benefits of free trade, he made headlines and had colleagues rubbing their eyes in astonishment.

“What I’ve learned is anyone who says anything even obliquely that sounds hostile to free trade is treated as an apostate,” Mr. Blinder said.

And free trade is not the only sacred subject, Mr. Blinder and other like-minded economists say. Most efforts to intervene in the markets — like setting a minimum wage, instituting industrial policy or regulating prices — are viewed askance by mainstream economists, as are analyses that do not rely on mathematical modeling.

That attitude, the critics argue, has seriously harmed the discipline, suppressing original, creative thinking and distorting policy debates. “You lose your ticket as a certified economist if you don’t say any kind of price regulation is bad and free trade is good,” said David Card, an economist at the University of California, Berkeley, who has done groundbreaking research on the effect of the minimum wage.

Obviously, we here at the ELS Blog are supportive of any efforts to use empirical research to check our fundamental assumptions.  Because of the huge influence of economics on public policy, this internal debate is a very healthy development for all of us.

Comments

[generic valtrex]

hello friend I think that They were roundly castigated for having looked carefully at the data concerning the minimum wage and finding out, mirabile dictu, that raising it had no employment effects at all, one way or the other.

[Tracy Lightcap]

The limiting case in this was how Card and Krueger were treated when they brought out Myth and Measurement. They were roundly castigated for having looked carefully at the data concerning the minimum wage and finding out, mirabile dictu, that raising it had no employment effects at all, one way or the other. Some even suggested that Card should be stripped of his John Bates Clarke award!

To get an idea of how this singular case of social science sleeping sickness came about, see Roy Weintraub's How Economics Became a Mahematical Science. Some of the anecdotes are downright scary.