10 Suggested Resolutions for Real-World Economist in 2010

Real-World Economics Review Blog

10 Suggested Resolutions for Real-World Economist in 2010

December 23, 2009

Peter Earl

As 2010 approaches, real-world economists should be thinking about what they can do in the New Year to advance the cause of real world economics. Here, I offer 10 suggestions to add to the exhortations of Fred Lee in his outgoing editorial of the Heterodox Economics Newsletter. Since I’m from a similar generation to Fred and 2009 marked the start of my fourth decade as an academic economist, this has been a year of somewhat frustrated reflection. However, I’ve tried to ensure that these do not look like the suggestions of a Grumpy Old Real-World Economist.

First, stop teaching anything that you do not believe to be a good representation of the real world, even if an unrealistic model is part of the standard curriculum. If I am ever asked to teach a core course I will teach it without wasting time ‘going through’ mainstream ideas, such as the theory of perfect competition and indifference analysis, that are logically flawed and/or based on wildly unrealistic assumptions. As regards the absolute core of mainstream thinking, namely, constrained optimization, all I shall do is say that it would be nice if we could work out the best way of meeting our objectives but that it is logically impossible to do so in most cases; I shall explain why and then move on to explain what is known about how choices are actually made in the real world.

Second, use every opportunity available to point out that what is currently attracting widespread interest under the banner of ‘behavioural economics’ is merely a lip-service pretence of being seriously concerned with real-world economics. This new behavioural economics is largely a means for clinging to constrained optimization mode of thinking. If you weren’t aware of this, see Esther-Mirjam Sent’s HOPE2004 paper via the link here. All they are offering, really, is standard constrained optimization with distorted preferences or perceptions. I’ve nothing against making use of what is known about ‘heuristics and biases’ of real-world decision makers, but I believe that economists need to stare in the face the implications of cognitive problems for how they do their work. If they did so, they would not, for example, build models of time inconsistent choices that on the one hand portray people as not very smart and on the other presume they do constrained optimization (with the twist of hyperbolic discounting). This lack of consistency is a sure sign of a degenerating scientific research programme.

Thirdly, suggest to your heterodox colleagues who devote their careers to writing about methodology that they should spend their time instead actually doing some real-world economics. This may upset them a bit, but it is important that they reflect on how they are spending their time. We have some great minds in the method area and, of course, things remain to be said about method. However, more of them need to use someone like Sheila Dow as a role model and contribute to theoretical and/or applied economics as well as writing about economic philosophy. The mainstream folk might benefit from reading more about method and learning the errors of their ways, but they probably don’t bother. Those who know what the typical methodological errors are should just get on with doing economics. With heterodox economists in a tiny minority of the profession, their talents should be aimed at dealing with the real world and showing the difference it makes in practice to use different methods. For example, rather than writing about the theoretical case for pluralism, try doing some pluralistic applied economics and show the value it adds.

Fourth, seek out and use opportunities to make contributions to parliamentary inquiries and other public forums. Not only is this a means to contributing to your employer’s goals regarding ‘engagement’; it is also a way of raising the profile of real-world economics and making a difference. It is easier than you might think: once you’ve make a submission to one high-profile inquiry you will find that secretaries of subsequent ones in related areas will approach you for submissions. These will get noticed by the press, who may then phone you for an interview (and may even pay you to write opinion pieces), and reports there can lead to requests to do radio interviews. We can’t all expect to have media profiles like Jeffrey Sachs, but we can at least make a start.

Fifth, form research teams and chase external funding. If you are successful, you can offer more to real-world economics and less funding may get into the hands of non-real-world economists. Sure, it is a serious investment of time to do a grant application that will have a decent chance of success but if you work with a new team in an area that requires you to engage with unfamiliar literature, it is a great way of opening up new research possibilities. Even if the grant application isn’t successful, it is likely to lead you to projects you otherwise wouldn’t have done and papers you otherwise wouldn’t have written and it may also give you the chance to educate colleagues towards heterodox ways of thinking.

Sixth, if you care about making an impact, write what you think is worth saying, rather choosing what to write based on the ranking of the journal likely to take it. It might not help your career in the short-term, but you’ll have more fun and feel better in yourself for writing it, and it will probably get you more citation hits if it is something that is actually useful.

Seventh, when you are refereeing be civil at all times but take the time to try to educate the authors of papers who seem oblivious of real-world perspectives offered by heterodox approaches to economics. If you set out a critique in some detail, including the necessary references, you make it easier for the author to do the changes and you make it harder for the editor not to request them; so your report helps stop the rot.

Eighth, don’t just carry on using standard texts that perpetuate fallacies an fail to show students contending perspectives; instead, take the time to look for and consider non-toxic texts, even if it means you’ll need to do a bit of re-tooling of your teaching. (To judge from the dismal sales of my latest pluralistic text – Earl and Wakeley, 2005, Business Economics: A Contemporary Approach, published by McGraw-Hill UK – not much of this goes on, despite what heterodox economists say to publishers about being sick of the standard fare.)

Ninth, if the department in which you work has an intranet and uses its discussion board facilities, make the most of the technology as a means to have your say about curriculum design, degree structures, PhD coursework requirements, and so on. Your non-real-world colleagues may not heed what you say, but at least they may read it and start to see the world a bit more like you do: it may be about the only chance you’ll have of such colleagues reading anything you write about economic method!

Tenth, if there’s something you think needs to be said about real-world economics that isn’t suited to the format of a regular article or needs to be said urgently, contribute to the Real-World Economics Blog.