Friday, May 8, 2015

How to improve economics

Today I told my students in a course on Public Economics what I think about the ideas of the students' group "Post Crash Economics," at least as these ideas had been portrayed in a newspaper in Barcelona this week. My opinion is that the debate initiated by this group is important and that academics and students should have this debate in the classrooms and outside them. I happen to sympathize with many of the ideas of the group, especially that economics cannot be separated from its historical and institutional context, and that the history of economic thought should occupy an important space in the economics curriculum. I also agree that economics should have a closer dialogue with other disciplines (not only social sciences but also natural sciences, physics or computer science). I agree in part with the criticism that neoclassical economics holds a kind of excessive monopoly over the approaches that are taught at universities. I agree that other approaches should also be taught, such as behavioural economics or evolutionary economics. But my agreement with this criticism is only partial, because I believe that neoclassical economics has evolved in very interesting ways in the recent decades, and its frontiers are really fuzzy at this stage. The neoclassical tent is today very large and plural, and encompasses economists such as Paul Krugman, Joseph Stiglitz and Gregory Mankiw. I disagree with at least two of the arguments that have been made by some members of the group. On the one hand, I do not think that modern economics makes an excessive use of mathematics. Economists (myself the first) should not use less, but better, mathematics, and of course they should also use narratives and know about philosophy, law, history and psychology. Mathematics is not right wing, it is a powerful scientific tool. Economists and other social scientists should aspire to the same levels of scientific rigour than other sciences. After all, we are only investigating the interactions of members of one of the animal species that have populated the planet in a small corner of the universe. On the other hand, I don't think that there is an excessive influence from American universities in economics. American universities are the best, and scientists trained or working in these institutions dominate every scientific discipline. American economics departments, in fact, are more plural than many Spanish or European ones. And all the approaches that can rival neoclassical economics as a dominant paradigm (such as behavioural or evolutionary economics) have also started in the USA.

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