A Presentation of the Book: How Economics Professors Can Stop Failing Us: The Discipline at a Crossroads (Rowman & Littlefield, 2017) By Steven Payson {The PowerPoint Slides Corresponding to this Presentation Can be Found at www.airleap.org/presentation.pptx} Slide 1 As indicated, I’m here to give a presentation based on my new book, which is called “How Economics Professors Can Stop Failing Us: The Discipline at a Crossroads. Before I begin there are some qualifications, or disclaimers, that I need to make. First of all, the views I express in this presentation, and in the book, do not necessarily reflect the views of any organization to which I belong. Secondly, I would like to clarify that the book’s title , and the book itself, does not mean to say that all economics professors are failing us. In fact, I make a point in the book to say that I believe there are several economics professors who are excellent role models for the profession who have never, and could never, fail us. Slide 2 For example, I devote the book to the memory of my dissertation advisor, Kelvin Lancaster, who in my mind could never fail us. And there’s another, very important qualifier I need to make which is that this presentation is NOT about the economics you are studying now. So, let me ask, just by a show of hands – how many of you are undergraduates? Are there any graduate students out there? And how many are economics professors? Well, here’s the deal ... I’ m going to talk about stuff that graduate students and economics professors deal with – not with the economics that students study in their undergraduate courses ... 1
But my hope is that this talk will still be useful to you because it will let you in on what you might expect further down the road. Slide 3 What I mean is that it’s like this ... The kind of economics you need to study in undergraduate courses is like going down a nicely paved road like the first one on the left. The textbooks and lectures explain the basics that make economics, economics. Personally, I think its pretty good stuff, which of course might explain why I became an economist. However, this particular road happens to be leading to Death Valley – so you need to be careful where you going! For those of you who do decide to go to graduate school, the road is more like the one on the top right – the path is still clear – but it’s much rougher going, and if you go as far as to work on a dissertation, it is like you will be helping to pave that new road. And finally, if you decide to become an economics professor, who is trying to advance in your career by publishing journal articles, then you really don’t have a road any more, And you’re struggling just to keep moving without get ting stuck in the mud. So by this analogy ... some professors ARE stuck in the mud, or stuck in stuff that is perhaps worse than mud ... and so I see my book as my way of offering them a way forward. But again, if you are an undergraduate don’t get mixed up by this, because, at the moment at least, you’re on a nicely paved road, and have a long way to go before you’ll need to worry about getting stuck in the mud. Now ... the book is close to 400 pages long, and so I could not possibly cover all of it here. So I will focus this talk on one of the central themes of the book, which involves a concept that I have termed “literature - only economic theory.” Slide 4 Literature-only economic theory does not represent all of economic theory; some economic theory IS literature-only economic theory, and some is not. 2
I define it in terms of three criteria; it must meet every one of these three criteria – otherwise it is not literature-only economic theory. (1) It relies on strong arbitrary assumptions. And if the assumptions were replaced by other, equally defensible, alternative, assumptions, then its findings would be completely different. (2) It goes so deep into highly mathematical constructs that it is generally incomprehensible to nearly everyone, including other advanced economists who are adept in mathematics. It is comprehensible only to the very few people in the world who happen to be thoroughly familiar with that particular thread of mathematical modelling, or those who are not familiar with it but would be willing to spend days to study it, and very few people would do that. (3) And this is especially important : The literature-only economic theory will never see the light of day in any textbook or classroom lecture , and will never be put to any practical use. So if we do see it in a textbook or a lecture, then it does not meet this criterion, and it is not literature-only economic theory. In short, literature-only economic theory serves only one purpose which is to be published in a technical journal — and to be accepted for publication on the basis of its impressiveness to the journal’s editor and reviewers. This is why I call it “l iterature- only” economic theory --because it is confined to the literature in technical journals, and working papers. At the top of the slide I have a very small sample of what literature-only economic theory looks like. It is created from the development of a very specific, highly sophisticated model. It pretends to be discovering something real, but it is simply studying the mathematical properties of whatever it created in the first place. I will come back to this point in greater detail – this was just a sneak preview. Yet, in spite of Literature-Only Economic Theory providing essentially no useful purpose, for applications, OR for improved understanding, it generally represents the most prestigious work there is within the academic economics profession. 3
Slide 5. As shown in the pyramid, I have identified three categories of the research and writing that academic economists perform: (1) Applied Economic Analysis and Economic Statistical Findings, (2) Useful Economic Theory (for application OR better understanding), and again, (3) Literature-Only Economic Theory. Of course, useful economic theory is what economic professors are supposed to work on. The trouble is that useful economic theory is often too hard to come by, and often too “unimpressive” to be accepted in the top-rank journals. So the lion’s share of the work that the most prominent economic professors perform, and what is expected for them to achieve their prominence, is contributions to literature-only economic theory. It is what the top journals want, and publications in top journals is what academic economics departments want of their faculty. It is, and has long been, the limelight of the economics profession and the road to stardom for prominent economics professors. Slide 6. Now let us put this all aside for the moment and consider the distinction between two things: the scientific pursuit of useful knowledge, versus competition in an intellectual game of amusement. There is surely a clear difference between the two. The first involves a commitment to make the world a better place, and to honestly understand causality, where such a greater understanding is the end in itself, regardless of whether such knowledge can be directly applied. The second is about having fun, and taking pride in being able to win the game. Of course, as I show here, both are also motivated by fortune and fame. 4
For many people in the economics profession, and for many economics students, it is obvious that the generation of literature-only economic theory is a legitimate science, and not merely an intellectual game of amusement. In fact, I would say that it is as obvious as the difference in colors between these two middle squares in the Rubik ’s cube in the next slide. Slide 7 We can see with our own eyes (if we are not color blind) that the top middle square is dark brown, while the middle square on the front side is light orange. These colors are completely different, in the same way that literature-only economic theory, as a legitimate science, is completely different from any intellectual game of amusement (like chess). But bear with me for a moment – I want to take a deeper look at this Rubik ’s cube. Slide 8 I am going to start blocking off parts of it, with out changing any of the colors in any of the squares. All I am doing is blocking them out as I go – and as I do this you can stare at the two middle cubes to be totally confident that I did not change their colors. ... We just witnessed a fantastic optimal illusion: The colors we see, or the colors we may think we see, depend enormously on the colors of whatever surrounds them. Slide 9 Squares #1 and #2 are essentially the same color, but because of their environment, one looks dark brown and the other light orange. The same illusion takes place in the view that many people, especially academic economists, have of literature-only economic theory . When we deeply examine precisely what literature-only economic theory is, and how it is produced, and compare it to an intellectual game of amusement, we will indeed see no difference between them. But why does literature-only economic theory appear, to the casual observer, to be a legitimate science? It is simply because it is surrounded by things that make it look like a legitimate science, such as: 5
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