Monday, November 11, 2019

A Science at Its Limits: Criticizing the Most Recent Economics Nobel

Here's why I think there is some pushback against the most recent Nobel in economics. 

You go into the science wanting to make some sort of big difference.

You want to end poverty or make billionaires face a lower tax burden or make capitalism work however you think is optimal within your worldview.

But what RCTs do is show the limits of the science. You can design mechanisms so more people are protected from malaria through smart incentive structure on mosquito nets.

And it saves lives! Saving lives is good. But it feels small bore.

If that's ALL the science can do, it gives lie to the grand ambitions you enter in the science with. By awarding a Nobel to the practitioners of RCTs in development, it is an admission that the limits have been reached.

For me this is the same as the limits of behavioral economics. I consciously construct nudges for myself after years of reading in that subfield.

The question is what can you do with it if you can't necessarily replicate it and use irrational actors breaking micro assumptions as a foundation to build new theory on?

You can help people save more for retirement. And you can make sure men pee in the toilet. One big, another small. But are we at the limit there? Where do we go from here?

Friday, November 8, 2019

A Second Approach to a Statement of Purpose

Today, I want to talk a bit about my personal approach to economics. The scientist makes decisions too as human and as an analyst of the world. This choice for me shapes the idea that all economics are normative to a point. What you choose to look at and what you chose to leave out have huge influences on your conclusions. It is our job as scientists to recognize that the metaphors we use about the streetlamp or the blind men with an elephant have power because they show how our choices of what we analyze matter. For example, Housework is not part of the GDP because of decisions made decades ago, and now we talk about welfare gains from homemakers joining the workforce. Women worldwide do trillions in unpaid care work, yet that is not counted as market income so in many ways it does not count in our measures. We have to be aware of these sorts of choices in all that we do, knowing that the measures we have and the numbers produced are not neutral snapshots of the world.

That said, I am ambitious about positive change we can make in the world through our studies. Marx famously wrote: “The philosophers have only interpreted the world, in various ways; the point is to change it.” His words contain a tension that I feel. I want to change the world, but there is a first step. Before you go about changing the world, there is a lot that must be understood. We study the world as scientists, but we are not purely removed from the world, we are part of it. This interaction makes social sciences different from chemistry or physics. The object of study of our science is human beings. You can observe, theorize, and predict in all sciences but protons do not make decisions. Human beings do, and no matter the assumptions in our models, this makes the world hard to predict.

Though I have grand ambitions, I know we also have to be humble about the limitations of the methods of the science. For years, I had a quote from David Harvey as the header for my personal blog and Facebook pages: “We are, in fact, surrounded with dangerously oversimplistic monocausal explanations.” This remains an anchor for me as I try to understand the dynamics of the economic system that we live in. My current header quote walks the same path, telling readers “There is only one true answer to any economic question: “It depends”,” from Dani Rodrik. These two quotes illustrate my personal take-away from over a decade of studying the economy that everything is complicated and conditional in dynamic processes opposed to a simple linear causal process — a form of “first this, then that.” To me this boils down to a personal mantra: “It’s more complicated than that!”

My ambition has long been to study at the doctoral level and I am at the point in my career academically and professionally where everything has come together to make this a perfect time to realize my dreams. I come to this process through a circuitous route. Reading the rest of my application you will see the schools I went to prepare myself for more graduate work. I started in English and then turned to business and economics as I personally navigated the fallout of the crisis of 2008 and tried to understand just what had happened in a business cycle that I thought was solved. I completed my MBA and have two classes left for my Master’s in Economics, and I circled back and am working on finishing the MA in English I started but had not finished. Refocusing since the crisis has also made me a better student. Since 2010 all my grades have been A’s except for the one A- in the first class of the MBA sequence. The education has helped me professionally as I have learned to use data for my agency’s benefit to help make better business decisions.   Working on a PhD will be a sacrifice in terms of opportunity costs, but I am certain that it is the next step for me and I am experienced enough to be aware of some of the potential pitfalls. My eyes are open.

If I have one worry it is that my research interests are too broad. I first got interested in fiscal and monetary policy in a crisis, but I avidly study the economy from many angles from behavioralists to inequality to trade and development. I once joked that my personal program was in building up a coherent agent-based system from the ground up when economic actors break our micro-assumptions. More specifically, the papers I have written have explored working within the capitalistic context to mitigate inequities, the need to look at all the stakeholders within an economic system, arguing for higher minimum wages, exploring cooperative industrial organization, the potential for basic incomes, more relaxed immigration, and Rawlsian ethical framing to justify a change to the taxation system for local schools. I have also argued for a simpler financial system to lower the potential for crashes which have negative externalities and for international trade systems that do not impose developed country norms on developing countries. The interaction between the economic and the political spheres is key here as we examine how the world works and come to an understanding of how to change it. This speaks to my interests that I would like to explore in my doctoral studies, but at a greater analytical depth that has been available to me at Roosevelt in my current status as a part time student and full time worker. As much as I have thrived here, I am looking forward to moving to a bigger department and learning from a larger set of peers and mentors. I hope that it is at your school. If you let me in you will see that this is just the tip of who I am. I can tell you about Jeopardy when we meet face to face.