A few years back, the New Republic accused me of ruining economics.
Now The Economist magazine, in a much more subtle way, makes the same implication. Here’s the second sentence of an article entitled “What Went Wrong With Economics”:
A few years ago, the dismal science was being acclaimed as a way of explaining ever more forms of human behavior, from drug-dealing to sumo wrestling.
The article actually turns out to be an indictment of macroeconomics and financial economics — two fields I’ve had nothing to do with — so I can’t fairly take credit for the most recent ruination of economics. But I do appreciate their attempts to make me relevant.
I have one complaint though. The article is about how the models that macroeconomists thought described the economy have been revealed to work much less well than was previously believed. In contrast, my descriptions of drug-dealers and sumo wrestlers are no less applicable than when I did the research. Indeed, recent research by three Swiss economists suggests that my research on sumo actually changed the sport for a few years (they got rid of the sharp non-linearity that led to cheating, and the cheating disappeared), but later the non-linearity was reintroduced and the cheating came right back.
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The ‘dismal science’ is still in its infancy. It has yet to reach the maturity of, say, physics or chemistry. Those fields have developed theories which are capable of reliably predicting future events given a sufficient picture of initial conditions. Macroeconomists, in my view, don’t even have the proper tools with which to measure initial conditions, let alone derive testable hypotheses or reliable theories. It’s like asking Newton to come up with the law of gravity without first having invented scales or the telescope.
Ya know who ruins economics? Ivory tower academics who shun the idea that economics can be used to explain everyday phenomena.
Keep it up Dr. Levitt.
Anyone that gets people interested in economics is not capable of ruining it….so thanks. And keep up the good work!
Ditto, Vasanth.
Additionally, it wasn’t Freakonomics that made it so people couldn’t see the insanely broken incentive structure being set up in the mortgage-backed securities market. It was short-sighted politics, mostly. Darn you, Freakonomics for malincentivizing our politicians 6 years before you were published!
You’ve ruined economics for many economists! [1]
I think most of the rest of people who know who you are would say you’ve improved economics.
[1: You haven't ruined it for Paul Ormerod ... http://www.timeshighereducation.co.uk/story.asp?storyCode=203943 ]
Steve, it may not sound like it, but I mean this as a compliment. It seems to me that Freakonomics is to economics what MythBusters is to science. Rigorous methodology applied to fun questions. Well, your methods seem to be a little more rigorous, and I’m really referring to the book and not your academic contributions. But it is an apt comparison, no?
As long as we remember that economics IS human behaviour, no-one can be accused of ruining economics. I admire the approach taken in Freakonomics that encourages people to look at the world around them and wonder about the economic implications of absolutely everything.
The study of economics over the last century (especially the latter half) has become too dominated by mathematics and the analysis of inherently artificial financial systems. Not that math is not necessary for representing complex relationships in a simple way but it became the default that if you could generate a new function or equation, that amounted to innovation in economic thought. There has been little incentive for economists to explore the real workings of everyday economics and impacts on the real economy.
This view is rapidly changing with our most basic real economy concerns – natural resources – under critical threat.
We must never forget that economics is about people and how they interact with the world around them.