A few weeks back, I sat down with the Richmond Fed’s Aaron Steelman for a most enjoyable hour or two talking about my recent research projects and perspectives on economics generally.? If you’re interested in learning more,?click here for the full interview.? Regular readers of this blog may even recognize a few themes that I’ve been hammering away at here on these pages.? At the risk of quoting myself, here are?a few favorite parts:
On the state of economics:
I still believe that economics is the queen of the social sciences. But the metric that leads me to say that is its influence on the world, which is what I think social science should be about. When it comes to almost any public policy problem, you call the economists. This is true in many areas once thought outside of the domain of economics, such as family policy and understanding politics. Economists have been very successful moving into those fields and have provided many important insights.
Economics and her sister social sciences:
The broader issue – the reason why I believe economics is the queen of the social sciences – is this movement of economics beyond GDP. It is hard not to think of Gary Becker as the founder of that, and this has been a very good thing. In sociology, I think our biggest influences have been on research about family or crime, as economists have done a lot of empirical work on those topics. With political science, on topics from election forecasting to political economy, we tend to see quite good empirical work from economists. That’s not to say that we should ignore other research methods. In fact, I had a sociologist on my dissertation committee, Sandy Jencks. I used to joke with Sandy – and he promised not to be offended – that sociologists have great questions and economists have great answers.
OK, so there’s a touch of hubris there.? But probably at least a kernel of truth, too.? But what about psychology?
What is interesting to think about are the terms of trade between economics and all these other disciplines. We are clearly a net exporter to political science and sociology. But at this point the trade with psychology is almost all one way. We are a near-complete importer. I wonder why we haven’t been bigger exporters to psychology. I think it has to do with the research method. Like political scientists and sociologists, economists are almost all about the analysis of observational data. And then there are second-order differences. Formal political scientists write down a model before they observe data; informal ones don’t. Ethnographers observe four people; survey researchers observe 4,000. But it’s all observational. But when I watch and speak with my friends in psychology, very little of their work is about analyzing observational data. It’s about experiments, real experiments, with very interesting interventions. So they have a different method of trying to isolate causation. I am certain that we have an enormous amount to learn from them. But I am curious why we have not been able to convince them of the importance of careful analysis of observational data.
Plus?there’s plenty more, on topics ranging from happiness to prediction markets, discrimination, inflation expectations and political economy.
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. You can also watch it on 
Economics is powerful because it deals with things that can be quantified. That gives it a feeling of objectivity. However, in back of it is always a question of value. Are all values market values?
One can do an economic analysis of marriage or of education or religion and they certainly capture something of their value but a lot is left out.
I don’t know too many psychologists who are wedded to a rigid ideology the way that so many economists are. That used to be the case when behaviorism ruled the roost but today there is no overarching ideology in psychology to match the free market fundamentalism of so many economists. Psychology is much more of a true science but economics resembles a religious cult that bases ideas on beliefs regardless of data. There are still many economists who are objective but it is the true believers who are dominating. The failure of so many economists to predict, let alone try to avert, our recent meltdown is proof of just how faith-based the profession has become.
I think the affirmations in the article do not apply to CBT. There are thousands of studies in the CBT field, with hundreds of subjects.
The hubris of economists never ceases to amaze me. The statistical technique is always some version of ordinary least squares regression or some variation of a linear technique to describe or predict non-linear phenomena. There are many other ways to examine questions, and the experimental method is one of those. But Psych, Ed. Psych, and all of the other social sciences already have non-linear methods such as structural equation models, simulation, and partial least squares.
It would behoove economists to read the social science literature first. For example, your linear regression doesn’t add any understanding to ideas about the information processing theory of the firm. Jay Gailbraith talked about that around 1970.
Social behavior tends to violate every necessary requirment of OLS. It’s the economists that haven’t figured that out yet. Stop being so arrogant until you have something to tell us, that the other social sciences don’t already know.