Sunday, February 3, 2008

Psychologists are evil

This is just an outstanding quotation, from a New York Times article:

"Often introducing money into the exchange — putting it into the marketplace — is what people find repugnant. Mr. Bloom asserted that money is a relatively new invention in human existence and therefore "unnatural."

Economists are asking the wrong question, Mr. Bloom said at the panel. They assume that "everything is subject to market pricing unless proven otherwise."

"The problem is not that economists are unreasonable people, it’s that they’re evil people," he said. "They work in a different moral universe. The burden of proof is on someone who wants to include" a transaction in the marketplace. (Mr. Roth, who acknowledges that "economists see very few tradeoffs as completely taboo," did not take the criticism personally.)"

Sadly, it seems that Bloom was kidding. Isn't it nice that "economists are evil" is a statement that can be mistaken for seriousness, but "psychologists are evil" is so clearly ridiculous?

How can economists plausibly evil, but psychologists cannot? I think the idea that economists "assume that “everything is subject to market pricing unless proven otherwise.”" is wrong. It's a common criticism: economists reduce everything to dollars and cents, trying to measure the value of stuff that's invaluable (the article is talking about how "repugnance" affects trade, using the example of selling organs).

As the social science of the allocation of scarce resources, how could economics operate without trying to figure out some concept of the value of something to someone? I think environmentalists have long despised economists for this reason. Say we're talking about a scarce natural resource, a rain forest for example. Again, positive economic science cannot possibly hope to tell us what the "best" use of this resource is, but it can hope to tell us the consequences of each use. Unfortunately, it's clearly easier to measure, say, the value of this resource to the logger and grazer who seek to use it today than it is to measure the value to humanity of preserving the forest.

Similarly, it's easier to measure the willingness to pay for an organ by a terminally ill individual, and to measure the willingness of another individual to give up an organ, than it is to measure the potential consequences of allowing the sale of organs. The question at hand is: do we do what we can, even given this imbalance, or does the imbalance justify making no valuation, even the ones that are possible? Is attempting to value anything an assumption that "everything is subject to market pricing"?

Trying to understand more about the consequences of a particular allocation of resources is not the same as either propagandizing for that allocation or method of allocation, that is, markets. Even in jest, the charge that we "operate in a different moral universe" is a serious one. It actually makes me very sad, because I'm very familiar with the particular problem of introducing myself as an economist: it alienates a decent percentage of people you meet. ("I'm an economist, but I'm not evil, honest".) Economists are evil, or at least morally bankrupt, to some people. I wish that wasn't the case.

It's understandable. Let's take the ideal world where all positive economics is done scientifically and without normative judgment. Is it surprising that value-neutral economic science seems evil, while value-neutral physics, or chemistry, or psychology, seems like the noble pursuit of knowledge? The Methodology of Positive Economics by Friedman is, again, eloquent on this subject:

"The subject matter of economics is regarded by almost everyone as vitally important to himself and within the range of his own experience and competence; it is the source of continuous and extensive controversy and the occasion for frequent legislation. Self-proclaimed "experts" speak with many voices and can hardly all be regarded as disinterested; in any event, on questions that matter so much, “expert” opinion could hardly be accepted solely on faith even if the "experts" were nearly unanimous and clearly disinterested. The conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained. Laymen and experts alike are inevitably tempted to shape positive conclusions to fit strongly held normative preconceptions and to reject positive conclusions if their normative implications - or what are said to be their normative implications - are unpalatable."

It's not just confusion between positive and normative economics, between the practice of the science and its interpretation, it's the very attempt to be value-neutral, to be agnostic, that makes economics seem evil. This is all the more true if, as Friedman is arguing, that there's temptation to attach value judgment to positive economics. If there's any hope of us shedding the "evil" tag, this is a temptation that all economists must resist and fight.

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