I have periodically engaged in a discussion with environmentalist writers about the economic approach to climate change and its virtues and shortcomings. Yesterday, I continued this discussion in a Free Exchange post that concluded:
Environmentalists and economists are fundamentally on the same side, supporting the use of data and the scientific method to reach reasonable, peer-reviewed conclusions and appropriate policy recommendations. Their differences are nothing in comparison to the gulf between those who prefer that peer-reviewed research inform a policy debate and those who’d rather cite email forwards. Until a way can be found to convince deniers to appreciate the reality of the situation, inter-disciplinary bickering is mostly a waste of time.
To my surprise, the response from my environmentalist interlocutors was, basically, “you think what economists are doing is scientific?”. David Roberts tweeted:
A discipline where there are so many fundamental disagreements over first principles & such a track record of failures … has a ways to go.
You don’t see phlogiston get debunked & then come back decades later. You don’t see irreducible disagreements b/t the pro & anti-phlogiston.
“On what are you basing this?”, I asked.
I don’t think your repeated resort to argument-by-credentials is serving you as well as you think it is.
But no, I’ve never witnessed the crystalline purity of academic economics. Just the shit show out here in the real world.
This, honestly, made me extremely angry, and there was a long twitter exchange which I said I’d continue tomorrow (today). Rather than put my followers through that, I’m just going to make a few points here. The “phlogiston” comment is revealing. That’s Krugman’s line, and it suggests that David hasn’t spent much time with actual economic literature in forming his critique. He acknowledges in a later tweet; he doesn’t need to know anything about academic economics to know that it’s useless; his observations of the real world are good enough. Obviously, if I made similar comments about climate science I’d be treated as an ignorant buffoon by people like David Roberts. I suspect they’d respond that economics is different from “real science”, but David obviously hasn’t taken the time to learn enough economics to know, one way or the other.
Is economics a science? Let me first associate myself with Adam Ozimek’s comments here. If you want to say that economics isn’t a “hard science”, that might be all right, depending on just what you mean by it. If you mean that economists can’t run lab experiments and can’t predict outcomes as accurately as, say, chemists, then that’s acceptable to me. If you mean that economists have no experiments, or don’t use the scientific method, or something of that nature, then you’re dead wrong. The currency of the economics realm is evidence. When economists do research they form hypotheses, build models, gather data, test the models against the data, and publish their conclusions. If other economists try to get similar results and fail, the original result is called into question.
Economics is quite often effectively predictive. If the supply of one good is disrupted, economists can tell you with great certainty what will happen to demand for complementary goods and substitutes. If supply levels are known and research establishing elasticities has been done, they can tell you even more about what will happen. Their predictions will nearly always be right. And this is true for many aspects of economics. It’s important to note that because economists can’t always run their own experiments, there will tend to be more confidence about theories that focus on things which occur very often. Prices shift constantly, and economists consequently know a LOT about prices. Massive, global economic recessions occur about once a century. There is obviously a lot more uncertainty regarding the theories that describe these events.
Economics struggles with limited data at times. Economists could substantially increase their macroeconomic sample sizes if they had good data on economic activity for all of human history, but unfortunately governments haven’t been collecting data all that long. (Though economic historians have put together respectable careers carefully assembling historical data sets.) The Job Openings and Labor Turnover Survey, which has been the subject of intense study in this recession, only goes back to 2000. But much of the progress of “hard” science has been about improving the available data. These limitations don’t detract from the scientific endeavor at the heart of the economics discipline. Economics is not empty philosophizing or groping in the dark.
Why does it seem to laypeople as though economists can’t agree about anything? I can give you a few reasons. First, Paul Krugman isn’t going to write a column saying, “Here are the many, many things on which both I and my University of Chicago antagonists agree,” and the Journal isn’t going to get Gary Becker to write a column saying, “Indeed, on these many things we see eye-to-eye.” Second, the most riveting economic events are those, like global recessions, that occur infrequently, and about which there is far less certainty than other, more common events. Critics make hay of the fact that economists seem not to have come any closer on these issues in 80 years, but this amounts to no more than academics debating the meaning of the first lab test while they run the second. And third, the stakes of the policy debate are high, and so commentary is passionate and intense. It begins to seem as though economics is riven through by unbridgeable gulfs, and that these gulfs are as yawning now as they’ve ever been.
But that’s not remotely what economics is like. While Krugman and others bash each other in newspapers, thousands of academic economists are gathering in reams of data, playing with new models, and trying, quite civilly, to figure out what we’ve learned from the Great Recession. Meanwhile, many thousands more are focusing on research related to all the other branches of economics — research which continues to yield solid and useful results.
You don’t have to be able to explain dynamic stochastic general equilibrium models to understand these things about economics. You just need to be prepared to approach an important academic discipline with a tiny bit a humility. Obviously, economists could use a good bit more humility themselves. Quite often, their conclusions are not as certain as they think they are. But that doesn’t mean that economists have nothing to contribute; our understanding of many, many crucial problems would be much poorer in the absence of economic analysis. And that is undoubtedly true where climate change is concerned.