Wednesday, August 22, 2012

Scientific theory is always up for grabs

Laurence Kotlikoff (an economist at Boston University ) has written an important op-ed piece on Bloomberg about the politicization of the economics profession: "Economists risk labeling as political hacks". While I agree with the general thrust of the argument, and much of the specifics, I was troubled by the line "Economic theory isn't up for grabs". Below is my response, left as a comment after the original article.


This is an excellent article and you raise some very important points that every economist should be concerned about.

However, in the last section of the piece (titled "Consumption Spree") I think you take the argument a step too far. In particular, I have a problem with the line "Economic theory isn't up for grabs. Economic facts aren't a matter of choice." Here you are doing a disservice to economics by exaggerating its claims to scientific impartiality. No theory exists in a vacuum and empirical "facts" must be interpreted in order for them to have any meaning (this is true even for the "hard" sciences, but especially so for social science such as economics)

The preceding discussion on savings rates provides a perfect illustration of this. You take an existing theory (life cycle savings model) and use it to interpret some empirical facts (savings rates, tax incentives) resulting in an explanation of America's low savings rates. This is all perfectly valid. But it involves the selection of a model - based on a particular world view - and the interpretation of the empirical evidence through the prism of that model.

Your argument sounds convincing - and I have no doubt this is at least part of the explanation for low savings rates. But the reader - and certainly other economists - should be free to agree or disagree with your particular interpretation, and to offer alternatives. Indeed alternative explanations of low savings rates have been offered by people who start with a different model or world view and make a different interpretation of the available evidence.

This is how good science should work. It is always up for grabs.


No comments:

Post a Comment