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Why are economists more prominent than historians?

Justin Fox recently sat down with a bunch of historians to talk about why economists had lapped them in the public debate. Fox's explanation was interesting, and so too was the historians':

One answer I offered was that economists had managed a remarkable balancing act between making the guts of their work totally incomprehensible — and thus forbiddingly impressive — to the outside world while continuing to offer reasonably straightforward conclusions. The basic form of an academic economics paper is a couple of comprehensible paragraphs at the beginning and a couple of comprehensible paragraphs at the end, with a bunch of really-hard-to-follow math or statistical analysis in the middle. An academic history paper, on the other hand, is often an uninterrupted cascade of semi-comprehensible jargon that neither impresses a lay reader nor offers any clear conclusions.

The one economist in the audience had another suggestion. Most economic work was aimed at prediction, and the world is always hungry for predictions. He added that most macroeconomic predictions are worthless (he was a microeconomist), but that doesn't seem to have damped the demand for them.

After the conference, at dinner, I heard another explanation from the historians themselves. It's that, especially in the U.S., only the tiniest minority of academic historians concern themselves anymore with matters of economic policy (or diplomacy, or war, or politics in the big-picture sense). The discipline has moved mostly to the study of identity (gender, race, etc.) and culture, ceding territory to the economists and political scientists. Yeah, yeah, there's always Niall Ferguson. But he's more the exception that proves the rule — not to mention, in the view of academic historians, a pop-culture figure who is no longer really one of them.

I've spent some time thinking about this and I think the "predictions" explanation holds a lot of weight. But I also think that the answer is partly that the public debate is substantially about what's happening with the economy. That's true when you're talking about the economy, but it's also true when you're talking about something like health care, where the majority of the discussion focused on the bill's impact on deficits and premiums and paychecks. And it'll be true when talking about financial regulation (will it reduce the availability of credit?) and mostly true when talking about cap-and-trade (will it hurt growth or my bank account?).

I think that's where some of the confusion over the eminence of economists comes into play: We seem to talk about a lot of issues in Washington, and so people miss that we're actually talking about a lot of different dimensions of one thing. But insofar as there's a problem, that's the one I'd point to: A warming earth is a problem, and so too are 50 million uninsured, but the debate is used to judging things by their aggregate impact on GDP or the deficit, and so that's how things get judged.

By Ezra Klein  |  March 31, 2010; 11:32 AM ET
Categories:  Economics  
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Comments

What about Tony Judt (who, if I remember correctly, first came in contact with "real historians" as a child listening to APJ Taylor on the Beeb)?

I think the predictions thing is right, and it's made even more powerful by the economists' ready ability to quickly explain why the prediction was wrong. Disclosure, I'm an economist.

Historians in contrast can offer informative parallels that can inform policy thinking. (here's a nice recent one: http://www.foreignaffairs.com/articles/65984/sheri-berman/from-the-sun-king-to-karzai )

Posted by: bdballard | March 31, 2010 11:43 AM | Report abuse

Another probable reason why economists carry a lot of weight is that the whole enterprise is based on the concept that resources are scarce and we need to evaluate trade offs. Many policy decisions are effectively trade offs.

A cost benefit analysis of policy, including those which are done on global warming policy options, is an economic analytical tool. It's hard to say economic thinking can't be applied to global warming or helping the uninsured.

Of course, economists only tell you what's efficient. For global warming, they'll say it costs about $X in present value terms, or X% of GDP to delay/stop global warming, whereas we have very uncertain benefits of stopping global warming per inputs from climate scientists (either averting something bad or something very bad - or possibly nothing bad at all, although I think most experts put a low weight on that last option), which the economists have to go bake into their calculations. A big negative on cost benefit analysis for climate change is that discounting means benefits to future generations count little whereas the immediate costs count a lot. This can always be adjusted by not using discounting. From there, even if the cost benefit analysis goes against global warming, we can decide to make a further trade off between our values (leaving a nice planet to posterity) and efficiency (saving money in present value terms). Most economists are well aware and okay with the fact that values sometimes trump efficiency in decision making.

At any rate, given the uncertainty surrounding climate change outcomes, and the real possibility that it will cause worse outcomes than expected (and we humans are risk averse, not risk neutral), combined with present day deadweight loss on income taxes says to me that an economic analysis of the situation would suggest cutting income taxes (or closing the deficit) and enacting a large carbon tax.

Posted by: justin84 | March 31, 2010 12:00 PM | Report abuse

This is one debate - Economists versus Historian - which has fascinated me most in recent days. Obviously I am on the side opposite of Economists considering their spectacular failures (and despite that assertion by Becker at Stanford that market economy / Chicago school is fine...) in recent years.

The problem is your theory may be sexy, mathematically beautiful but it does not reconcile with reality and is unable to make sound predictions; it is of no news. With Market oriented approach - again indeed that may be most efficient way or 'lowest information loss / entropy' way; but fallible humans can never fulfill it's potential for long time to come; what good it is?

Hence I believe Historians who all are familiar with 'human frailty' and who literally own that territory; could be more useful to us as a society. The name 'Historians' is bit misnomer here because that creates a space for another trade called 'Futurologists'. May be a discipline which seamlessly moves from History to Future would have the real significance to us and that may be the reason why 'this combination of History + Futurology' is still not popular (today's incompleteness). To that extent Sociology and Politics do predict so things are gray there is agreed.

One more point - why American Historians have moved to 'soft topics' like gender and race oriented investigations? Is it too much of Liberal & Progressive dose here? I mean what value as a society we can get from a study like 'gender dependency of ice cream preferences in New York during 1867 to 1869' (okay, I am making up that)? No wonder Conservatives want to whack Academia. If along with Literary studies, Historians have done such over dose then they are culprits here in setting the context for today's political polarization.

Posted by: umesh409 | March 31, 2010 12:03 PM | Report abuse

I think (nay, I know) that economists are perfectly capable of talking about equity along with efficiency, and many do.

Few could have predicted this, of course

http://www.youtube.com/watch?v=LZ4LApYH4P8

Posted by: bdballard | March 31, 2010 12:07 PM | Report abuse

Historians are marginalized because the US population has a collective memory of about 20 minutes. If the US population had any historical perspective, they would have realized that:
-Obama's health care plan is a centrist plan that coopted many republican ideas.
-republicans were against social security, medicare, and medicaid when they were proposed
-republicans used the same "socialist, government takeover" rhetoric on each of those programs when they were proposed.
-republicans shamelessly flip flop on cutting vs preserving medicare, depending on the political advantage at the moment.
-Bush is 90% responsible for the current the debt and deficit situation
-republicans used reconciliation about 3X as many times as democrats.
-republicans used deem and pass many times when they were in the majority
etc.
-it was the vast majority of republicans that pushed for financial regulation (although a few dems also supported this)
-The savings and loan crisis was essentially the same kind of blunder as the mortgage crisis and the current wall st crisis, deregulating an industry without knowing or trying to find out what the implications were and then not monitoring how the market adapted to the lack of rules.
-All of these deregulatory debacles happened under republican presidents
-40 years ago, middle class families only needed 1 income to support a family and now it takes 2 incomes to maintain the same living standard. (ie there has been a 50% drop in household purchasing power over that time period.)

-Bush proposed closing Gitmo and tried terrorists in federal court

-waterboarding and other forms of torture were outlawed during Reagan's term.

I could go on ad infinitum, but you get the point.

Posted by: srw3 | March 31, 2010 12:39 PM | Report abuse

Isn't this really just the ultimate outgrowth of the rise of the Chicago School? Back when I was in law school in the late '80s, we spent a lot of time talking about the "new" economic theory of the law -- the concept that everything, good, bad, or indifferent, could be boiled down to a number. Over the past 20+ years, that school has gone from "new" to "establishment," and its principles are now a core part of the Republican Party -- so central that even the Democrats have had to learn to play in that sandbox if they want to stay in the game.

So if you have internalized the basic principle that everything boils down to the numbers, then why wouldn't you pay more attention to those who claim expertise in determining and defining those numbers?

What I'll be really interested in is whether this still holds true in 20 years, now that even a significant branch of economics has recognized that people aren't always rational actors seeking to maximize efficiency.

Posted by: laura33 | March 31, 2010 12:42 PM | Report abuse

There's something attractive and reassuring about conclusions drawn from numbers, too. They seem more solid. History seems like a matter of interpretation and therefore opinion. Now, anyone that spends a little time thinking about it realizes that economics is a matter of opinion as well, indeed is probably MORE about opinion, but it nevertheless feels less so.

Posted by: roquelaure_79 | March 31, 2010 12:50 PM | Report abuse

I think ideology is too often left out. In that economist thought- by and large- is internally consistent with a certain type of free-market policies that are very popular today. And the assumptions behind them have wormed their way into even quite liberal commentators. See: http://threews.wordpress.com/2010/03/31/economists-vs-historians-round-7649/

Posted by: pwirzbi1 | March 31, 2010 12:55 PM | Report abuse

I have a theory.

Economics is about money, history is about dead people.

People care about money, but not so much about dead people.

Therefore, economists get attention, while historians do not.

Posted by: bsimon1 | March 31, 2010 1:01 PM | Report abuse

Another factor is that economics encompasses views from across the ideological spectrum, so its internal debates and the work that flows from them can resonate with political debate in the world at large. Academic history, by contrast, is by and large an ideological monoculture. It's not going to have the same impact when it's only ever got one thing to say.

Posted by: tomtildrum | March 31, 2010 1:28 PM | Report abuse

Ezra says:

"A warming earth is a problem, and so too are 50 million uninsured, but the debate is used to judging things by their aggregate impact on GDP or the deficit, and so that's how things get judged."

I don't understand your point. Are you saying that we ought not consider the economic impact of our policy choices?

Steve

Posted by: FatTriplet3 | March 31, 2010 1:35 PM | Report abuse

As a historian, dare I say that we should look at this problem historically. Economists gain a lot in the public imagination with the shift from the Cold War and Keynesian economics to neoliberalism and globalization. The market plays a MUCH bigger role in our imaginations today than it did in the 1960s, when understanding things like thirdworldism was more important, for example. The Dow Jones average has become a centerpiece to all news shows. That didn't exist before neoliberalism took hold as our reigning ideology. Unfortunately, I would say more historians predicted the economic collapse than economists.

Posted by: michiganmaine | March 31, 2010 1:37 PM | Report abuse

The course of human events is chaotic as their are too many possibilities to accurately predict. There is a continuum of minor events culminating in occasionally very significant events (the theory of sync). History supports this and can be used as a predictor of likely future events. Economics is a subset of human events hence incomplete. Therefore economic analysis techniques need to advance as mechanics did to a "quantum" theory. Resolution of the near total disagreement between fresh and salt water schools both of which have cogent arguments is necessary as part of this advance.

Posted by: BertEisenstein | March 31, 2010 1:53 PM | Report abuse

I would argue that one reason that economists lap historians on policy issues is that its in their job description.

The science of economics demands that you take a few things seriously:

1) You have to consider the trade-offs of policy decisions, who wins and who loses.
2) You have to examine and understand the incentives, both positive and perverse, that a policy creates.
3) You have to work to understand the shorter-term and longer-term effects of policy decisions.
4) You have to understand both the seen and unseen effects of policy decisions.

Any economist that doesn't look at these things when doing policy analysis is, literally, not doing her job. Because of these requirements, economists have developed effective tools for researching and understanding these effects.

As an example of all these, I would recommend that you read this article in the current issue of National Affairs on the deficit: http://nationalaffairs.com/publications/detail/america-in-the-red.

All four of the above are in full display.

Of course, an historical analysis is very helpful, even necessary. We can even do that historical analysis using the tools of economics. As an example, Aid to Family with Dependent Children was a New Deal era program that provided welfare for single mothers. Though intended to help widows with children, its policies both discouraged marriage (since marriage would make you ineligible for benefits) and encouraged childbirth. The effect was multi-generational poverty for a certain subset of the population. AFDC was effectively eliminated with Clinton's 1996 welfare reform. Very few economists and historians would dispute the incentive effects of the legislation.

Steve

Posted by: FatTriplet3 | March 31, 2010 2:05 PM | Report abuse

srw3,

Yeah we get it. You think Bush and Republicans suck.

You say, "Bush is 90% responsible for the current the debt and deficit situation".

One of those expensive Bush policies was Medicare Part D and HCR just happened to remove one of the cost control mechanisms of Part D.

At the end of the day, your man is in office and he has to play the hand he has been dealt. So I eagerly await his proposals to get the deficit under control.

Steve

Posted by: FatTriplet3 | March 31, 2010 2:16 PM | Report abuse

Steve,

You have already seen some of his proposals to get the deficit under control, and it is law: HCR. The biggest deficit reducer since the last democratic president, Bill Clinton. Now who was it that ruled in between????

Posted by: michiganmaine | March 31, 2010 2:20 PM | Report abuse

Michigan,

Do you somehow think I am a fan of Bush?

HCR will be a fiscal nightmare. Even the head of the CBO has implied that it could be a disaster (my words) because he could not make political assumptions in his analysis. And even if the budget projection beat expectations (extremely unlikely) then we still have major, enormous issues ahead. Read the National Affairs piece I pointed to earlier.

Steve

Posted by: FatTriplet3 | March 31, 2010 2:34 PM | Report abuse

This has opened a perfect window for a hack and swindler like Amity Shlaes to call herself an "economic historian" and get afforded way too much respect and authority.

Posted by: flounder2 | March 31, 2010 2:40 PM | Report abuse

I think the "economists make predictions" answer is more or less on target. As someone who studied History (technically Policy History) at the graduate level, I can say that academic historians are quite ambivalent about what their role should be (if any) in the unfolding of current events. The question is certainly debated in the field, but in a much different way than in economics where the whole point is to come up with predictive models.

As some have pointed out, however, historians can provide a great deal of perspective to modern problems - something the debate so often lacks. Some professors of history have embraced this view. (I remember attending teach-ins at my undergraduate university organized by "History professors against the Iraq War.") Others live in a more insular version of academia.

The point is, there is no consensus among historians as to what their role in modern debate should be, if any. I don't think economists operate the same way.

Posted by: jbossch | March 31, 2010 2:48 PM | Report abuse

There is confusion here about the differences between economics and history.

Economics is best understood as a model-building discipline. Models are essentially simplified versions of reality: their goal is to make sense of the world by sorting important details from unimportant ones. They should be simple, fit well with reality, and identify some sort of causal mechanism. There tends to exist a trade-off between a model's simplicity and its ability to fit well with reality (what we observe in the real world), and this is often the source of conflict: what is the optimal balance between simplicity and empirical validity? At one extreme, if we add too much complexity into our model, it may become nearly as complex as the reality it seeks to model, telling us very little about any causal relationships. Conversely, too much simplification might leave out important elements.

History, for the most part, is not interested in model-building. It is all about context and details; there is no rigorous attempt to simplify things down into a causal mechanism. Of course the best description of a rare and influential event must include idiosyncratic details, but that sort of "rich, thick" description of a single case necessarily limits the ability to generalize, compare, and most of all predict.

Posted by: UnityPolitics | March 31, 2010 2:49 PM | Report abuse

UnityPolitics is right. One big difference between the two, and I would say part of the problem at least for economics, is that economics is about simplification whereas history is about explaining and taking account of complexity. The simple stories are often the easiest to sell.

Posted by: michiganmaine | March 31, 2010 2:55 PM | Report abuse

@ FatTriplet3 : My personal feelings about bush are not the issue. I pointed out historical facts that the population either doesn't know, doesn't remember, or doesn't understand the impact of.

I noticed that you didn't provide any factual refutations of what I posted.

"At the end of the day, your man is in office and he has to play the hand he has been dealt. So I eagerly await his proposals to get the deficit under control."
1. Obama isn't my man.
2. Obama has to deal with what bush left him. Bush left him a gigantic mess, 2 mismanaged wars, historic deficits, etc.
3. It may take more than 1 congressional term to turn around 8 years of bush and 6 years of republican congressional control.
4. People are already forgetting what a tremendous failure the bush administration was, which is my point.

Posted by: srw3 | March 31, 2010 3:02 PM | Report abuse

David Brooks made the same mistake in his column about economics a few weeks ago.

http://unitypolitics.blogspot.com/

Posted by: UnityPolitics | March 31, 2010 3:04 PM | Report abuse

srw3,

I think its plausible though unlikely that history will be kinder to Bush than you are. But I agree his administration was a failure on many fronts and I agree with most of the ones you mention and could add a few of my own.

But I think that it's time to move on. Remembering Bush is a futile exercise. The past is behind us. We have to now figure out how to fix the mess that he left us.

A true visionary leader would be focused on the deficit, unemployment and on economic growth. Obama is a failure on these issues and I see no willingness by his administration to address the core issues that determine a positive outcome on these issues. Just the opposite in fact. I would contrast that with Paul Ryan who addresses these issues squarely.

Steve

Posted by: FatTriplet3 | March 31, 2010 4:13 PM | Report abuse

Whether right or wrong, a lot of Americans have an absolute disdain for any type of gender,race,sexuality,culture studies.

Maybe that is in line with your "the public debate is about the economy" point. IMO I don't think gender,race,sexuality,culture research isn't useful, but I do think that a lot of fields in liberal arts are way too concentrated in those areas, when they could probably make valid contributions to analysis of more traditional topics, as well.

Posted by: zosima | March 31, 2010 4:33 PM | Report abuse

Economists have also drawn influence simply because they're placed *in* administrations rather than being consulted *by* administrations. This has led to (a) policy debates often taking place in more economic language, and (b) economists driving their discipline more towards policy-related questions when they return to academia.

But mostly I think it's just a function of the type of questions being asked. Economic analysis simply lends itself better to a broader variety of policy-related problems than does any other discipline.

Posted by: jeffwacker | March 31, 2010 4:34 PM | Report abuse

Unity,

I agree and disagree. I would argue that the simplest models in economics tend to be the most likely to be true. So a model that says that an increase in the price of a good will decrease the demand for a good is a consistently reliable model. So much so that its embedded in a law: the law of supply and demand. A model that says that if prices are held artificially below the equilibrium level that it will stimulate demand above supply and create shortages is reliable too. This is econ 101 stuff.

But I agree that complex econometric models that use multiple regressions to determine causality or effect tend to frequently be fatally flawed. I'm Hayekian like that. People are complex and will respond to the multiple incentives in a complex system like HCR in complex and unexpected ways.

The CBO would have used multi-variate regressions in its analysis of the legislation. The CBO is full of very, very talented economists. But I am willing to be dubious about their scoring, not only because they were not allowed to analyze important aspects of the bill, but because HCR is an extremely complicated piece of legislation that effects 100's of millions of stakeholders in dozens of ways.

Of course, the CBO is aware of this so it provides a "range" of outcomes in its scoring. Based on both the constraints placed on CBO by Congress (for example, not allowing CBO to score the cost of the personal mandate or requiring it to make wildly optimistic assumptions about political realities or economic growth)and the incredible complexity of the economic models used in the scoring with such a far-reaching piece of legislation, I think it is very likely that this legislation will end up costing twice as much as CBO projects. If I am right, and I hope I'm not for the sake of my grandchildren, then we are screwed.

Steve

Posted by: FatTriplet3 | March 31, 2010 4:39 PM | Report abuse

Jeffwacker,

"Economic analysis simply lends itself better to a broader variety of policy-related problems than does any other discipline."

That's what I was trying to say, too. You just said it better! ;-)

Steve

Posted by: FatTriplet3 | March 31, 2010 4:41 PM | Report abuse

@steve: the deficit, unemployment and on economic growth. Obama is a failure on these issues

False on all counts. The stimulus while too small by 50% did create or save between 700K and 2 million jobs. Not nearly enough, but the reverse in the unemployment trends and economic output shows that his policy worked. It was only a failure in that he didn't do enough (mostly blocked by conservatives who wanted less spending). On the deficit, have you heard of counter cyclical spending during recessions? Now is not the time to reduce govt spending to balance the budget. Once the economy is growing again at a pace that is at least creating enough jobs to meet natural population growth and cut the unemployment rate slowly over time, we can start thinking about serious deficit reduction. Eventually there will have to be a combination of reducing spending as a % of gdp and raising revenues, but now is not the time. Remember 1937...

As for Ryan's plan, it is a disaster for the middle class, the medicare recipients and anyone who depends on social security or is within 20 years of retirement. It is a huge tax cut to top income earners and corporations borne on the backs of the middle class and retirees whose medicare vouchers have no chance of keeping up with the cost of health care and whose social security will be cut drastically in future years. Social security is in fact solvent now and will be until 2030 with no changes and with some minor tweaks will be solvent for the foreseeable future.

I bring up Bush because that is the direction that the republicans want to take the country again. Tax cuts and deregulation is what brought us to where we are now. Republicans have no substantive proposals that don't feature these things prominently.

If people don't remember how bad things were under bush, they might be seduced by the easy to grasp(but totally ineffective and dysfunctional) solutions that republicans propose.

Posted by: srw3 | March 31, 2010 4:47 PM | Report abuse

My blog, which I write with a bunch of historians, addresses this issue directly:

http://threews.wordpress.com/2010/03/31/economists-vs-historians-round-7649/

Here's a taste of Wiz's take:

"For what its worth, I think the issue of ideology is too often left out of these debates. And not just that historians tend to be more left-wing than economists.

From my perspective, its that decision makers- and those who like to pretend they are decision makers- are naturally drawn to disciplines that can wrap themselves up in a scientific veneer. It gives them a legitimacy and authority that others lack.

But more importantly, economic language (or what Tony Judt would call economism, the tendency to think of all things from the perspective of economic rationality) often provides people a dry detached language with which to emotionally distant themselves from morally questionable decisions. Thus a language of efficiency, of “elasticity,” and all the rest of the “really-hard-to-follow math or statistical analysis” allows people to pretend that what they are talking about is simply a math problem to be solved, rather than a political question about power and morality. “Opps… my hands are tied, the minimum wage simply can’t be raised, see this advance level calculus equation proves it.” It is a convenient tool for those shirking responsibility for their own decisions."

Posted by: weineroctopus | March 31, 2010 5:34 PM | Report abuse

srw3,

I made a reply to your comment but when I submitted it it said it needed to be reviewed by the host and it never saw the light. Maybe Ezra feels I have co-opted his blog. Can't say that I would blame him. Rather than trying to re-write, I would encourage you to read the National Journal piece I pointed to in an earlier comment. I don't think the stimulus worked at all but even I will admit its just ex-post storytelling. But its also ex-post storytelling of those that defend the stimulus. I would also recommend that you go to Greg Mankiw's blog and read the comments he made in December to The Federal Reserve Bank of Philadelphia. The post is called Comments on Fiscal Policy and was posted yesterday.

Steve

Posted by: FatTriplet3 | April 1, 2010 8:32 AM | Report abuse

So what about the fact that economists are generally in disagreement among themselves about their predictions, and most of them end up being wrong?

I think it is more a matter of intellectual shorthand. Economists feel entitled to have an opinion on everything regardless of whether they have the knowledge to base it on, and journalists are in the habit of calling the last guy who gave them an opinion on something.

The "predictions" racket doesn't explain how economists' opinions on things like educational psychology (recent NYT magazine article) or physics and chemistry (climate change) are held as valid in public discourse when they are in point of fact simply the ravings of rank amateurs with an overblown sense of importance.

Posted by: pj_camp | April 1, 2010 9:27 AM | Report abuse

Economists make predictions, true, but not in the "predict the future" sense. Prediction, in econo-speak, means: does A cause B, controlling for C, D, and E?

At the same time, nobody holds meteorologists or geologists or even medical doctors to the same standards. Who can predict the date of the next earthquake in California? What doctor can predict the timing of a patient's heart attack, except to say, "It's gonna happen soon."

Posted by: hungryinkabul | April 1, 2010 10:15 AM | Report abuse

A subset of economists enjoy writing in an accessible and entertaining way for the public and are not shy about opining on a broad range of stuff, including flaky everyday stuff. Where is the "airchair historian" or the "undercover historian"?

Posted by: afprj | April 1, 2010 12:02 PM | Report abuse

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