Why Economics Needs Philosophy. Julian Reiss

Transcription

1 Why Economics Needs Philosophy Julian Reiss

2 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, downturns in stock markets and numerous evictions, foreclosures and prolonged vacancies in the housing market around the world and of course a global recession Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

3 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, downturns in stock markets and numerous evictions, foreclosures and prolonged vacancies in the housing market around the world and of course a global recession Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

4 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted Last year, everything the came collapse apart. of large financial institutions, the bailout Few of economists banks saw by our national current crisis governments, coming, but this predictive downturns failure in stock was the least of the field s problems. More important was the profession s markets blindness and to numerous the very possibility evictions, of catastrophic foreclosures failures in a market and prolonged economy. vacancies in the housing market around the world and of Paul Krugman: How Did Economists Get It So Wrong? course The a New global York Times, recession September 2, 2009 Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

5 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, downturns in stock markets and numerous evictions, foreclosures and prolonged vacancies in the housing market around the world and of course a global recession Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

6 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, downturns in stock markets and numerous evictions, foreclosures and prolonged vacancies in the housing market around the world and of course a global recession Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

7 The financial crisis This crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, downturns in stock markets and numerous evictions, foreclosures and prolonged vacancies in the housing market around the world and of course a global recession Interesting for us: many have blamed the crisis on economics, economists and the training future economists receive in business schools

8 A Particularly Embarrassing Story Some research results by Harvard economics Carmen Reinhart and Kenneth Rogoff were read as If Public debt/gdp > 90%, bad things will happen E.g., 2010 paper Amherst grad student Thomas Hernon tried to replicate these results and couldn t Why? Reinhart and Rogoff made a silly coding error, highly dubious methodological choices and analysed data selectively This shows that there are problems with respect to economics theoretical foundations (where is the theory that supports the 90% rule?) methodological foundations (how do we know if R&R were justified?) ethical foundations (do R&R have the requisite epistemic integrity? should you publish results that can have dramatic political etc. effects without a warning?)

9 A Particularly Embarrassing Story Some research results by Harvard economics Carmen Reinhart and Kenneth Rogoff were read as If Public debt/gdp > 90%, bad things will happen E.g., 2010 paper Amherst grad student Thomas Hernon tried to replicate these results and couldn t Why? Reinhart and Rogoff made a silly coding error, highly dubious methodological choices and analysed data selectively This shows that there are problems with respect to economics theoretical foundations (where is the theory that supports the 90% rule?) methodological foundations (how do we know if R&R were justified?) ethical foundations (do R&R have the requisite epistemic integrity? should you publish results that can have dramatic political etc. effects without a warning?)

10 A Particularly Embarrassing Story Some research results by Harvard economics Carmen Reinhart and Kenneth Rogoff were read as If Public debt/gdp > 90%, bad things will happen E.g., 2010 paper Amherst grad student Thomas Hernon tried to replicate these results and couldn t Why? Reinhart and Rogoff made a silly coding error, highly dubious methodological choices and analysed data selectively This shows that there are problems with respect to economics theoretical foundations (where is the theory that supports the 90% rule?) methodological foundations (how do we know if R&R were justified?) ethical foundations (do R&R have the requisite epistemic integrity? should you publish results that can have dramatic political etc. effects without a warning?)

11 Economics in Crisis? While the Financial Crisis (and the ensuing European Sovereign Debt Crisis) have surely brought certain foundational problems of economics to our attention (and made newspaper headlines), it would be hard to maintain that the Crisis has pushed economics into a state of crisis This is simply because it s been in a permanent state of crisis ever since it was divorced from philosophy

12 Economics in Crisis?

13 Economics in Crisis? A short and gappy history of crises in economics:

14 Economics in Crisis? A short and gappy history of crises in economics: Richard Jones vs John Stuart Mill in mid-1800 s

15 Economics in Crisis? A short and gappy history of crises in economics: Richard Jones vs John Stuart Mill in mid-1800 s Gustav Schmoller vs Carl Menger in early 1900 s (Methodenstreit)

16 Economics in Crisis? A short and gappy history of crises in economics: Richard Jones vs John Stuart Mill in mid-1800 s Gustav Schmoller vs Carl Menger in early 1900 s (Methodenstreit) [Gustav Schmoller vs Max Weber in 1920s (Werturteilsstreit)]

17 Economics in Crisis? A short and gappy history of crises in economics: Richard Jones vs John Stuart Mill in mid-1800 s Gustav Schmoller vs Carl Menger in early 1900 s (Methodenstreit) [Gustav Schmoller vs Max Weber in 1920s (Werturteilsstreit)] Burns and Mitchell vs Tjalling Koopmans in mid-1900s ( Measurement without Theory debate)

18 Case I: Rational Choice Theory Economic theory is built on a model of rational choice Rational choice theory is a very important theoretical engine in the contexts of explanation, prediction and policy analysis Economists assume that people have preferences that are complete and transitive What that means: people can order the alternatives available to them, they can rank all of the alternatives, and in such a way that no cycles ensue

19 Case I: Rational Choice Theory But these aren t enough For empirical applications we also need Stability Invariance Both are problematic Let me focus on invariance

20 Invariance Sidney Morgenbesser

21 Invariance

22 Invariance Which pie would you like: apple or blueberry?

23 Invariance Apple!

24 Invariance I just heard that we also have cherry pie

25 Invariance Oh, in this case I d like the blueberry

26 Invariance

27 Invariance Yeah, yeah!

28 Invariance

29 Invariance There is no smoking on the subway!

30 Invariance

31 Invariance If I d let you do it, I d have to let everyone do it.

32 Invariance Who are you, Kant?

33 Failures of Invariance

34 Failures of Invariance

35 Failures of InvarianceWould you like some tea or go home?

36 Failures of Invariance Na, I really should go home

37 Failures of Invariance

38 Failures of Invariance In fact, there s cocaine as well

39 Failures of Invariance In which case, I d love some tea!

40 Failures of Invariance

41 Failures of Invariance

42 Failures of Invariance

43 Failures of Invariance

44 Failures of Invariance

45 Failures of Invariance

46 Failures of Invariance

47 Failures of invariance: trust game Investor no transfer transfer of 10 10, 10 Trustee 0, 50 25, 25

48 Failures of invariance: trust game The second node of the game is a version of the Dictator Game But it is one thing to make some decision in a dictator game, but quite another to respond to someone who has already proved trusting reward equity/desert People do in fact choose differently 10, 10 Investor no transfer transfer of 10 Trustee 0, 50 25, 25

49 Case I: Rational Choice Theory If you look at the experimental evidence amassed in the past 50 or so years you ll find that human behaviour is exceedingly context sensitive Any factor can make any difference: Monetary incentives Information Experience Culture and social norms

50 Case I: Rational Choice Theory Upshot: we cannot make do without substantive assumptions Economists prefer a purely formal (as opposed to substantive) theory of rationality: [...] that an agent is rational from RCT s point of view does not mean that the course of action she will choose is objectively optimal. Desires do not have to align with any objective measure of goodness : I may want to risk swimming in a crocodile-infested lake; I may desire to smoke or drink even though I know it harms me. Optimality is determined by the agent s desires, not the converse. (Paternotte 2011: 307-8)

51 Case I: Rational Choice Theory In practice, substantive assumptions are of course added (e.g., dominance ) but these are either false or ad-hoc My own view is that individuals behaviour (rational or not) is an epiphenomenon of the socio-economic structure in which it appears, so economic theory should focus on the latter and not behaviour But if we must have a theory of rational choice, then it must be be one that makes substantive assumptions about behaviour and it seems to me that philosophers are in a good position to contribute to the development of such a theory (as they re experts in rationality, explanation, the nature of scientific theory...)

52 Case II: Mostly Harmless Econometrics The causal wars are currently raging in econometrics, between proponents of so-called Theory-based econometrics; and Design-based econometrics Theory based: in order to estimate the causal effect of X on Y we have to build a causal model (based on RCT!), which tells us about conditioning variables, functional form etc.

53 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

54 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

55 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

56 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

57 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

58 Case III: Mostly harmless econometrics A recent movement interested in policy analysis holds that assumptions of this kind are subjective and should be reduced to a minimum They advocate a design-based approach to econometrics: analyse well-designed (naturally occurring or randomised) experiments instead of observational data The idea seems to be: epistemic warrant should derive from design rather than ( subjective ) background assumptions

59 Case II: Mostly harmless econometrics Of course, theory-based econometricians demur: experiments introduce artifacts, answer too narrow a range of questions, designs are likely to be flawed unless based on theory... How can we arbitrate? E.g., by pointing out instances of fallacious reasoning Here I ll just mention one reasoning mistake on each side Design based: (randomised) experimentation is the gold standard of causal inference

60 Case II: Mostly Harmless Econometrics Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

61 Case II: Mostly Harmless Econometrics Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

62 Case II: Mostly Harmless Econometrics Bladibla... Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

63 Case II: Mostly Harmless Econometrics Bladibla... Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

64 Case II: Mostly Harmless Econometrics Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

65 Case II: Mostly Harmless Econometrics Philosophers such as Mill teach us what matters is that we observe the right kind of situation All causal inference proceeds by interpreting an observation on the basis of causal background knowledge Experiments are means to create situations that have the right properties for causal inference; what matters for inference is whether the situations have the right properties, not why they have them Call this generative fallacy

66 Case II: Mostly Harmless Econometrics Theory-based econometricians often argue that IV studies are only trustworthy if the IV is given by an economic model Some ambiguity what an acceptable economic model is From a causal point of view, what matters is whether the variable does have the requisite causal properties And there are at least some example that the causal structure of a situation can be given institutional and historical background knowledge Thus, how we know that the situation has the right structure (i.e., whether through a theory or not) is inessential ( epistemic fallacy )

67 Case II: Mostly Harmless Econometrics Upshot: philosophers can contribute to debates such as this by clarifying concepts, pointing out instances of fallacious reasoning and drawing attention to historical parallels (that have been solved in one way or another) Naturally, not without empirical input...

68 Case III: Facts and Values Economists are firm believers in the fact/value dichotomy In economics, it is reflected of course in the separation of positive vs normative (or welfare ) economics Consider: Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

69 Case III: Facts and Values Economists are firm believers in the fact/value dichotomy Mankiw, Greg: Macroeconomics: In economics, Here it is are reflected two statements of course in the you separation might of hear: positive vs normative (or welfare ) economics Consider: POLLY:!Minimum-wage laws cause unemployment. NORMA:! The government should raise the minimum wage. Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

70 Case III: Facts and Values Economists are firm believers in the fact/value dichotomy In economics, it is reflected of course in the separation of positive vs normative statements, (or welfare ) notice economics that Polly and Norma differ Consider: Ignoring for now whether you agree with these in what they are trying to do. Polly is speaking like a scientist: She is making a claim about how the world works. Norma is speaking like a policy adviser: She is making a claim about how she would like to change the world. Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

71 Case III: Facts and Values Economists In are general, firm believers statements in the about fact/value the world dichotomy are of two types. One type, such as Polly s, is In economics, it is reflected of course in the separation of positive vs normative (or welfare ) economics Consider: positive. Positive statements are descriptive. They make a claim about how the world is. A second type of statement, such as Norma s, is normative. Normative statements are prescriptive. They make a claim about how the world ought to be. Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

72 Case III: Facts and Values Economists are firm believers in the fact/value dichotomy how we judge their validity. We can, in principle, confirm or In economics, it is reflected of course in the separation of positive vs normative refute (or positive welfare ) statements economics by examining evidence. An Consider: A key difference between positive and normative statements is economist might evaluate Polly s statement by analyzing data on changes in minimum wages and changes in unemployment over time. By contrast, evaluating normative statements involves values as well as facts. Norma s statement cannot be judged using data alone. Deciding what is good or bad policy is not merely a matter of science. It also involves our views on ethics, religion, and political philosophy. Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

73 Case III: Facts and Values Economists are firm believers in the fact/value dichotomy In economics, it is reflected of course in the separation of positive vs normative (or welfare ) economics Consider: Scientist vs policy advisor Positive/descriptive vs normative/prescriptive How the world is vs how the world ought to be Examining evidence vs views on ethics, religion, and political philosophy That is, Science vs Non-science (= opinion, faith, sentiment, intuition?) Objective vs subjective?

74 Case III: Facts and Values The idea, then, is this: all economic statements can be divided into either of two categories: positive and normative Positive statements, concerning how the world is can be checked by considering ( objective ) evidence; testing against data and what have you Normative statements, concerning how the world ought to be cannot be so checked; they involve values as well as facts, and to evaluate them we have to consider our views on ethics, religion, and political philosophy

75 Case III: Facts and Values The idea, then, is this: all economic statements can be divided into either of two categories: positive and normative Positive statements, concerning how the world is can be checked by considering ( objective ) evidence; testing against data and what have you If we disagree about ends it is a case of thy blood or mine or live and let live... But if we disagree about means, then scientific analysis can often help us resolve our differences. If we disagree about... morality..., then there is no room for argument. Normative statements, concerning how the world ought to be cannot be so checked; they involve values as well as facts, and to evaluate them we have to consider our views on ethics, religion, and political philosophy

76 Case III: Facts and Values Differences about values are The idea, then, is this: all economic men can ultimately statements only can be divided into either of two categories: positive and normative Positive statements, concerning how the world is can be checked by considering ( objective ) evidence; testing against data and what have you differences about which fight Normative statements, concerning how the world ought to be cannot be so checked; they involve values as well as facts, and to evaluate them we have to consider our views on ethics, religion, and political philosophy

77 Case III: Facts and Values The idea, then, is this: all economic statements can be divided into either of two categories: positive and normative Positive statements, concerning how the world is can be checked by considering ( objective ) evidence; testing against data and what have you Normative statements, concerning how the world ought to be cannot be so checked; they involve values as well as facts, and to evaluate them we have to consider our views on ethics, religion, and political philosophy

78 Case III: Facts and Values

79 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny

80 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of:

81 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of: Rationality

82 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of: Rationality Concept formation

83 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of: Rationality Concept formation Modelling

84 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of: Rationality Concept formation Modelling Theory testing

85 Case III: Facts and Values Unfortunately, the strict separation into a value-free positive (factual) economics and a value-laden normative (ideational?) economics doesn t hold up to critical scrutiny Facts and values are entangled, at least in the contexts of: Rationality Concept formation Modelling Theory testing Choice of methods

86 Case III: Facts and Values Like ordinary language, economics often uses concepts that have a mixed descriptive and evaluative content: excessive risk taking, the underprivileged, culprit, subprime (?), depression, financial panic, delinquent When we use these concepts, we both describe a situation but also express approval or disapproval: A bond is a promise to pay... There was also an unrated equity tranche to provide extra safety to the investors Thick ethical concepts are indispensable in economics

87 Case III: Facts and Values

88 Case III: Facts and Values One way to try to get rid of these concepts is by operationalising them

89 Case III: Facts and Values One way to try to get rid of these concepts is by operationalising them That is, by defining them in terms of an explicit and transparent measurement procedure

90 Case III: Facts and Values One way to try to get rid of these concepts is by operationalising them That is, by defining them in terms of an explicit and transparent measurement procedure Thus, rather than saying, Banks were making active efforts to lend to the underprivileged we can call the latter poor and provide an objective measure of poverty

91 Case III: Facts and Values One way to try to get rid of these concepts is by operationalising them That is, by defining them in terms of an explicit and transparent measurement procedure Thus, rather than saying, Banks were making active efforts to lend to the underprivileged we can call the latter poor and provide an objective measure of poverty But indicators such as these involve value judgements as well: consumer price inflation

92 Case III: Facts and Values

93 Case III: Facts and Values Details of measurement procedure affect results enormously

94 Case III: Facts and Values Details of measurement procedure affect results enormously P cocoa Q cocoa P cloves Q cloves I arithmetic I geometric I harmonic I Laspeyres I Paasche ES ES % 0% -20% -13% 14%

95 Case III: Facts and Values Details of measurement procedure affect results enormously Measuring inflation by the CPI involves value judgements to a great extent 0.7% of the total 1.1% CPI overstatement of inflation estimated by the Boskin Commission were such value-based judgements

96 Case III: Facts and Values Details of measurement procedure affect results enormously Measuring inflation by the CPI involves value judgements to a great extent 0.7% of the total 1.1% CPI overstatement of inflation estimated by the Boskin Commission were such value-based judgements To measure inflation adequately, one needs background assumptions concerning:

97 Case III: Facts and Values Details of measurement procedure affect results enormously Measuring inflation by the CPI involves value judgements to a great extent 0.7% of the total 1.1% CPI overstatement of inflation estimated by the Boskin Commission were such value-based judgements To measure inflation adequately, one needs background assumptions concerning: facts (e.g., how do actual consumers react to relative price changes?)

98 Case III: Facts and Values Details of measurement procedure affect results enormously Measuring inflation by the CPI involves value judgements to a great extent 0.7% of the total 1.1% CPI overstatement of inflation estimated by the Boskin Commission were such value-based judgements To measure inflation adequately, one needs background assumptions concerning: facts (e.g., how do actual consumers react to relative price changes?) values (e.g., does this change constitute a genuine quality change? Is that exchange fair?)

99 Case III: Facts and Values Details of measurement procedure affect results enormously Measuring inflation by the CPI involves value judgements to a great extent 0.7% of the total 1.1% CPI overstatement of inflation estimated by the Boskin Commission were such value-based judgements To measure inflation adequately, one needs background assumptions concerning: facts (e.g., how do actual consumers react to relative price changes?) values (e.g., does this change constitute a genuine quality change? Is that exchange fair?) purposes (e.g., whose cost of living are we measuring?)

100 Case III: Facts and Values Value judgements in measuring unemployment: How much effort does someone have to put into work search in order to count as unemployed? Who can count as unemployed? What kind of job does one have to accept? And in measuring GDP: How do we evaluate government-provided goods and services? How the black economy? How leisure? What do we do about externalities? Are market evaluations fair? And philosophers might help to get the values sorted?

101 Conclusions

102 Conclusions Let me end with an analysis, a recommendation and a prediction

103 Conclusions Let me end with an analysis, a recommendation and a prediction Analysis: those on the wrong side of the debates have the honourable intention to make economics an objective science but they have the concept of objectivity wrong (objective = mathematised, free from background assumptions, value-free)

104 Conclusions Let me end with an analysis, a recommendation and a prediction Analysis: those on the wrong side of the debates have the honourable intention to make economics an objective science but they have the concept of objectivity wrong (objective = mathematised, free from background assumptions, value-free) Recommendation: objectivity is a good thing; but it s a good thing only when and to the extent that it promotes trust in science

105 Conclusions Let me end with an analysis, a recommendation and a prediction Analysis: those on the wrong side of the debates have the honourable intention to make economics an objective science but they have the concept of objectivity wrong (objective = mathematised, free from background assumptions, value-free) Recommendation: objectivity is a good thing; but it s a good thing only when and to the extent that it promotes trust in science If the Financial Crisis has shown one thing, then that many people have lost trust in the way economics is currently practised

106 Conclusions Let me end with an analysis, a recommendation and a prediction Analysis: those on the wrong side of the debates have the honourable intention to make economics an objective science but they have the concept of objectivity wrong (objective = mathematised, free from background assumptions, value-free) Recommendation: objectivity is a good thing; but it s a good thing only when and to the extent that it promotes trust in science If the Financial Crisis has shown one thing, then that many people have lost trust in the way economics is currently practised There are other ways to gain trust than to insist on more maths, fewer background assumptions and no values

107 Conclusions Let me end with an analysis, a recommendation and a prediction Analysis: those on the wrong side of the debates have the honourable intention to make economics an objective science but they have the concept of objectivity wrong (objective = mathematised, free from background assumptions, value-free) Recommendation: objectivity is a good thing; but it s a good thing only when and to the extent that it promotes trust in science If the Financial Crisis has shown one thing, then that many people have lost trust in the way economics is currently practised There are other ways to gain trust than to insist on more maths, fewer background assumptions and no values Prediction: the objectivists will win once more, and we ll have the same debate again in years