It really does matter: if economists are going to use biology as a model for their discipline, we need them to understand ours, to help improve theirs. But I’m getting ahead of myself.
By way of Brad DeLong, we stumble across this Russ Roberts piece discussing the question of what kind of science (if any) is economics. What bothered me in reading the original piece was how badly the biology was mangled (which doesn’t give me much hope for economics). Let’s go to Roberts (italics mine):
I have often said that economics, to the extent it is a science, is like biology rather than physics. Let me try to make that clearer. By biology, I do not mean the study of the human cell, which we have made a great deal of progress understanding though there is more to learn. I am thinking of biology in the sense of an ecosystem where competition and emergent order create a complex interaction of organisms and their environment. That sounds a lot like economics and of course it is. But we would never ask of biologists what the public and media ask of economists. We do not expect a biologist to forecast how many squirrels will be alive in ten years if we increase the number of trees in the United States by 20%. A biologist would laugh at you. But that is what people ask of economists all the time. Economists should be honest and say that the tasks they are often asked to do are outside the scope of economics as we know it and perhaps outside the scope of economics as it will ever be known.
Erm, no. Actually, ecologists not only answer those types of questions for regulatory purposes all the time (e.g., forestry biologists, fisheries biologists, pest control, crop management), but they routinely answer much more difficult questions, such as how does a temperature increase combined with less rainfall affect pine populations due to a change in bark beetle populations. Biologists have been running simulations (which are different from models) for a very long time.
Onto the subject of evolution (italics mine):
Is economics a science because it is like Darwinian biology? Darwinian biology is very different from the physical sciences. Like economics it is a very useful way to organize your thinking about complex phenomena. But it is not a predictive or very precise science or whatever you want to call it. Before seeing any direct fossil evidence, no biologist can tell you how long the giraffe’s neck was ten million years ago. They cannot make accurate backcasts of any precision such as the year that the forerunner of the giraffe began to lengthen its neck through natural selection. It cannot model why the giraffe’s neck isn’t longer. Darwinism, like much of economics, exploits tautological reasoning. If the fossil record is incomplete or shows no change or vast periods or the pace of change is inconsistent with the fossil record, the theory is not discarded but modified with the concept of punctuated equilibrium. Is punctuated equilibrium true? There is no real way of knowing. It is our best hypothesis given very limited data. Is it a science? Sure. But it is a science that is unlike physics. That’s OK. It is still a very useful way of organizing one’s thinking about evolution. And the “imperfection” of biology is fine unless you really want to know when the elephant got his trunk. Then you are in unscientific territory. It doesn’t matter whether our understanding of natural selection is imperfect or that we simply don’t have enough fossil data. Biologists understand the limits of their field.
Whenever you hear the term ‘Darwinian’ from anyone other than historians of science, assume the crash position; it’s going to get real ugly. There’s a lot here to correct (but we like helping!). First, evolutionary biologists do predict past states: whenever we reconstruct evolutionary histories (phylogenies), we reconstruct the ancestral past states. And if we have molecular data, we can often attach a rough estimate of time to those states. We certainly can get the order in which events occurred estimated reliably.
The part about tautology is an egregious misunderstanding of the theorem of natural selection. The theorem of natural selection is, well, a theorem because it is repeatedly supported by multiple, independent lines of evidence. The punctuated equilibrium hypothesis isn’t a theorem. It is simply a testable prediction of how the outcome of natural selection should be reflected in the fossil record. Sometimes ‘punk eek’ does fit the observed data, and sometimes it doesn’t. This is what one expect of a discipline that deals with historical contigency–as does economics. As a dissertation committee member once told me, “It all comes down to those stupid fucking natural history facts.”
But where Roberts goes off the rails is his statement that economists try to predict specifics and that’s impossible to do. I personally wouldn’t blame an economist who didn’t get the timing exactly right on the collapse of Big Shitpile. But what was disturbing was that very few economists–or at least those that interacted with the public–were saying that the combination of rapidly rising housing prices, high personal debt and stagnating wages were a disaster waiting to happen. Contrast that with how evolutionary biologists approached the problem of antibiotic resistance in bacteria. Bruce Levin and Frank Stewart published the first population genetics treatment of the evolution of resistance. In 1977. Whenever I’ve explained to evolutionary biologists who are unfamiliar with microbiology that:
1) We are bathing the world in a dilute solution of antibiotics (to use Julian Davies’ phrase);
2) Bacteria can evolve heritable resistance.
–the response has always been
Oh God, Oh God, we’re all gonna die that it’s obvious resistance would increase in a global sense. Predicting which beta-lactamase resistance allele would be seen first in a particular hospital is far more difficult (although Dan Weinreich has done some very nice work on that question). But the failure to predict the housing crisis isn’t equivalent to getting the specific adaptive change involved in a particular case of resistance wrong; it’s the equivalent of saying, “Don’t worry, be happy” because resistance won’t evolve. I’ll forgive missing the specific, but the general outlines should be correct.
Then there’s the role of historical contingency. A lot of events in biology–and I would argue economics too–are dependent on those stupid natural history facts. In this sense, biology and economics are sciences in the way that astrophysics is a science: while general theory can give you some idea of how things could work, you need to know some natural history, some facts, to understand how things do work:
…biologists aren’t only trying to derive general principles, they’re also trying to figure out how organism- or system-specific processes work.
To use a very macabre example, we are interested in a how a gun fires a bullet–and in a controlled environment, we can estimate very precisely how that bullet will travel. But, a biologist is also faced with the task of trying to figure out what happened on the grassy knoll in Dallas. The study of ballistics is necessary, but not sufficient. At the risk of completely tasteless overkill, does anyone view September 11th primarily (or even entirely) as a structural engineering problem? Those stupid natural history facts matter too. Understanding and predicting particular events also requires a knowledge of phenomena that can not be generalized and reduced to simple general theory.
(also see this)
That leads to another issue, which is that economics has to be viewed in part as a social science. Some of the phenomena that drive economic behavior really need a good sociologist, not a mathematician.
But the really key difference is that biology has accepted modes of confronting theories and, importantly, discarding them. As Paul Krugman notes, that doesn’t seem to be happening:
Yes, the old Keynesian Phillips curve was abandoned in the face of evidence. But while real business cycle theory has indeed been “invalidated by reality”, as far as I can tell it’s still going strong in freshwater departments.
The point is that while economics certainly did have some of the characteristics of a science three decades ago, you can make a good case that significant parts of the field have lost those characteristics since then.
I want to end with something Barry Eichengreen wrote:
The late twentieth century was the heyday of deductive economics. Talented and facile theorists set the intellectual agenda. Their very facility enabled them to build models with virtually any implication, which meant that policy makers could pick and choose at their convenience. Theory turned out to be too malleable, in other words, to provide reliable guidance for policy.
In contrast, the twenty-first century will be the age of inductive economics, when empiricists hold sway and advice is grounded in concrete observation of markets and their inhabitants. Work in economics, including the abstract model building in which theorists engage, will be guided more powerfully by this real-world observation. It is about time.
Should this reassure us that we can avoid another crisis? Alas, there is no such certainty. The only way of being certain that one will not fall down the stairs is to not get out of bed. But at least economists, having observed the history of accidents, will no longer recommend removing the handrail.
That sounds a lot like modern biology. Including the ‘Darwinist’ stuff.
Update: Brad DeLong has some interesting thoughts on economics as a discipline.