29 August 2007

Another kind of pseudoscience

Imagine an economy in which the following hold true: (a) it is ruled by a dictator who has unlimited powers of intervention, (b) this dictator likes to think of himself as maximising the welfare of his society, (c) he thinks many market participants have some kind of bias (e.g. sexism) which he believes results in a suboptimal economic outcome, (d) he wants to know: how much of society’s resources should be allocated to fighting bias?

Now clearly the answer, given those assumptions, is going to be “some”, with the details depending on the benefit versus cost of fighting bias, which will probably exhibit diminishing returns. Any more specific answer will be sensitive to the precise parameters, in ways which are likely to be fairly predictable. (E.g. the longer it takes to shift bias, and the more impatient the average person is, the less we should devote to fighting it.)

So you might think that mathematicising the problem is not going to prove particularly illuminating. However, this is to misunderstand the role of modern academia, which is not to illuminate but to provide an ersatz product that will conceal the absence of genuinely progressive intellectual activity. This object is achieved by demonstrating technical expertise in a way which is difficult to criticise by outsiders and which also provides, where possible, incidental reinforcement for the prevailing ideology.

Here is how a trained economist (1) would nowadays be expected to present the above problem:

Now this looks very clever. And anyone except another trained economist would find it difficult to recognise that the mathematics does not really add much. This model, which is fairly typical, suffers from several flaws:
a) It does not really contribute anything to understanding the problem.
b) The conclusions it yields cannot go beyond what could be ascertained by non-mathematical logic.
c) It conceals its most crucial assumptions (2), e.g.
- that individuals are homogeneous,
- that a meaningful ‘welfare function’ can be constructed as a proxy for an aggregate ‘good of society’,
- the presupposition of a 'benevolent dictator',
- and the idea that the choices of an exogenous welfare-maximiser shed light on what is desirable in practice for a real economy.

As someone who was on the inside of academic economics not so long ago, I can confirm that much of contemporary economics is like this. And I suspect many other areas of social science suffer from similar pseudo-scientification. Now wouldn't it be interesting if Professor Dawkins had a go at that?

(1) Although the author of this model appears to be a young economics graduate — whom I certainly do not mean to single out for criticism — his model is a variation on a fairly standard workhorse of economics 'research'.
(2) When I say the most important assumptions are concealed, I don't mean specifically in the context of the blog post from which this model is taken, which I realise is not intended to be a full-blown academic contribution. Nevertheless, the assumptions I list are ones which are typically not stressed and heavily signposted (as they should be) in papers that use such models.

Update: trained economist Gabriel replies.