Nobel winner Paul Romer on the backwardness of economics and economists’ misleading use of math

A fresh Nobel Prize laureate in economic sciences Paul Romer published three years ago an interesting short paper “Mathiness in the Theory of Economic Growth”. His main assertion (which granted him with colleagues’ reactions such as “don’t make waves“) was that economists tend to deliberately use math in misleading ways:

“The style that I am calling mathiness lets [economics’] academic politics masquerade as science. Like mathematical theory, mathiness uses a mixture of words and symbols, but instead of making tight links, it leaves ample room for slippage between statements in natural versus formal language and between statements with theoretical as opposed to empirical content. (p. 89)
Mathiness could do permanent damage because it takes costly effort to distinguish mathiness from mathematical theory… The market for mathematical theory will collapse. Only mathiness will be left. It will be worth little, but cheap to produce, so it might survive as entertainment. Economists have a collective stake in flushing mathiness out into the open.” (Romer 2015: 90)

This reminded me three beautifully clever and witty quotes by Joan RobinsonRobert Heilbroner and Paul Samuelson.
Romer, however, went on to “make waves” and air his discontent with economics. In 2016 he gave a lecture titled “The Trouble with Macroeconomics“, whose abstract states that: 

“For more than three decades, macroeconomics has gone backwards. The treatment of identification now is no more credible than in the early 1970s but escapes challenge because it is so much more opaque. Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as “tight monetary policy can cause a recession.” Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by the action that any person takes. A parallel with string theory from physics hints at a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth.”

Romer concludes his lecture, stressing that:

“The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error.”

Mathiness in the Theory of Economic Growth - Paul Romer

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R.I.P. James March — “Success”

James G. March

James G. March (1928-2018)

James G. March — a distinguished social scientist, great master of organisational and institutional theory, inspiring and towering intellectual, wonderful man, has passed away. 
His voluminous, cross-generational, multi-topical, interdisciplinary, exceptionally influential scholarship does not need presentation — which is certainly the best presentation one could deserve.
But only a few know that beside his tremendous academic career (by the way, he continued to publish insightful and illuminating papers until his last days), March was also an accomplished poet. Josef Chytry has an interesting essay on March’s poetic work that offers a glance and insights into his personal world and social life. 
March has occasionally written about poetry in academic journals. In “In praise of beauty” (2013) he relied on several poems, including his own, to reflect on the importance of ideas in scientific thinking:

“Beauty is as elusive as truth. Many enormously thoughtful people have tried to provide an understanding of the architecture and appreciation of beauty, and anyone who has read Aristotle is conscious of the complications of aesthetics. Appreciating the elegance and evocativeness of ideas demands a nuanced and sensitive ability to impose standards while constructing them. It is essential to experiment with new components of beauty, even while embracing old ones. Imagining, identifying, reconstructing, and celebrating an aesthetic of ideas about organizations is an unending project… The scholar who seeks beauty in ideas, despite the unbearable lightness of the search—or perhaps because of it—affirms an essential element of humanity.”

In “Poetry and the Rhetoric of Management: Easter 1916” (2006) he mulled over the role of rhetoric in framing views of reality: “The rhetoric of management is a rhetoric of decisiveness, certainty, and clarity.” Poetry, in contrast, is “an exploration of ambivalence and paradox, of the possibility of feeling simultaneous sentiments that seem contradictory, of living in multiple worlds and experiencing multiple feelings, and of recognizing the role of ugliness in the creation of beauty.”

“Success” by James G. March

No one needs him
after he’s gone.
No one who stays
depends on him,
if he has done it right;
No one asks
why flowers grow, 
or how a summer ends,
or notices long
that he has gone, quietly
into the dark.

March, James G. 1980. Pleasures of the Process. London: Poets’ & Painters’ Press. (p. 98)

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Central Banks, Technocratic Power, and the Fear of Democracy

Photo Shape Editor: https://www.tuxpi.com/photo-effects/shape-toolJacqueline Best has an interesting new article that starts with catchy and provocative analogy and then presents thought-provoking discussion and arguments:

What do border guards and central bankers have in common? Both operate, on a day-to-day basis, in political spaces exempt from many of the norms of liberal democratic politics and yet have the power to define and constrain them. In order to understand the role of such routine suspensions in the norms of liberal politics, we need to move beyond analyses that focus narrowly on security exceptionalism or emergency-management and pay attention to the practices of technocratic exceptionalism. Drawing on Foucault’s lectures on biopolitics, I examine the ways in which economic theory and practice has sought to resolve some of the central tensions in liberalism by protecting the market from too much democracy—a kind of exceptionalism exemplified by the doctrine of central bank independence.”

In the course of the paper Best infers that:

“[Ordoliberal and neoliberal economists’] theories retain a rather conservative skepticism about the democratic process… Through their efforts, pockets of technocratic exceptionalism have been integrated into the rhythm of everyday political-economic life, suspending democratic oversight over certain economic decisions.”

Open access to this worth-reading paper: Best, Jacqueline. 2018. “Technocratic Exceptionalism: Monetary Policy and the Fear of Democracy.” International Political Sociology https://doi.org/10.1093/ips/oly017

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B&B: Herbert Marcuse // The Adjunct Crisis // Against Capitalist Orthodoxy // Gender and finance // History of taxing the rich // (Im)mobility in the rural America // Inventing Thanksgiving

This time, especially worth reading  and sharing articles:

> Herbert Marcuse on how the Frankfurt School reevaluated Marxism following the failure of crises to destroy capitalism, the philosophical roots of the student rebellions of the 1960s, and more — in a 1977 interesting video interview with Bryan Magee

> The adjunctification of the Professorial Class. The biggest problem with organizing around labor issues in academia is that academics are loath to see themselves as labourers; but intellectual work and teaching are labour — by Nair Yasmin

> The fundamental problems of capitalism are: weak and unstable growth; stagnant living standards and rising inequality; and environmental risk. Which economic ideas can successfully tackle these challenges today? — by Michael Jacobs and Mariana Mazzucato 

> Gender power relations and financial governance: reflections on the position of women within broader class struggles regarding finance and money in the history of the modern state — Adrienne Roberts elaborates on Samuel Knafo’s The Making of Modern Finance

> Analyzing two centuries’ history of progressive taxation in the US, Canada and Europe. Christopher May reviews Taxing the Rich: A History of Fiscal Fairness in the United States and Europe, by Kenneth Scheve and David Stasavag

> Moving no longer means social mobility; staying no longer means immobility. As America’s rural communities stagnate, what can we learn from one that hasn’t? — by Larissa MacFarquar

> Commercial invention of tradition: How businesses and advertising shaped Thanksgiving as we know it — by Samantha N. N. Cross

economic sociology

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Economics as Religion

economics

COME WORSHIP WITH US “A LESSON IN ECONOMICS”
(Photo courtesy of  Jodi Beggs – Everglades, Florida, USA, 2013)

I rest my case 😉 

Or, at least, Max Weber could be assigned to teach it… 🙂  

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The Melodramatic Side of Political Economy

Oscar Wilde

Miss Prism: “Cecily, you will read your Political Economy in my absence. The chapter on the fall of the Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side.
Cecily [Picks up books and throws them back on table]: 
Horrid Political Economy!…

😏

(The Importance of Being Earnest, Oscar Wilde, 1895)

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Sociology Journals and Network Proprieties of the Matthew Effect

by Luca Carbone*

Science is a political field. As Bourdieu peremptorily said “the scientific field is the locus of a competitive struggle, in which the specific issue at stake is the monopoly of scientific authority (1975: 19).
Shifting a little the focus, sociologist Robert Merton tackled in his seminal Science article (1968) the issue of how this authority is acquired looking at the “ways in which certain psychosocial processes affect the allocation of rewards to scientists for their contributions” (p 56). These processes are not only crucial for the ways ideas and findings spread in the scientific community, but are also the product of individual and structural characteristics of the system in which scientific practices are embedded in. The main point in Merton’s article was showing that a basic mechanism through which scientists acquire credits for their work depends on the class system “based on differential life-chances which locates scientists in differing positions within the opportunity structure of science” (p. 57). This is the Matthew effect, for which “eminent scientists get disproportionately great credit for their contributions” (p. 57).
Using bibliometrics data, I have explored one of the possible ways in which this phenomenon unfolds, looking at the citation patterns that sociological journals followed in 2017.
Table 1 shows the 26 journals, selected among those common in three web archives (Scimago, Scopus and Incites), that constitute the nodes in the network. The edges could be conceptualized as the number of times in 2017 journal A has cited an article published in journal B in all the possible years in which journal B could have published an article. Nodes have different weights, computed as linear sum of the indicators used to quantify the impact of a journal (this choice is due to the intrinsic limits of the Impact Factor (IF), as presented by Larivière and Sugimoto (2018)but also due to the consideration that these metrics measure different aspects of a journal), and edges have different sizes (according to the number of times each journal cites the others).
Journal in the network
Looking at the characteristics of this network at the nodes level, three concepts are particularly important: degree, betweenness, and eigen centrality. Overall, most of the nodes have a degree centrality above 20 (on a scale up to 35), which means that journals often have links with many other journals; secondly, those in the very center of the graph, with a higher degree centrality and hence more connected with the overall network, are in general those journals with a higher impact.
Another important nodes’ feature is betweenness centrality, which indicates on how many paths between other nodes each node is positioned (measuring how much information they are able to gather). One journal in particular, Social Science Research, places itself in between a great variety of patterns. This means that publishing in that journal allows the authors to be in between other journals’ patterns, both in terms of citing, they cite more often other journals, and in terms of being cited, this journal is cited by a more diverse set of journals. The rest of the network is consistently at the edge, indicating a low overall level of betweenness centrality. Figure 1 shows the distribution of journals in terms of betweenness centrality.

 

Betweenness Centrality

Figure 1: Betweenness Centrality. The more yellow the node, the higher the weight; the closer the node to the center, the higher its betweenness centrality (i.e. advantage in acquiring information).

To have an idea about the journals’ prestige also in terms of citations (and not only weights), the concept of eigencentrality is particularly helpful. It describes the degree of centrality of each node, taking into account the centrality of their neighbors. In this network, the most important journals in terms of weight have also a better position in terms of visibility. In fact, the nodes at the center of the graph are mostly light and closer to the yellow part (indicating a higher weight). This is shown in Figure 2.

Eigencentrality

Figure 2: Eigencentrality. The more yellow the node, the higher the weight; the closer the node to the center, the higher its eigenvector centrality (i.e. the more central neighbors that node has).

Because this is a direct network, it is important to evaluate which ties are better able to spread the information around the network, for which two measures are particularly explicative, authority and hub. An authority is a node with many other nodes linking to it, and Figure 3 shows the distribution of authorities in this graph as nodes’ size. As shown for the nodes, most of the authorities are high-ranking journals.

Authorities

Figure 3: Authorities. The bigger the node, the higher the authority (i.e. the higher the number of incoming links by good hubs); the thicker the link, the higher the n° of citations

The second concept, that of hub, refers to the ability of one node to pointing to many authorities, allowing in this way a trustworthy selection of the information it transmits. Translating this concept from the information theory to citation patterns, good hubs are journals that cite other journals considered as good authorities due to the impact of their works. Figure 4 shows that good authorities are also good hubs. American Sociological Review, American Journal of Sociology, Social Forces, American Behavioral Scientist, Social Science Research are among the most impactful journals, and always among the top authorities and top hubs.

hubs

Figure 4: Hubs. The bigger the node, the larger the number of citations to authorities; the thicker the link, the higher the n° of citations

An interesting fact emerges when the authority and hub graphs are compared. One journal, in particular, pays a high wage in being in this network, namely European Sociological Reiview. In 2017 it has received 0 citations from the other journals (indeed it is at the outskirt of the authorities’ network), but it figures among the strongest hubs. This means that not only high-ranking journals constitute an impermeable clique, but they are also supported by other journals which do not gain nothing in exchange.
Borrowing from recent works on web dynamics on social networks such as Facebookthese results could suggest the existence of an echo-chamber effect, where certain kind of information continuously circulate within close circles. And this effect could be conceived as one instance in which the Matthew Effect continuously reproduce itself.
Additional hints in this direction are provided looking at the whole network. Figure 4 shows the cliques in the network. This concept indicates particular subgroups in the network in which nodes cite each other more often than with other nodes. Three major cliques for this network are detected, mostly overlapping except for two nodes in each clique. To have a view of which journals belong to which cliques, Figure 5 shows two of the three major cliques. From this plot, it could be assessed that most of the high ranked journals (American Sociological Review, American Journal of Sociology, Social Forces, American Behavioral Scientist, Social Network, Sociology of Education) belong to both the cliques, indicating once more some evidence of an echo-chamber effect.

Cliques

Figure 5: Cliques. The bigger the node, the higher the weight; the thicker the link, the higher the n° of citations.

These analyses have depicted a fairly well connected network of journals in the field of sociology, with some evidence that more impactful journals maintain their weight also because information resonate within circles of mutual reinforcement (echo-chamber effect). This study, though, addresses the topic of the rewarding system using a single year of reference. Dynamic networks should be employed to further deepen the struggles intrinsic to the political field of science.
—————————
Luca Carbone is Research Master student in Sociology at Tilburg University, NL. His research interests lie at the intersection between historical and cultural sociology, employing social network analysis, archival research, and scientometrics tools to study the many facets with which science and society bicker.

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B&B: Gendered economics // Social drinking // Competition amok // Neoliberal beliefs vs. neoliberal reality // Do protests work? // Business’ counter-mobilization // Pro-poor market

This time, especially worth reading  and sharing articles:

Women economists are forced to conform to research interests and publishing habits of male economists. Gender discrimination in economics has various facets — by Giulia Zacchia

> Social drinking: How one hundred years ago, Britain nationalized hundreds of pubs and invented a better drinking culture — by Phil Mellows

Neoliberalism perceives society-as-a-whole as one big competitive arena. How did competition and competitiveness become justifiable and acceptable — by Will Davies

Neoliberal beliefs vs. neoliberal reality: Inequality is getting worse, but the percent of people across the world who say that their society is a meritocracy is increasing — by Jonathan J.B. Mijs

Do protests work? Is ‘folk politics’ of marches, petitions, and strikes more habit than solution, and a distraction from the structural nature of problems? — by Nathan Heller

Protest culture and business’s counter-mobilization in 1960s–80s: The personal, the political and the profitable — by Benjamin C. Waterhouse

Value chains for development: Pro-poor market interventions and the moral dilemmas they bring up for the the organisations implementing them and for the communities impacted by them — by Dena Freeman

neolibaralism inequality

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Did Neoliberalism and Austerity Cause Brexit? Yes.

While the Brexit process is underway and UK politicians are tearing themselves apart over this overwhelmingly and multidimensionally complicated  issue, an economics professor from Warwick University Thiemo Fetzer provides ample and comprehensive evidence that the austerity-induced withdrawal of the welfare state brought about by the Conservative-led coalition government from late 2010 onwards are key to understanding how pressures to hold an EU referendum built up and why the Leave side won.
In his new research paper “Did Austerity Cause Brexit?” Fetzer convincingly shows
and asserts that various welfare cuts and neoliberal reforms (such as the abolishment of council tax benefit, the so-called ‘bedroom-tax’, and the squeeze of disability living allowance) have been a strong driving factor behind the growing support for the populist Ukip party in the wake of the EU referendum, contributed to the development of broader anti-establishment preferences and are strongly associated with popular support for Brexit.
See the abstract of this very interesting, important, well-researched and well-written paper, and also find below an open-access link to the paper itself:

“This paper shows that the rise of popular support for the UK Independence Party (UKIP), as the single most important correlate of the subsequent Leave vote in the 2016 European Union (EU) referendum, along with broader measures of political dissatisfaction, are strongly and causally associated with an individual’s or an area’s exposure to austerity since 2010. In addition to exploiting data from the population of all electoral contests in the UK since 2000, I leverage detailed individual level panel data allowing me to exploit within-individual variation in exposure to specific rules-based welfare reforms as well as broader measures of political preferences. The results suggest that the EU referendum could have resulted in a Remain victory had it not been for a range of austerity-induced welfare reforms. These reforms activated existing economic grievances. Further, auxiliary results suggest that the underlying economic grievances have broader origins than what the current literature on Brexit suggests. Up until 2010, the UK’s welfare state evened out growing income differences across the skill divide through transfer payments. This pattern markedly stops from 2010 onwards as austerity started to bite.”  

Neoliberalism caused Brexit

Fetzer, Thiemo. 2018. “Did Austerity Cause Brexit?” Centre for Competitive Advantage in the Global Economy’s working paper series, Department of Economics, University of Warwick.

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C. Wright Mills on Knowledge, Power, and the Moral Duty of the Intellectual

An eminent and brilliant sociologist C. Wright Mills (1916-1962) was deeply concerned with the responsibilities of social scientists in the post-World War II (American) society. Therefore he advocated for engagement of intellectuals in public life in contrast to merely conducting distant observations. Mills’s research and writings had a significant impact on the Left and social movements of the 1960s.

“As a type of social man, the intellectual does not have any one political direction, but the work of any man of knowledge, if he is the genuine article, does have a distinct kind of political relevance: his politics, in the first instance, are the politics of truth, for his job is the maintenance of an adequate definition of reality. In so far as he is politically adroit, the main tenet of this politics is to find out as much of the truth as he can, and to tell it to the right people, at the right time, and in the right way. Or, stated negatively: to deny publicly what he knows to be false, whenever it appears in the assertions of no matter whom; and whether it be a direct lie or a lie by omission, whether it be by virtue of official secret or an honest error. The intellectual ought to be the moral conscience of his society at least with reference to the value of truth, for in the defining instance, that is his politics. And he ought also to be a man absorbed in the attempt to know what is real and unreal.” (1967: 611)

Mills, C. Wright. 1963. “On Knowledge and Power.” Pp. 599-614 in Power, Politics and People: the Collected Essays of C. Wright Mills, edited by Irving Louis Horowitz. Oxford University Press.

C. Wright Mills

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