Six signs you’re reading good criticism of economics


Jason Collins


October 29, 2013

After reading Chris Auld’s 18 signs you’re reading bad criticism of economics (I agree with most, although by viewing them as “signs” with exceptions), I was thinking about what signs someone should someone look for in a decent critique. So, here are my thoughts. Some are twists on Auld’s points, or could easily be turned into additional reasons that a criticism is likely bad, but they’re a useful initial filter.

1. The criticism is by an economist

There are a lot of exceptions to this rule in both directions (see Auld’s sign #18). Some of the best and most groundbreaking critiques of particular areas of economics have come from outside (just look at the list of Economics Nobel winners who aren’t economists). But as an initial sign, knowing whether the critic is an economist does a pretty good job, particularly for any screed that declares “here’s what wrong in economics”. There simply seems to be a base level of knowledge of economics required to give a decent critique. That knowledge is so rare outside of economics.

Take the common critique that all economists assume that people are self-interested rational automatons. There is a mountain of work in economics that relaxes this assumption, and most non-economists (and a few economists) have almost no awareness of it.

And sorry economists, this sign also works the other way.  There have been some great economic analyses of other fields, but if you’re reading an economic critique of another academic field - “if only they were more statistically rigorous like us” - there’s a good chance it’s breaching the equivalent 18 signs for that field.

2. They know the difference between academic economists, economic consultants, business, bureaucrats and politicians

When a criticism of economics actually identifies work of an academic economist and then seeks to pull it apart, that’s normally a good sign. If they quote Alan Greenspan, Ron Paul, Ayn Rand, a random McKinsey consultant or Jamie Dimon before tearing apart the current state of economics, its unlikely they understand the current state of economics.

Of course, if the critic does follow this rule, there is a good chance that the critique is not actually of economics but rather of some hack’s use of economics for their particular means. “Our stadium will produce 20,000 jobs!” We don’t hold evolutionary biologists responsible for eugenics do we?

3. They distinguish “good for business” and “good economics”

What is good for (existing) business is not necessarily good economic policy. There aren’t many economists who are happy about how the major financial players in the GFC emerged relatively unscathed. And conversely, opposing certain types of banking regulation does not mean that an economist simply wants to protect the banks. What’s good for business and good economics may align, but sometimes it doesn’t.

When an economic critique can distinguish between the two, they tend to do a better job at addressing the underlying argument made by the economist. The assumption that the economist is a “corporate shill” is never a good start for a rational debate (even if they are a shill).

4. They criticise a particular, clearly defined area or use of economics

Economics is full of ideas and sub-fields that could do with a good beating. A critique that takes on a particular idea or field has a chance of hitting on the core issues. Believe that economists should be better macroeconomic forecasters? Take on the economists who research macroeconomic forecasting, point out what is wrong with their approach and suggest how it could be improved. Don’t expand a single issue to all of economics, unless you have a coherent reason as to why the failure of macroeconomic forecasters implies larger problems (as John Quiggin tries to do).

Similarly, there is a big difference between generally criticising economics for the use of rational actors in a model, and criticising an economist using rational actors in a particular model or context. Much of the time, a rational self-interested actor is a simple assumption that does a good job. However, there are some contexts where it is inappropriate and should be called as such.

5. They criticise a specific economist

This is a twist of sign 4. Of course, if that person happens to be Adam Smith, Friedrich Hayek or Milton Friedman, then this sign no longer applies. Chances are that they’ll go on to breach sign 4 by implying that economics is built purely on the back of the alleged problem child they have identified (and likely misinterpreted and possibly never even read).

 6. They recognise that economics and values cannot be untangled, no matter who is doing the analysis

Economics draws heat as it deals with areas where people have strong opinions, regardless of whether they are an economist. And economists can be biased. We can push our favoured theories while ignoring evidence to the contrary, always supporting “our team”. But to claim that “if only evolutionary biologists or anthropologists or physicists were pulling the levers we’d hit on the rights answers” suggests a lack  of self-awareness (which is unfortunately also lacking for many economists).

If the above signs are present, it’s more likely to be a coherent critique that will draw an interesting response instead of turning into a higher-level flame war that these types of discussion usually trigger. And of course, there is the possibility that you’ll get a poor defence from the economist, but the signs of a poor defence will have to be the subject of another list (Unlearningecon has put together a list that could serve this purpose, of which I’d agree with around two-thirds if I read them sympathetically and as “signs”).

Having said the above, it pays to be humble. One day one of these screed writers might trigger the overthrow a dominant economic paradigm from outside, and people will laugh at what we today call economics. It’s worth looking past the signs that you are reading a bad criticism to see if there might be a charitable way of reading the argument and taking it on board.