A recent presentation on ‘Making an impact’

Here’s a presentation I gave to a recent Government Economists’ Conference in Canberra. Like some other reflections of my book launching years (only some of which have been preserved for posterity),1 it tries to describe how I go about thinking about economics.

And the thing is, I don’t really know anyone who describes their own approach similarly. Most of the people who are unsatisfied with economics as it is, and that certainly describes me, want some new paradigm to take hold. I guess I could say the same, but only by saying that the paradigm change I want is some self-reflectiveness of the discipline and an ability to get the best out of the paradigms available to it. As I intimate with my use of the image of the plane with feathered wings, a discipline like economics which cannot really mark its knowledge much to market – where falsifiction is mostly only available to prove the obvious – one of the greatest enemies is impatience. The hankering for a new paradigm for the outsiders is like the hankering for the next bit of economic theory from the insiders.

In my experience, most of the good economists can do comes from patiently looking at things, asking people on the scene and trying to find productive ways of describing the situation and finding ways to improve it. Hence my little man with the magnifying glass and the chart suggesting that ‘doing economics’ in a professional capacity is and should be mostly the act of applying ideas. There’s plenty of different ways quite simple ideas can be applied, and the task is to find a principled and productive way to do so rather than just turn up, announce that you’ve got your “economists’ hat on” (what’s with it with these hats all of a sudden?) and then uttering some econo-robo-babble like “it’s all about supply and demand” it’s all about the “incentives”. It’s not that those ideas shouldn’t be used, but, like the idea of putting wings on a plane, they’re the very beginning of the search for insight, not the end.

  1. I know you’ll be looking for book launches at this stage, so here are two.
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2 Responses to A recent presentation on ‘Making an impact’

  1. Matt C says:

    Hi Nicholas,
    I think the change you describe wanting to see in the discipline (“ the paradigm change I want is some self-reflectiveness of the discipline and an ability to get the best out of the paradigms available to it”) is very similar to what Dani Rodrik calls for in his book Economics Rules.

    I’d be interested in whether you’ve read that book, and if so how your view differs from the one he advances (if at all).

  2. Nicholas Gruen says:

    I like Rodrik’s work and in fact commented in my response to Paul Krugman that he seemed to be the economist with something to say about the subjects that Krugman’s New Trade Theory was supposed to shed light on.

    However I don’t think of Rodrik as particularly imaginative in the way in which he applies economic ideas or as particularly self-reflective. Just a good economist who’s not weighed down by the idiocies of slavish adoption of neoclassical methodological dogma. He’s a sensible eclectic economist so full marks to him for that.

    However there are large aspects of economic life that are barely dealt with in orthodox economics which it maddens me are largely marginalised from mainstream economic attention. I’ve tried to explore quite a few of them – I mentioned some of them in the lecture and there’s a summary of some of them in the links in this piece.

    There are no doubt plenty others that languish. For instance, the importance of employee morale in firm productivity is something of huge significance to managers of firms. But economics only deals with the subject crudely because the current bundle of methodological tools and instincts in economics don’t give you much purchase on the subject. The same can be said for questions of delivery of programs. There’s much more to delivering programs than what is contained in RCTs (as valuable as they can sometimes be), but RCTs get all the attention because they fit into the scientistic protocols of the discipline, whereas all the other things you need to deliver high impact services are much harder to treat using those tools.

    I think the tools of economics should be determined from its subject matter, rather than vice versa as is the case now.

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