Economics and Ethics

Needed: An Economics for Grownups (Interview with Deirdre McCloskey at National Review)

Mark D. White

There is a terrific interview at National Review with Deirdre McCloskey regarding her new book, Bourgeois Dignity (and her previous one, The Bourgeois Virtues). My favorite part is when the interviewer asks her, "What should young people who want to study economics your way, your 'humanistic science of economics,' do?" (Emphasis mine.)

In college you got the claim that Greed is Good, and anyway people are Max U sociopaths, regardless of what all the scientific evidence gathered on the point says to the contrary. I would advise them, of course, to read my book How to Be Human*: *Though an Economist, which is advice to young economists about maintaining morale and integrity — and getting the scientific task done while retaining common sense. Beyond that, Educate thyself. Read widely, having acquired somewhere a deep knowledge of an economics of some sort. We have enough amoral idiot savants in the study of the economy. We need some fully educated humans. We need a humanomics, not more freakonomics.

Amen.

How Influential Was Mechanics in the Development of Neoclassical Economics?

Mark D. White

An interesting paper from the new issue of Journal of the History of Economic Thought (32/4, 2010):

HOW INFLUENTIAL WAS MECHANICS IN THE DEVELOPMENT OF NEOCLASSICAL ECONOMICS? A SMALL EXAMPLE OF A LARGE QUESTION

IVOR GRATTAN-GUINNESS

Abstract

It is well known that classical mechanics played a significant role in the thought of several major economists in the neoclassical tradition from the 1860s to the 1910s. Less well studied are the particular parts or features of mechanics that exercised this influence, or the depth and extent of the impact. After outlining the main traditions of mechanics and the calculus, and describing types of analogy between theories in general, I review some main pertinent features of the work of eight neoclassical economists from the 1830s to the 1910s. I argue that the influence took various forms but that in practice it was modest. Then I briefly describe a fresh set of possible influences with the development of dynamical systems in the period 1920–1950, where again the role of mechanics was limited. I end by raising a large question: does economics need some mathematics designed for its own purposes rather than that traditionally obtained by analogizing from mechanics and physics?

No More Santa Claus

Jonathan B. Wight

Do you remember what it felt like when you learned that there was no Santa Claus? Or when you began to suspect that pro wrestling was rigged?  Loss of innocence can be both joyful as well as painful.

Recently I asked my economic development student to reflect on moments of “loss of innocence.”  Going in, many students held the delightfully-naïve Santa Claus model of economic development: a rich and benevolent uncle from the north has capital and technology and can bestow presents in the form of gifts, loans, or investments that will magically transform a poor relative into a middle class citizen. 

Or, there is the equally naïve notion that economists in Washington or Cambridge can derive blackboard policies that will work as well in Bangladesh as in Bulgaria.  Dani Rodrik convincingly demolishes that quaint notion, because development is always context-dependent. 

Here are a few other “loss-of-innocence” moments:

1. International aid (whether monetary or donation of goods) does not necessarily increase economic well-being in a poor country.  A person's definition of well-being depends a lot on his/her culture. 

2. Economic development is not a mechanical process amenable to stable abstract models.  Development is an organic process, much more like biology, in which novelty-by-combination is the norm.  Hence, while biologists and economists may be able to explain past evolutionary transformations, we certainly cannot predict future ones. 

3. Not all reform policies should be implemented at the same time.  Sequencing matters, because economic development is deeply disruptive. 

4. Economic evolution is not necessarily efficient, but it is always adaptive to the needs of those who have the power to bring change.  For a perceptive discussion, see Raghuram G. Rajan and Luigi Zingales, Saving Capitalism from the Capitalists (Princeton 2004).

New book: Economics as Applied Ethics (Value Judgments in Welfare Economics)

Mark D. White

New from Palgrave is Wilfred Beckermam's Economics as Applied Ethics: Value Judgements in Welfare Economics, a detailed account of the intrinsically ethical nature of welfare economics, discussing the nature of preferences, utilitarianism, equality, happiness, and other important topics in the philosophy of normative economic analysis. Furthermore, it is written in a style appropriate for upper-level undergraduate and graduate students as well as professional economists; in this way, it may have wider appeal and impact than even Hausman and McPherson's essential survey Economic Analysis, Moral Philosophy and Public Policy and Little's classic A Critique of Welfare Economics.

And the endorsements are superlative (with one glaring exception, of course):

"This book is witty and wise, and a delight to read. It will enlighten economists – both students and teachers – and will encourage non-economists skeptical of the subject's ability to contribute to human welfare to think again." Wendy Carlin, Professor of Economics, University College London

"As more people are starting to realize, economics without ethics is dangerous, and ethics without economics is foolish. This very timely book explains why these two perspectives can and must be combined." Mark D. White, Professor in Political Science, Economics, and Philosophy, College of Staten Island/CUNY & author of Kantian Ethics and Economics: Autonomy, Dignity, and Character
   
"Wifred Beckerman's Economics as Applied Ethics: Value Judgements in Welfare Economics elucidates many of the important ethical questions that are almost always suppressed in both mainstream economics teaching texts and advanced scholarship. The book provides a productive blending of abstract theoretical discussion with applications that focus on contemporary policy debates. It should therefore appeal both to students who are excited by and seek deeper understanding of abstract ideas, and those who are impatient with abstract debate and want to see just how these ideas matter concretely in policy making." George DeMartino, Professor and Co-director of the MA program in Global Finance, Trade and Economic Integration, University of Denver 

2011 ASSA Meetings: The status of economics and economics education

Mark D. White

Still mining the depths of the preliminary program for the upcoming Allied Social Science Association meetings in Denver in early January, I present below the fold several sessions that touch on the status of economics and the teaching of economics (as before, I've omitted the names of chairs and discussants, which can found on the program):

2011 ASSA Meetings: Rationality, preferences, self-control, and choice

Mark D. White

Continuing through the preliminary program for the upcoming Allied Social Science Association meetings in Denver in early January, I present below the fold several sessions that touch on rationality, preferences, self-control, and choice (as before, I've omitted the names of chairs and discussants, which can found on the program):

2011 ASSA Meetings: Economics and religion sessions

Mark D. White

Going through the preliminary program for the upcoming Allied Social Science Association meetings in Denver in early January, I decided to highlight sessions that I found interesting for one reason or another. (See this previous post for sessions that focus on economics and ethics.)

Below the fold are several sessions that touch on economics and religion (as before, I've omitted the names of chairs and discussants, which can found on the program):

2011 ASSA Meetings: Ethics and economics sessions

Mark D. White

I went through the preliminary program for the upcoming Allied Social Science Association meetings in Denver in early January, and I thought I'd highlight sessions that I found interesting for one reason or another.

Below the fold are several sessions that touch on ethical aspects of economics (I omitted the names of chairs and discussants, which can found on the program):

MetaLawEcon: Lawyers, economists, and philosophers on legal research

Mark D. White

Thanks to Google Alerts (and a generous citation of my edited law and economics book), I found this blog post from the European Association of Law & Economics regarding a recent workshop on "meta law and economics" (or MetaLawEcon):

MetaLawEcon: a TILEC workshop on the foundations of law and economics (Friday, 26 Nov 2010, Tilburg University, The Netherlands)

Organizer: Péter Cserne (peter.cserne@uvt.nl)

When a discipline grows and gets well-established, many researchers tend to think that its foundational problems have been solved. This misperception is related to the fact that researchers often do not bother themselves with meta-level problems of their scholarship. For good or bad, they “just do it”, without much reflection on what they are doing. Although methodological self-reflection in not a panacea and rarely a full-time job, time to time it is useful to look at one’s work in a more abstract way.

Law and economics scholars are no exception. Fifty years after Coase’s The problem of social cost, law and economics seems to have become the lingua franca of US legal scholarship. Compared to the 1970s and 1980s, the discipline has become more pluralistic in its methods, more self-critical about its normative assumptions, assertions and ambitions, and it is increasingly popular in Europe (and elsewhere in the world). Still, there are significant misunderstandings standing in the way of the reception of economic insights in European legal academia. It is often suggested that this is related to the unresolved foundational problems of the discipline. Certainly, the meta-level discussion has been going on in many ways: Kaplow and Shavell’s Fairness v Welfare (2002) has provoked dozens of critical reviews, symposia are held (e.g. “Law and Economics and Legal Scholarship”, Chicago-Kent Law Review 79 (2004)), PhD theses written (e.g. by Gerrit de Geest, Horst Eidenmüller, Anne van Aaken, Klaus Mathis), collective volumes published, e.g. The Theoretical Foundations of Law and Economics, ed. Mark D. White (Cambridge 2008), Foundations of Law and Economics ed. Cooter and Parisi (Elgar 2009).

The interdisciplinary character of law and economics research raises further questions about the possibilities and limits of intellectual integration. While economists are more or less aware of the foundational problems of economic theory, they are rarely confronted with jurisprudential concerns. Lawyers who are working on doctrinal or policy problems are often confused about what to expect from economics. Finally, jurisprudential critiques of law and economics often have a straw man as their target.

These considerations inspired the Tilburg Law and Economics Centre (TILEC) at Tilburg University, the Netherlands to organise a workshop on the foundations of law and economics. Economists, legal scholars and philosophers from numerous European countries attended the workshop, amongst them a large number of students of the Erasmus Programme in Law and Economics. The keynote speaker was Professor Lewis A. Kornhauser from New York University. A leading scholar in law and economics who has published path breaking papers in many legal areas and also plays an important role in the dialogue between law and economics, legal and political philosophy, and legal theory.

Please follow the link above for more information, and contact Peter Cserne at peter.cserne@uvt.nl if you're interested in MetaLawEcon (I know I will!).

Kantian Ethics and Economics: Autonomy, Dignity, and Character

Mark D. White

I am happy to announce that my forthcoming book from Stanford University Press, Kantian Ethics and Economics: Autonomy, Dignity, and Character, is now available for pre-order.

I plan to blog a lot more about this book as the May 2011 publication date approaches, but for now I'll just offer the summary and the very humbling endorsements:

This book introduces the moral philosophy of Immanuel Kant—in particular, the concepts of autonomy, dignity, and character—to economic theory, explaining the importance of integrating these two streams of intellectual thought. Mainstream economics is rooted in classical utilitarianism, recommending that decision makers choose the options that are expected to generate the largest net benefits. For individuals, the standard economic model fails to incorporate the role of principles in decision-making, and also denies the possibility of true choice, which can be independent of preferences and principles altogether. For policymakers, standard decision-making frameworks recommend tradeoffs that are beneficial in terms of material goods or wealth, but may be morally questionable from a more person-centered perspective.

Integrating Kantian ethics affects economics in three important ways. This integration allows for a more complete understanding of human choice, incorporating not just preferences and constraints, but also principles and strength of will or character. It demonstrates the broader impact of welfare economics, which generates policies that affect not only persons' well-being, but also their dignity and autonomy. Finally, it reconciles the traditional, individualist stance in economic models of choice with the social responsibility emphasized by many systems of philosophical ethics and heterodox schools of economics.

"This book makes an original and valuable contribution by introducing the philosophy of Kant and the concepts of autonomy, dignity, and character into economics. Mark White is to be complemented for raising fundamentally important questions about economics' theory of choice. The book will be a landmark in social economics."—John B. Davis, University of Amsterdam and Marquette University

"Relentlessly utilitarian and procedurally-detached, economic man takes no account of the duty to treat morally equivalent persons impartially. In contrast, the decision environment contemplated by Professor White's Kantian agent is congenial to the cultivation of respect for the moral law. The implications for social interaction and for public policy are profound. A must read!"—Timothy Roth, Department of Economics & Finance, The University of Texas at El Paso

"For too long it was almost universally thought that utility theory, and so economics, was intrinsically and solely about means/end rationality and achieving the best consequences. Principled action, it was agreed, could not be integrated into formal decision theory and economics. Mark White's wonderful and important book shows this to be a fundamental error. White's Kantian ethics opens a much richer, and far more adequate, normative analysis to economics, freeing economics from an impoverished view of humans and ethics. White holds out to us the promise of an economics as a science of human dignity and autonomy."—Gerald Gaus, James E. Rogers Professor of Philosophy and Director of the Program in Philosophy, Politics, Economics & Law, University of Arizona