Tuesday, June 2, 2015

Steve Randy Waldman — Endogenize ideology

Oldie but goodie that is just as relevant if not more so, since the situation has gotten worse than rather than better.
Paul Krugman understands this stuff. He is in general very sensitive to the political and ideological ramifications of policy choices. Throughout the Bush administration, he highlighted some of the dynamic that brought us from prickly consensus to nasty division. For example, there was the fabulously successful strategy of governing incompetently while using each failure as evidence that government action cannot help but be corrupt and inept. Heckuva job, Brownie!
However, many of Krugman’s professional colleagues really do treat ideology or “political constraints” as given, and perform the exercise that economists perform reflexively, starting with their first grad school exam: constrained optimization. Constrained optimization is a mechanical procedure. The outcome is fully determined by the objective function and the constraints. A party that understands the objective function and can shape constraints controls the outcom….
Economists in particular are disdainful of ideology, on the theory that ideology implies bias and constraint, while optimality requires unconstrained choice. But that is misguided on multiple levels: 1) Supposing the economist could (counterfactually) be non-ideological, the human agents that she studies are subject to ideological biases and constraints, and our non-ideological economist will fail to be a good scientist if she fails to take those into account; 2) The economist is human, and ought to grapple explicitly with her own biases and instinctual constraints, if she is to have any hope of countering them and approximating “unconstrained” choice among available hypotheses and policies; 3) Despite an economist’s best efforts, the true, unconstrained space of models and hypotheses plausibly consistent with evidence is always too large to be exhaustively searched and sorted. Ideology, individual and institutional, will always shape economic conclusions to some extent, and economists ought take responsibility for that and think critically about the effect of their ideology on the polity whose choices they help to shape.

It is childish, and wrong, to imagine that acknowledging the ideological aspects of ones work and self makes one less trustworthy or more dangerous than those whose work is equally ideological, but who mistake their ideology for objectivity or truth and who therefore deny any role for ideology. Many of history’s most dangerous ideologues have been “true believers”, and others have pretended a “scientific” perspective while advancing claims we now recognize as ideological. Being acted upon by, and acting upon, prevailing ideology are part of what it means to be human. It is not just the province of economists or policymakers, or a fabrication of Svengalis in the propaganda ministry. Nevertheless, politicians and economists and other “opinion leaders” probably do have disproportionate influence over ideological change. As far as I’m concerned, they (we) ought to be doing a better, more careful, and more conscious, job of it.
"Ideology" is a bit of loaded terms. Set of assumption, explicit, implicit and hidden, for example, general presuppositions, suffices.

The chief assumption of economics as science is that the observer is a neutral "black slate." To the degree that the observer is well-trained as a scientist, the observed is a mirror of reality free of subjective bias. The findings of psychology and cognitive science contradict this assumption as does elucidation of philosophical logic.

This is a 17th and 18th century Cartesian view that Antonio Damasio demolished in Descartes' Error, for instance. Scientists are not Spock. Cognition and affect are not separate processes in the brain but rather are entangled.

Moreover, the language we use to express thoughts to ourselves and to communicate with others are context-based, and context is both culturally determined and shaped by individual priors, most of which are not entertained consciously. There is no independent observer acting as mirror of reality.

Formalization and criticism can assist in increasing clarity, economy, and precision of thinking and communication, but they cannot hurdle human epistemic boundaries. Rationality is bounded to a greater degree than Herbert Simon realized. Humans are prisoners not only of affect, context and previous impressions, but also they cannot know fully what they do not know.

The second assumption is about the nature of human agency. Economics assumes homo economicus, while findings of social science strongly suggest that this is a fiction. Homo economicus is a picture of economists assumptions about themselves, that is, Spock as atom-like, freely making perfectly "rational" choices.

These assumptions do not accord with reality, and probably most economists would admit it. However, they claim that this is a modeling convenience and the model produced is close enough to provide useful enough information than other methods much more precisely.

This is really what the dispute is about. It was recently ignited by a paper of Paul Romer and the debate it elicited. Romer was accusing some other economists, notably Robert Lucas of being ideological rather than scientific through his use of what Romer called "mathiness," a takeoff on Colbert's "truthiness" as a similar criticism of the media.

The upshot is that methodology, which the mainstream has sought to banish from the debate as an already settled issue, is back. It's long past time to get the assumptions and presuppositions on the examination table and look at them under the microscope, as other disciplines do. Economists that reject or remain aloof from this debate are being not only ideological but dogmatically so.

There is nothing wrong with any assumptions or any model. All models are only representational to a degree without being replicas, and all models, even wildly wrong one, can teach us something. Humanity began its journey with some wildly wrong models, but eventually hit up the scientific method and began the process of refining both models and modeling. However, what is necessary is being circumspect in using models not merely as tools but as guides.

Models with dubious or demonstrably wrong assumptions are unlikely to be adequate when a representational model is called for regardless of the syntactical construction of the model in terms of consistency and economy. Models whose outcomes are called into question by events cannot be considered accurate regardless of the degree of precision achieved syntactically.

Experience shows that economists seems to be tempted to use models either for ideological purposes or based on ideological bias. For example, can it be coincidental that liberal and conservative economists' findings  are almost always respectively liberal or conservative when dealing with similar context, issues, and data.   

Interfluidity
Endogenize ideology
Steve Randy Waldman

1 comment:

Matt Franko said...

Brownie's job was to dispense funds from the federal level ... when the left takes shots at Brownie they are undermining the basic MMT arguments. ... Waldman is no ally here.