Saturday, February 27, 2010

There Are Many (Much) Better Reasons to Hate Economics

Emmanuel Subangun wrote in Kompas 2/27/10 op-ed:
As recognized by anyone who ever attended university and had economics course, economics suffers from two plagues. First, to support the claim of economics as a science, the limitation has to be clear. In economics lingo, economics has to be separated from other social facts -- boldly called as, from Latin, ceteris paribus. From this point, economic model is born and, alas, all economic policies are based on models generated this way. The second plague, economics(sic!) is not willing to be registered as social science, so that (sic!) it self-regards as a star (science) that has best understanding on social issues. This creates a superiority complex.

Those who ever took econ courses (and elementary research methodology) seriously would understand that ceteris paribus doesn't mean a separation from the so-called economic and social facts. Ceteris paribus (or all else being held constant) means that when you try to explain the effect of a change of variable, you assume that other variables are constant.

Let me repeat this clearly: This has nothing to do with separating the facts, let alone between economic and non-economic facts.

It is about how to tell the effect of, say, proper Econ 101 education, on ability to write a well-informed op-ed. In your observation, you can not really tell it if you do not hold other variables (e.g overall educational level, writing skills, exposures to relevant readings, political bias, the number of economist friends, etc) constant.

Moreover, who said that economists do not consider non-economic facts in their analysis ? Mr. Subangun probably needs to read a whole series on non-economic factors in economics at the diskusiekonomi blog.

On his second claim that economics refused to be categorized as a social science, well, it surely has different methodology than, say, sociology, but it is a social science. Suppose it weren't a social science, does it mean that now we have social sciences, natural sciences, and economics?

Then Mr. Subangun also thinks that Boediono and SMI represent scientific economics, while Pansus common sense. The former fails to convince the latter, hence political communication dysfunction.

Common sense makes you think that the sun revolves around the earth.

Beside, Pansus does not use common sense, but play ill-informed politics. They just either, like Mr. Subangun, don't get the economics right, or, worse yet, for whatever reason, refuse to take well-founded economic arguments for bailout.

Additional flaw: From the quote, Mr. Subangun argues that economists want to separate non economic social facts; but at the same time he suggests that they claim to have best understanding on social issues. Alas, this argument is a contradictio in terminis.

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