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Exordium

The Strangeness of the Discipline

A Good Scientific Conversation

The Strangeness of the Subject

People often don't get it — what we are talking about, that is. "These economists don't know what they're talking about," a businessperson will blithely say. They consider our way of talking strange. And they do not get the point, or the practicality of what we are doing. "If they're so smart, why aren't they rich?" is the archetypically American question that appears to silence virtually all economists (considering their modest cars and homes). A businessman whose daughter I once courted thought very little of her prospects with me. With my head in the clouds the way it was, I would certainly not keep her in the manner to which she was accustomed. (How correct he was.) At the same time I was puzzled that, although this man had been very successful, he could not make much sense of the economy. Beyond a few commonplace fragments of knowledge, he was quite inarticulate. The science of economics had no meaning to this man of practice. So what does it mean?

When I tell first-year students that economics is not about money or the making of it, they become restive. When I tell them they are not going to learn anything practical, the evaporation of their enthusiasm is palpable. They do ask the inevitable question: What, then, is economics good for? My answer is strangely vague; at this point it must be. I offer them something about a way of thinking — the economic way of thinking; that they will gain a perspective that may help them make sense of the economy. This buys back a tiny bit of their interest, but not much. Only when I hit them with a production possibility curve do they settle down to work. Students are always attentive to territories that look like they might reappear on exams.

When students hear the definition of economics — the study of choice and allocation of scarce resources — they are too disconnected from it (or overwhelmed by it) to raise objections. In expecting to learn about the economy and to make sense of articles in the economic pages, talk about choice and allocation of resources strikes them as somewhat daft. They want to understand how business people behave, why economies go up and down, how economies grow and how money works. What does that have to do with the allocation of scarce resources? And choices — businesspeople have choices we all are more or less familiar with but to have "choice" define the subject of economics…? That can't be right.

If students manage to attain and maintain a critical stance while going through their courses of economics, they will notice how scarce references to the real economy are. Professors may offer a generous amount of "real world" economics in the beginning because it is effective in piquing the interest of the students and luring them into the economic world. But it is possible — in some schools more than others, and with some professors more than others — to ascend through one course of economics after another, learn about models, equations and concepts, and struggle with increasingly complex problem sets without ever discussing economic institutions. The further into the study of economics, the more abstract the classes and the less relevant the real economy. Economics becomes more about itself than about the economy. Students learn more about the science of economics than the world of economics.

In a survey among graduate students at the most prestigious schools in the U.S. (Klamer and Colander 1987, 1990), we found that students considered the knowledge of math and problem-solving abilities far more important for their careers as economists than being knowledgeable about the economy. Sixty-eight percent of those surveyed actually considered knowledge of the real economy unimportant. Think how weird this is. Here is a profession dedicated to the study of the economy, and the brightest graduates are tethered to the mathematical abstractions of choice and allocation of scarce resources. When something in the real economy is at stake, they don't know how to talk.

This is not the only strange feature that novices find in economics. The way we talk is strange as well. I keep telling my students that economics is like a foreign language to them. It has become easy for me to talk what I will call econospeak, but they should not be misled by that — it takes a great deal of practice. "Shifting the demand curve" is quite different from "movements along the curve," and economists speak about elasticities, rational choice, externalities, public goods, income multipliers, transaction costs, Nash equilibrium, and derived demand with as much ease as today's weather. They make inside jokes in econospeak to show off how good they are at it. I only began to speak it comfortably after teaching it. Like any foreign language, it takes practice, practice, and more practice.

You better do not practice econospeak with non-economists. The terms often call up unpleasant or wrong meanings and upset people. When I want to sort out a love affair and begin with the notions of utility functions, constraints and rational choice, every economist would understand, and might even think highly of the argument, but my partner might consider it compelling evidence that the two of us make a bad match after all.

Strange is also how economists depict the market. After having said something about products, demand, supply and price, their teacher will take a few seconds (at most) to draw the following picture:

FIGURE 1.1 NEAR HERE

"This is a market," the professor says. "Don't be ridiculous," they think. Where are the people screaming on the floor of the stock exchange? Where are towns' farmers' markets? Whatever their images of "market," they do not conform to a diagram with four lines. The skeptics — and rightly so — protest. "Suspend your disbelief," I will say (a polite way of saying be quiet and listen). More and more stuff goes on the board, and as it looks mighty high on the exam index, this is no time to challenge it. The indoctrination is quick and insidious. Students become so intimate with these curves — ascribing a term to each point on the graph and giving meaning to the dynamics of each change in terms of "movements along the curve," "a shifting of the curve to the right," "the point of equilibrium," "an inelastic curve" — that, yes, it is accepted as a market. Why not? It's got prices and products and choices. By that time they will need an outsider, like a parent, to remind them how weird and unrealistic the picture is. Some of us do try to have students continually consider the diagram in a critical (real world) manner, but I doubt that the efforts are effective. The numeral has outdone the number.

Diagrams and their symbols lead the way to equations. Students thus next come to accept the following "market":

Qs=f(P, Qe, w/p, A, r, ) + b and Qd= f(P, Y, Ye, r, )

This is the mathematical representation of a market, one that economists treat quite a bit more seriously than the diagram of it (which actually only serves as an initiation ritual for first year students, something like the Rutherford model of the atom for beginning physics students). A sound person may wonder how such an abstraction can capture the complexities of something like a market, but economists are quite comfortable with it.

After studying economics for some time, students will have learned to think in terms of models and a foundational rite of passage is complete. Quite a few economists cannot think without a model, and require it of anyone with an interesting economic insight. Once I tried to sell the utterly sensible idea that trading comes about because of differences in knowledge, my teacher's response was, "Interesting, but what is your model? Let's talk when you have a model." Modeling is the sine qua non of academic econospeak. Strangely, it is what economics is all about. Assuming it is a science, that is.