Sunday, 26 February 2017

When Do You Become An Economist?

On a regular Sunday evening, sitting across from me, my flatmate is reading Friedman's Optimum Quantity of Money. All of a sudden, he bursts out laughing. In between his strained attempts of catching his breath he jokingly says "This is the best sentence is all of economics! If anybody asks me what economics is about, I'll read them this sentence".

The sentence itself was an epic example of vague econ-lingo, a hedged statement that regardless of the outcome the writer (Friedman in this case) would be correct. But the question it raised was much more interesting than the actual answer. What is economics about? The go-to answer in most textbooks around the world is the following sentence by Lionel Robbins in 1932:
“Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses” (p. 16, An Essay on the Nature and Significance of Economic Science)
The more interesting distinction is what constitutes an economist. When do I graduate from being a "writer on economic topics" to being an actual "economist"? It's not the first time I have struggled with this issue, and I've hesitated referring to myself as an 'economist' before, simply because I do not hold an academic degree. Where is the magic line dividing the population into economists and non-economists?

For an essay last week I had the great (mis)fortune of reading parts of Ed Balls' memoar Speaking Out (FT review here), where his publisher describes him as an economist, despite the fact that he studied PPE at Oxford for his undergraduate degree and an MA in Public Administration at Harvard. Ed Balls an economist? Nobody believes that. So, then who is?

The easiest starting point would be some kind of academic degree. Let's first consider an undergraduate degree in economics, normally including a few years training in thinking on the margin, some supply-and-demand analysis, drawing graphs in macro and micro settings, deriving first-order conditions and doing some simple econometrics. But honestly, like most university work, it boils down to signalling employers that you're analytically and verbally smart enough to be employed  rather than constituting an intellectual challenge, separating the economics wheat from the non-economics chaff. If we pretend somebody has taken all required economics units but hasn't formally received his/her diploma, would they be less of an economist than somebody who has? Unless we're in some strict legal positivist world we'd have to answer no, which implies that there is some fundamental knowledge that defines an economist.

Any takers? Turns out, there are quite a few. First up, Paul Krugman's infamous "Economists' Creed" from an article in 1987:
If there were an Economist's Creed, it would surely contain the affirmations "I understand the Principle of Comparative Advantage" and "I advocate Free Trade."
Now this is an interesting contender and a point I guess Dr. Krugman regrets ever making. And more than one prominent economist has taken issue with such blackboard free trade positions; more recently, see for instance MIT professor David Autor's work (here or here or here). However, looking at University of Chicago's IGM survey of high-profile economists' opinions, that seems to align fairly well with Krugman's creed; few topics in the IGM surveys are as clear as this one.

But if the dividing line is not a university degree but some fundamental insight, a few other pertinent contenders, such as that of the self-taught polymath Henry Hazlitt comes to mind. One of his more famous quotes about what an economist is and should be doing is as follows:
The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
echoing the 19th century writer Frédéric Bastiat:
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.
If we're going back to Mises, Per Bylund recently wrote the following in an article for 
A true economist has a deeper understanding for how economics works, which Mises called begreifen in contrast to Weber's more vague term verstehen, rather than technical ability to perform mathematical analyses. (my translation)
An often-quoted passage of Keynes' eulogy over his mentor Alfred Marshall puts the description of what an economist is slightly broader:
The study of economics does not seem to require any specialized gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy or pure science? An easy subject at which few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.” (Keynes 1924: 321-322)
Here is another of my favourite authors (economists?), David Colander, writing sarcastically on the topic:
“To become an economist who is considered an economist by other economists, you have to go to graduate school in economics.” So the reality is that, to economists, an economist is someone who has a graduate degree (doctorates strongly preferred) in economics. This means that what defines an economist is what he or she learns in graduate school.  (p. 2)
To clarify he says: "when economists talk about economists, what they have in mind is someone with a Ph.D in economics" (p. 251); i.e., what makes an economist is whatever (s)he learned in graduate school. Incestous to say the least, but what does that entail? Here are a few things Colander identifies:
  • Using and constructing workable models (read: DSGE)
  • Statistical techniques and mathematical proofs
  • Econometric analysis, such as time series or sophisticated regression analysis. 
He notes, quote interestingly, that the glue that holds economists together is no longer Marshallian price theory –  but shared knowledge of statistical techniques. Maybe that what it takes to be an economist? Colander discusses wisdom and compares economics with other fields:
Most fields see wisdom as being embedded in past literature and in the practical knowledge of the people in the institutions actually studied. That is why the graduate core of fields such as political science and sociology have students study the past literature and the current debates in the field. The graduate core in economics does not do this; it focuses almost entirely on techniques and the particular cutting-edge work that the professor is doing. [...] there is very little attempt to teach students about the problems with the techniques their professors are using, nor about the current debates within economics (p. 244)
Interesting to say the least, and I'm sure there are many more examples and distinctions one can make as to what actually constitutes an economist. I'd be interested to learn more!

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