'Though imperfect, the current format of the economics curriculum at Cambridge and elsewhere allows students to solve problems within a specific context.'PHOTO CREDITS: WIKIMEDIA COMMONS

Pluralist economists typically sound similar in their criticisms of mainstream economics. They argue it is governed by dogmatic norms: rationality, utility-maximisation and complete information being the most often cited. They portray mainstream economists as a homogeneous mass of mathematical modellers who see themselves as the antithesis of “soft” fields such as history and sociology, while pluralists proclaim to offer a diversity of methodological approaches. In reality this characterisation is not only misguided but also dangerous.

“...the idea that mainstream economists treat markets and rationality as science and ignore broader institutional context is absurd.”

To counter such a narrative, consider three young mainstream economists at the forefront of their respective fields. First, Melissa Dell at Harvard, whose work looks at how institutions shape economic outcomes. One of her seminal papers finds that the mita (a forced mining labour system imposed in Peru and Bolivia by the Spanish Empire) raised the prevalence of child stunting and had persistent impacts on land tenure. Far from the traditional portrait of mainstream economists, Dell’s work ranges from the consequences of drug trafficking crackdowns in Mexico to the effects on local insurgent responses to US bombing strategies during the Vietnam War. Gabriel Zucman at Berkeley is another exception to the dogmatic laws of mainstream economics espoused by critics. He studies the effects of tax havens on inequality, as well as how to tackle tax evasion with banking reforms and capital taxation. Like Dell, Zucman works with large datasets and uses statistical tools to disentangle the complex world of tax havens, analysing data as early as the 18th century and providing tractable solutions to growing inequality. Nava Ashraf at LSE is another exception to the pluralist narrative. Ashraf studies the role of behaviour and psychology in developing countries. Her work ranges from analysing how a commitment savings product in the Philippines empowers women to simulating “dictator games”(where one agent controls an endowment and selects an amount to give to another voluntarily) in Russia, South Africa and the United States to ascertain the importance of trustworthiness and reciprocity. In contrast to the pluralist story, Ashraf focuses on “soft” topics like trust and social norms, while publishing exclusively in top mainstream journals such as the American Economic Review and the Quarterly Journal of Economics.

Dell, Zucman and Ashraf are not exceptions to the norm. Looking at John Bates Clark Medallists (awards given to an American economist under 40 each year for impactful research) since 2000, over half were recognised for their use of data rather than formal theory. In fact, even theorists fail to meet the criteria attached to them by pluralists. Behavioural economist Matthew Rabin incorporates fairness and self-control into economic theory. Market designer Parag Pathak applies matching theory to education, designing student assignment systems for the Boston and New York school districts. Mathematical economist Yuliy Sannikov studies imperfect monitoring in collusion arrangements, financial markets in the macroeconomy, and externalities in credit markets. Even among senior researchers, the idea that mainstream economists treat markets and rationality as science and ignore broader institutional context is absurd. The most cited economist worldwide according to the IDEAS/RePEc ranking is Andrei Shleifer, known for his contributions to the intersection of law and economics, and behavioural finance. At No. 3 is Daron Acemoglu, the institutional economist known for his theory that political institutions explain modern comparative development. And at No. 5 is Joseph Stiglitz, whose Nobel Memorial Prize was awarded for his work on imperfect information.

As the examples show, mainstream economics incorporates a wide range of fields, and facilitates a wide range of different assumptions and policy conclusions. What is regarded as “mainstream” is not defined by a dogmatic set of rules (as pluralists seem to think), but rather by empiricism as an approach to economics. Pluralism, by defining itself as economics that diversifies beyond the mainstream, therefore advocates unproven assertion and evidence as equally valuable. It is understandable that this approach sounds attractive to students apathetic to mathematical models within restrictive settings. But incorporating pluralism into the economics curriculum would be as ridiculous as requiring astrology to be taught alongside astrophysics to give Natural Science students a broader perspective beyond an excessive mathematical focus. Or equivalently to require alchemy alongside chemistry, or telepathy alongside psychology. Pluralism also sets a dangerous precedent: allowing economists to assert their opinions to the general public without first convincing their peers leaves society vulnerable to misinformation. As flawed as quantitative work can often be, it forces the burden of proof upon its purveyors. In theoretical work, it forces assumptions to be justified and criticised by peers where they appear unrealistic. In empirical work, it encourages replication and generates debate over the study’s methodological validity. Vis-a-vis a pluralist approach, this reduces the ability of individuals to sell their personal beliefs to the public under the guise of science.

“It is a legitimate argument that Cambridge could do more to incorporate empirical methods or institutional context into core microeconomics and macroeconomics...”


Mountain View

There’s something rotten in the state of economics

It is among students that pluralism has arguably gained the most traction, leading to widespread calls for curriculum reform in light of the Great Recession and subsequent discontent with economists. It is reasonable to argue that economics undergraduate programmes excessively teach theoretical models with minimal empirical content – although this is rapidly changing with Raj Chetty at Harvard reinventing introductory economics with a big data approach, and the LSE’s economics curriculum reform to focus on active research areas. Here at Cambridge, the Economics Tripos is far from ignorant of institutions, history and empirical work: only 1 of 11 third year, and 1 in 7 possible second year, optional courses is based around mathematical economics. Both politics and economic history are compulsory courses in the first year, constituting a 40% weighting in exams. It is a legitimate argument that Cambridge could do more to incorporate empirical methods or institutional context into the core, compulsory microeconomics and macroeconomics modules – a view to which I am partial. Nonetheless, pluralism is altogether different. Pluralism would enable academics, whose work cannot be subject to methodological scrutiny, to assert their ideas to students. Rather than allowing economics to be a framework for analysing novel problems, a pluralist approach would dogmatise the subject. Though imperfect, the current format of the economics curriculum at Cambridge and elsewhere allows students to solve problems within a specific context. While this context may be restrictive, students are encouraged to be aware of shortcomings of the framework. In a pluralist curriculum, the framework becomes the view of the lecturer, who is incentivised to favour students who praise their subjective views.

Ultimately, moving towards pluralism would constitute moving towards economics where academic orthodoxy is determined by assertion over evidence. This would pose a serious threat both to economic discourse but also, given the important policy implications, to society at large.

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