Nobel Criticism and Agricultural Economics

This year's winner of the Prize in Economic Sciences in Memory of Alfred Nobel went to Princeton economist Angus Deaton. The internet was abuzz with commentary all day, so this post is a bit late.

I would wager that most ag economists who took PhD consumer demand after 1980 used "Economics and Consumer Behavior" by Angus Deaton and John Muellbauer in that course. For those of us who don't work in development, Deaton's work on the Almost Ideal Demand System was probably our introduction to him. The blog posts I read today (here, here, here, and here) brought me up to speed on his tremendous contributions and I certainly recommend reading them.

As the title suggests, I read another commentary on the Econ Nobel that was notable for its negativity toward the prize and (at least the author seems to think) to economics in general. The article, written by anthropologist Joris Luyendijk, excoriates the Sveriges Riksbank (the Swedish central bank behind the Econ Nobel and its $1 million cash prize) for failing to present the award to social scientists in different fields, and the economics profession in general for its inability to live up to its claimed status as a science.

Certainly there's a lot packed into the article, but I just want to respond to a few things. First, no one is stopping any organization interested in sociology, anthropology, or political science from establishing an annual prize for contributions to those fields.

Second, as the author notes, the prize has been awarded to people "outside" of economics. He mentions Kahneman, but ignores Elinor Ostrom. Ostrom didn't seem to be concerned with the delineations between the fields in the social sciences and used whatever method she thought might provide insights. If you read the article, that's exactly what Luyendijk wants economists to do! Many of Deaton's contributions to development economics consisted in conducting face-to-face interviews (something the author believes is important) and collecting other micro-level data. Again, this type of work seems to be exactly what the author wants more of.

As far as economics being a "science," I see no reason to call it anything else. Googling "definition of science" yields the following: "the intellectual and practical activity encompassing the systematic study of the structure and behavior of the physical and natural world through observation and experiment." Certainly economics fits this mold, as do, I would argue, sociology, anthropology, and political science.

The author spends quite a bit of time criticizing specifically the failures of mathematical/quantitative finance and macroeconomics to see the most recent financial disaster coming. This may or may not be a fair criticism, but the author's diagnosis is no better, even after the fact. Luyendijk mentions financial deregulation as a cause of the 2008 financial crisis several times even though such deregulation never occurred.

He criticizes the use of mathematical theory as well:

Over the past decades mainstream economics in universities has become increasingly mathematical, focusing on complex statistical analyses and modelling to the detriment of the observation of reality.

That sounds a lot like what another Econ Nobel winner, Ronald Coase, derisively called "blackboard economics." Several other Econ Nobel winners have offered similar criticisms. James Buchanan also offered methodological critiques. Luyendijk levels some potentially useful criticisms at quantitative finance and macro but misses the fact that several Econ Nobel winners just might agree with him.

The article wasn't, in my mind, all negative. It reminded me one of the reasons I chose to pursue a graduate degree in Agricultural Economics: diversity of thought. Ag Econ departments bear a variety of names, including such phrases as "Food Sciences," "Applied Economics," "Rural Sociology," "Resource Economics," "Management and Agribusiness," and others. These programs house microeconomists, macroeconomists, business scholars, and sociologists.

As an undergrad investigating what would become my alma mater, I was glad to learn that the K-State Ag Econ department housed a handful of management and finance scholars right alongside economists specializing in IO, policy, and other fields. This diversity of method certainly attracted me to the field and I'm certainly glad I found it.

If Luyendijk's point is that diversity of thought and method are important, I agree. Instead of insisting that the Econ Nobel cater to other fields, he could cultivate a greater appreciation for the diversity of thought and method among past winners.