Economic neutrality

Robin Hanson says,

Sure we give lip service to fairness, and we may sincerely believe that we care about it, but that mostly expresses itself as sincere outrage when our side is treated unfairly.
. . .
While in practice economics is full of folks promoting various sides, one of the reasons I am proud to be an economist is that we have a good standard neutral analysis criteria, economic welfare, for judging policies

Welfare economics used to be known as normative economics because it uses value judgments to tell us what we should do. Is it accurate to describe any methodology based on value judgments as ‘neutral’? I don’t know a lot about the subject, but would those who do not subscribe to some form of utilitarianism find the economic framework ‘neutral’? Matt talks a lot about making our assumptions apparent and I fear that trying to paint ourselves as neutral obscures the nature of the framework within which we operate.

  • I agree.
    I think there’s a difference between defining an objective standard (economic welfare) and assuming that its maximisation ought to be a policy priority.

    The first is more or less value neutral, but as you say, the second one is basically utilitarian, and hardly ‘neutral’ or ‘value-free’.

    A good starter book for this is ‘Economic Analysis, Moral Philosophy and Public Policy’, by Daniel Hausman and Micheal McPherson.

  • “Matt talks a lot about making our assumptions apparent and I fear that trying to paint ourselves as neutral obscures the nature of the framework within which we operate”

    To be clear, I state that one of the advantages of the economic method is that we can make our value judgments transparent IF we try attempt to make some type of prescription or even critical description.

    I completely agree with you on the conclusion that Hanson is mistaken when he calls economic analysis “neutral” – however I have always said that the nature of analysis, in fact making any conclusion, required a value judgment.

    Our framework can be generalised to the point where it can be seen as “objective” (which is the point where everyone agrees – again this doesn’t ensure truth!) – and I see this as one of the primary goals of economic science. However, as soon as we use the framework to “analyse” we are definitely in normative territory.

    Hopefully that clarified what I currently think, which will no doubt change in due course 🙂

  • ‘Our framework can be generalised to the point where it can be seen as “objective” (which is the point where everyone agrees – again this doesn’t ensure truth!) – and I see this as one of the primary goals of economic science. However, as soon as we use the framework to “analyse” we are definitely in normative territory.’

    While I respect your viewpoint about descriptive vs prescriptive, I think that even in description Economists are always going to come from one perspective or another, and trying to paint ones’ self as objective is unrealistic. For a start, any subject you choose to analyse over another represents a form of bias. And using the economic framework to describe instantly sets you apart from many other disciplines and viewpoints, in that you place more value on generalised models for analysis.

    You mentioned that economists think that humanities are sometimes intellectually dishonest. This has been a problem, and in History, one that stemmed from an obsession with objectivity.

    In the 1950’s historians would claim they were totally neutral mirrors to the past. But the problem was they were all white, European men, and today, after the influence of things like feminist history and anthropology – calling anything from that era neutral is laughable.

    Even if it is possible to separate descriptive and prescriptive for objectivity, I’m not sure you are ever going to keep anyone in line. As we’ve talked about already, Economists make prescriptions with steaming value judgments all the time, and who is going to tell them off? The media is still going give them airtime, and if we’re still spreading this myth about the economists’ objectivity, it gives the prescriptive economists an aura of being objective even while they break the rules, which isn’t healthy.

    I totally agree that the best thing we can do is make our bias transparent, this is what we try to do in history. But once our bias is out there, why not use our value judgments and let them colour our analysis? Value judgments make writing more human and interesting, and i would argue that this is what has made prescriptive economists like Friedman so popular.

    Anyway, that’s my totally unobjective, left-field humanities perspective 😉

  • “While I respect your viewpoint about descriptive vs prescriptive, I think that even in description Economists are always going to come from one perspective or another, and trying to paint ones’ self as objective is unrealistic”

    I think there is a key difference here between description of a generalised “tendency” and description of a situation. Describing a realistic situation is also value-laden and inherently normative, I agree. By describing a tendency in a generalised vacuum is as close to objective as we can get.

    Ultimately, the goal of “economic science” is to focus on this process of generalisation – extending the range of possible worlds that could sit inside a given framework.

    However, the process of analysis is very different – it involves applying value judgments in order to reach a conclusion. To do this we need to apply value judgments to some a priori model. The generalised model that economic science provides gives us a framework where we can:

    a) Apply our value judgments to reach conclusions,
    b) An area where the value judgments we make are transparent.

    Is the practice of economic analysis objective – no. Is it a laudable goal for “economic scientists” to try to create an objective, but empirically empty framework with which people can apply value judgments to create conclusions – I think so.

    “As we’ve talked about already, Economists make prescriptions with steaming value judgments all the time, and who is going to tell them off? The media is still going give them airtime, and if we’re still spreading this myth about the economists’ objectivity”

    I have always said that as soon as you make a conclusion you must have made some value judgments. As a result, I don’t see economists as objective when they do this.

    “I totally agree that the best thing we can do is make our bias transparent, this is what we try to do in history. But once our bias is out there, why not use our value judgments and let them colour our analysis?”

    Value judgments create our analysis – we can’t come up with a conclusion without value judgments. As a result, the framework I am discussing does allow for that.

    However, I find the question of “who has the best value judgments” vexing – I am not sure that economists have the best value judgments, in fact I’m pretty sure many of them don’t. As a result, I see the role of “economists” as a group of people trying to build an objective framework with which conclusions can be made if we apply value judgments.

  • rauparaha

    When we build a model are we trying to describe reality from an atomic level? No, clearly not: we are attempting to create some abstract structure which describes the behaviour of the thing we’re modelling. There may be many such abstract structures and ours is certainly not unique. However, our choice of structure influences the way we think about the underlying phemenon we’re trying to describe.

    So how can we say that economists’ choice of structure does not incorporate value judgments? Surely, by our choice of structure we’ve already made judgments about how to describe behaviour and that influences the way we perceive it. And that’s before we even consider a notion of ‘best’ or ‘better’.

    I like our structure, but I don’t think there’s any way I can believe that it doesn’t incorporate value judgments, even if they’re not prescriptive at that stage.

  • “However, our choice of structure influences the way we think about the underlying phemenon we’re trying to describe.”

    Indeed.

    “I like our structure, but I don’t think there’s any way I can believe that it doesn’t incorporate value judgments, even if they’re not prescriptive at that stage.”

    No doubt. However, isn’t the goal of economic science to generalise the structure of the economic environment as markedly as we can, until all we are left with is a structure that can have things thrown into it.

    The purely objective part of our science is so small, I agree, it is merely that individuals make choices given their preferences (which are in themselves formed in some way) – it is a truism. Beyond that, we add some CP clauses which allow us to view frameworks “given” some value judgment. This in itself is objective “given” the recognition that our initial CP clauses are in fact implicit value judgments, as we are only moving around a system!

    Trust me, if economists were solely interested in being objective they would have nothing to say. However, the value of this type of “economic science” is mechanical – by creating a framework with implicit CP clauses that are variable (eg parameters) we create a situation where someone can step up, make value judgments (by giving a value to the parameters) and know that the conclusion is logically consistent.

    “Surely, by our choice of structure we’ve already made judgments about how to describe behaviour and that influences the way we perceive it”

    I agree – which is why if we even tried to “describe” a situation we would be making value judgments. I definitely agree.

    Objectiveness in my mind stems from a lack of any application, an allowance for any fundamental parameter value for any conceivable parameter. As soon as we set something we are being subjective. The framework is the generalised superstructure.