Bleg: Facts and beliefs


Why is it that, in economics (compared to other disciplines), people are a lot less likely to let observed facts change their opinion on what is going on, or how the world works?  Is it because:

  1. The data is too unreliable
  2. The data requires “value statements” to make sense that cannot be separated from beliefs
  3. People invest themselves in their world view – and are unwilling to trust evidence above what makes them feel comfortable.

Answer, discuss, all that jazz.

Note:  Any answer should be consistent with the historical fact that people want to pretend right now is “different” and that we are living through “historical” times of change – after all how else can we make ourselves feel important if we don’t stress how important the times we live in are 😉

  • Nathaniel Robson

    I think the answer is mainly #3, combined with the nature of what we study.  The distance between fundamentals and what we observe is (arguably) large enough that when the data fits our theory, it is proof, but when it doesn’t, strange attractors are the cause.  This also means that we are able to pick whatever theory fits our wider world-view with the confidence that we cannot easily be proved wrong, and we can make money arguing in favour of that theory.  No one is interested in economists who shrug and say “actually I don’t know”.  If debate is better than no debate then this is a beautiful example of people pursuing their self-interest leading to an optimum.  I’m not sure whether debate is always better.  I suppose it depends on the audience.

  • Bill

    Thanks for asking the question. It has been an underlying question for me for a while, because there does seem to be a reluctance to modify beliefs in the face of data. A few thoughts:

    – This isn’t limited to economics, or even Economics. Happens all the time in every discipline. Paul Slovic did some interesting research on ‘expert judgement’, inaccuracy, and unwillingness to change.

    – Whatever we theorise about this behaviour, we are creating meta-theory about data and theory. We are therefore caught the same trap at a new level. We create beliefs about people’s reactions to new data, which we may fail to update properly. ARGH! And it’s turtles all the way down!

    – I really hate to say it, but: ‘It is difficult to get a man to understand something, when his salary depends upon his not understanding it!’ Upton Sinclair.

  • Kimble

    I like 2, as it nicely (ironically) fits my prefered “humans like stories” narrative.

    But I have to say I think 1 and 2 reinforce the underlying truth of 3. The data is often too weak, with too many confounders, to break through our emotional barriers to force reluctant acceptance. The habit of good economists to acknowledge the dis-unequivocality of their own conclusions doesnt help.

    There may be some evolutionary advantage to stubborness; probably related to decisiveness, and being able to put in 110% effort without the distraction of doubt.

  • All very good points – thanks guys.

    As an additional note I’d like to point out that I’m also guilty of being like this as well – I just think it is a discipline where it can be really hard to update your beliefs.

    And Bill, good point that it happens everywhere – I just get the feeling that, in something like economics, we see this a lot more than in, say, physics. 

    • Nathaniel

      Leading on from what i said before about audiences, we see more economists than physicists taking a firm stand on things because they stand to gain more from doing so.  They’ll get a slot on Close Up to argue (in sound bytes) why the minimum wage is good/bad.  People in general don’t care why a physicist believes that the Higgs boson exists, even though the ramifications of proof that it does makes such economic questions  trifling in comparison.  The only people that care are other physicists, and given the empirical basis of science, they are all willing to bow to the evidence.

      Of course, I am not guity of being stubborn in my beliefs because I am an academic economist.  😉

  • Phil

    Do you think the same thing happens with climate change?  I do.

    • Indeed.  I’m willing to trust the experts, and so I can see why they should form policy on it.

      I suspect that a lot of the angst isn’t about the scientists even – its just a lack of trust of government.  Which is a pity.

      • Kimble

        I think for many it is a version of 1. The data they are given is wrapped in thick blankets of hyperbole so as to be completely useless. 

        • In terms of climate change – I have no idea how reliable the data is, or the analysis.  But I’m willing to trust people who made their carrers in it that the environmental impacts they are suggesting are “best estimates”.

          Of course, when it comes to discussing allocation given these estimates, you really need to get some economists onboard 😉

        • Kimble

          The actual science is hard to understand, but the hyperbolic claims* are easy to recognise as bullshit. 

          The problem is doubled when the people who are held up as experts in the field (like Australias Tim Flannery) also come out with patently absurd predictions obviously meant to scare people.

          And the problem is tripled when reasonable people asking reasonable questions are vilified as enviro-heretics.

          I could not know a single thing about evolution, but still have a good idea who to believe based on how creationists act.

          *such as, temperatures will rise by 15 degrees by 2050, or that sea levels will rise by 100m.