Sunday, March 1, 2009

On the mediocrity of Heterodox Economics

Ann Pettifore's recent article linked to Richard Portes' statement about heterodox economics.

Portes, Richard. 2008. "The Annual Report of the Secretary-General (of the Royal Economic Society).

"Mediocrity is rationalised on the grounds that it is hard for the ‘heterodox’ to publish in top journals -- despite the examples of Joseph Stiglitz, Amartya Sen, Herbert Simon, Samuel Bowles, Herbert Gintis, and many others."

Consider his list of Heterodox economists. Herbert Simon? There is some overlap there, but he ceased to do economics and moved on to other fields. Joe Stiglitz did good stuff before he became active in public debates, but I think most economists would regard his more policy-oriented work as belonging in top journals. Amartya Sen also does interesting work, but has he ever been associated with the left.


Anonymous said...

I haven't read the article and might be missing something, but heterodox=left!?

Sandwichman said...

Is that even a sentence?

Michael Perelman said...

Heterodox does not mean left, except Portes happens to use that term to justify the exclusion of the left -- otherwise why include only economists typically associated with a left-liberal perspective.

Sandwichman said...

So what's Portes angle in dissing the left? Is he some kind of ex-commie or something? said...

Regarding this set, they are a mixed bag. Simon did publish some of his key papers on bounded rationality back in the 1950s in some leading journals, such as the Quarterly Journal of Economics. He also received the Nobel in the late 1970s, although that was one of the first of such prizes that a lot of people grumbled about as being "undeserved." Simon himself was never all that precisely in economics. His Ph.D. was in political science, and he was a seriously big cheese in computer science, especially in the area of artificial intelligence, which linked up with his studies of bounded rationality. At the end of his career he was in four departments at Carnegie-Mellon: computer science, information science, management, and psychology. The comp sci building there is named for him.
Ironically, bounded rationality is now much more respectable, arguably in and somewhat fashionable, certainly on the rise. Also, he was not on the left and did work for the US military at certain points, I think, although I could be mistaken on that, but, while he may not have been a Republican, he was certainly not particularly leftist politically.
Amartya Sen has long been identified as more leftist, emphasizing egalitarianism and praising the democratic Communist government in the Indian state of Kerala. However, methodologically he has always been very orthodox and theoretically mathematical, a student of Kenneth Arrow. However, he has long had a heterodox edge in that he has emphasized how economics and economists should be concerned with ethics and the plight of women and the poor.
Joseph Stiglitz has always been essentially mainstream, if not hard core orthodox, in his economics methodology, very much in the tradition of his major prof at MIT, Paul Samuelson. However, he has moved somewhat more to the left and probably somewhat more unorthodox in his approaches in more recent years since he stepped aside as Clinton's Chair of Council of Economic Advisers. A major break appears to have happened during his stint as Chief Economist of the World Bank in the late 1990s, when he denounced the IMF response to the East Asian financial crisis in 1997, which was basically orchestrated by then Treasury Deputy Secretary, Larry Summers, currently Obama's top economic adviser, leading to Stiglitz getting removed. He has been more in the camp of Krugman, somewhat to the left of Obama and Summers and crew, if not still fully heterodox in his economic methodology.
Of course, Bowles and Gintis were once upon a time fuly heterodox and leftists, self-identified as Marxists, if of a heterodox variety. Bowles was famously turned down for tenure at Harvard for political reasons, and the move by them to University of Massachusetts-Amherst set the tone of that institution that still holds.
However, they have both retired from there and become more mainstream since, having abjured Marxism in the mid-1980s. They are arguably somewhat non-mainstream, into evolutionary game theory and behavioral economics, but much more "respectable" than in the past, and it is since they made their moves that they began appearing in those "leading journals," not back in their more seriously heterodox days.
BTW, Gintis rejects the whole idea of "heterodox" as a meaningful category and says that "what we need is a homodox economics that is scientific." I think they are still more or less leftist in their politics, kind of social democratic, although Herb Gintis is quite idiosyncratic in his views to the point that one really cannot predict what he will say about any particular issue, although whatever it is, he will state it very forcefully and articulately.

Jack said...

"... Gintis rejects the whole idea of "heterodox" as a meaningful category and says that "what we need is a homodox economics that is scientific."

A refreshing, if some what poingant, comment that the profession would do well to adopt and inscribe on its coat of arms.
Or at least in large letters as a preface heading in every economic text book. said...

Regarding Herbert Simon, his relationship with economics and its practitioners is very complicated. A nice coverage of his relationship with game theory is found in a paper by Esther-Mirjam Sent, "The legacy of Herbert Simon in game theory," Journal of Economic Behavior and Organization, March 2004, 53(3), 303-317. Simon was the first to write a review of the seminal work by von Neumann and Morgenstern, praising it. However, later he becamem disillusioned due to its reliance on rationality. This, in the late 1950s, probably coincided with his move away from economics, after publishing in some of its leading journals.

He was certainly aware in 1978 of the disdain that many economists expressed at his winning the Nobel, certainly further exacerbating his negative attitude. Later, game theorists such as Aumann and Rubinstein would introduce a bounded rationality idea based on imperfect memory, but at least at first without citing Simon. Later Aumann would recognize him, but diss for insufficient "formality."

A further wiggle on this is that while some of his immediate followers at Carnegie-Mellon would be the original devlopers of behavioral economics, such as Cyert and March in their Behavioral Theory of the Firm (with Cyert later becoming president of Carnegie-Mellon), others at Carnegie-Mellon would develop and push the rational expectations idea, specifically to "answer" Simon, along with those pushing the empirically correct cobweb models in agriculture. That would be John Muth in 1961, although he would not share the Nobel with Lucas for inventing ratex. Kydland is now at Carnegie-Mellon, just to emphasize this, and also before he died to further alienate Simon from economics on the CMu campus.

BTW, while Muth is generally credited with inventing/discovering ratex, I have seen it claimed that Jacob Marschak preceded him in 1950, although as near as I can tell what Marschak came up with back then was something more akin to the Lucas critique, although without ratex, namely simply observing that an econometric model may be limited because agents may change their behavior in response to policy changes, thus implying changes in the values of parameters in the model, an argument actually foreshadowed a bit less formally by Keynes when he criticized Tinbergen. The difference was that Lucas said the agents would alter their behavior by following ratex, whereas neither Keynes nor Marschak were as silly as to make such a nonsensical assumption.

Anonymous said...

Amartya sen has self-identified with the left in this interview:

he is generally seen as being on the Left, through his work with Jean Dreze which focuses a lot on state action. It was him that Jagdish Bhagwati was referring to when he criticised some gifted economists for constructing economic models that showed how public ownership of key industries would lead to socially optimal outcomes in developing countries.

Development economics has thrown up several economists who could be considered 'hetereodox' Amit Bhaduri is another one.