Economism and Cognitive Bias in the Social Sciences
James Kwak is a Professor of Law at the University of Connecticut School of Law, best known as co-founder, with Simon Johnson, in September 2008, of the economics blog “The Baseline Scenario”, a commentary on developments in the global economy, law, and public policy, mostly focused on the situation in the USA.
A couple of years ago I was introduced to a book he wrote entitled:
ECONOMISM:
Bad Economics and the Rise of Inequality
It’s not surprising that Noah Smith – an economist – speaks highly of Professor Kwak’s book. Economism is based on Noah Smith’s notion of “101ism”, in which the rudimentary assumptions of introductory economics (i.e. Economics 101), fail to accurately describe the real world. This reality doesn’t seem to stop anyone from using their simplistic notions of economics, if they support their political perspectives.
The book is well-written, though I must confess that I mostly listened to the audiobook version.
I began putting together a curriculum for a short, ‘micro certification’ designed for accounting technicians and tax professionals in 2019 – about the same time that COVID-19 struck. Since I had cancelled my gym membership – or at least my local gym went through bankruptcy – I began hiking with my dog and my wife on Pender Island and later on Mount Doug in Victoria, BC where we recently bought a condo.
Being lazy (and wanting to evaluate the new AI tool), I asked CHAT CPT for a quick overview of the essence of the book:
“Economism” is a critique of the influence of economic thinking, particularly the principles of neoclassical economics, on public policy and society as a whole. Kwak argues that “economism” refers to the uncritical application of simplistic economic ideas to complex social issues, often leading to misguided policies and exacerbating inequality.
In the book, Kwak explores the origins and development of economism, tracing its roots to neoclassical economics and its rise to prominence in the second half of the 20th century. He argues that economism has become a dominant ideology, reducing complex human behavior and social phenomena to simplistic models of rational self-interest and market efficiency.
Kwak also criticizes the influence of economism on public policy debates and decision-making, highlighting its impact on issues such as healthcare, education, and finance. He argues that economism has led to policies that prioritize efficiency and markets over other important societal values, such as equality and social justice.
Throughout the book, Kwak challenges the assumptions and limitations of economism, urging readers to consider alternative perspectives and approaches that take into account the complexities and nuances of the real world.
Overall, “Economism” offers a critical examination of the dominance of economic thinking in public discourse and policy-making, calling for a more nuanced and inclusive approach to understanding and addressing societal challenges.”
In the short video below I illustrate the problem with an interview on CBC NEWS after a recent furore over runaway profits in Canada’s largest – family-controlled – grocery chain during the pandemic. The CEO (and grandson of the founder) hired ‘independent’ consultants to determine the appropriate level of compensation for a CEO of the family business. Not surprisingly, he increased his compensation package considerably on the strength of that report.
Of course, the problem isn’t limited to our business schools.
In the US there are now ‘red states’ and ‘blue states”. There are even “red universities” and “blue universities”. This lack of viewpoint diversity of in higher education recently led to the formation of the Heterodox Academy, whose ‘raison d’être’ is summarized below:
“Heterodox Academy is an organization in the United States that advocates for viewpoint diversity and open inquiry in academia. The rationale behind the organization stems from concerns about ideological homogeneity and the lack of intellectual diversity in many academic institutions. Here are some key points that explain the rationale behind Heterodox Academy:
Intellectual diversity: Heterodox Academy believes that intellectual diversity is crucial for the pursuit of knowledge and the advancement of scholarship. They argue that a range of perspectives, ideas, and viewpoints is necessary for robust academic debate and the development of well-rounded scholarship. By encouraging diverse perspectives, they aim to enhance the quality and accuracy of research and avoid potential biases.
Ideological imbalance: There is a growing concern that many academic institutions lean towards the left end of the political spectrum, particularly in certain disciplines and social sciences. Heterodox Academy suggests that this ideological imbalance may lead to a lack of representation and marginalization of alternative perspectives, stifling open inquiry and free expression. They argue that this can limit academic rigor and hinder the exploration of different ideas.
Echo chambers and confirmation bias: Heterodox Academy highlights the risk of echo chambers in academia, where individuals primarily interact with like-minded peers and reinforce their existing beliefs. This can lead to confirmation bias, where scholars predominantly encounter ideas that align with their own perspectives, potentially hindering critical thinking and the ability to consider alternative viewpoints. Heterodox Academy aims to foster an environment where diverse perspectives are welcomed, creating a more intellectually rigorous and open academic community.
Free speech and academic freedom: Heterodox Academy advocates for free speech and academic freedom on college campuses. They argue that these principles are fundamental to a healthy and thriving academic environment. By encouraging a culture of open inquiry and protecting the rights of individuals to express their views without fear of reprisal or censorship, they aim to create a more intellectually vibrant and inclusive atmosphere within academia.
Overall, the rationale behind Heterodox Academy revolves around the belief that intellectual diversity and open inquiry are essential for the pursuit of knowledge, academic excellence, and the fostering of a more inclusive and intellectually vibrant academic community. By addressing concerns about ideological homogeneity, echo chambers, and the promotion of free speech, Heterodox Academy seeks to advance these goals within higher education.”[1]
[1] Thanks again to the bots at CHAT GPT