In Defense of Economics

“Economics is astrology for guys named Chip.”

I am by no means an avid follower of the campus meme page, but I happened to catch this economics joke a few weeks ago while scrolling through my Facebook feed. Unlike most things on the page, this one stuck with me. It brought to mind other recent interactions, like my debate partner arguing that it would be more accurate to throw a dart at a dartboard than trust a macroeconomist or whispers in Sharples about “econ bros” and “selling out” at fancy finance jobs. It feels odd to need to say this since economics is the most popular major at Swarthmore, but it the subject needs a bit of a defense, both on the grounds of what the discipline can do and on who the people are who study it. Despite misconceptions, a wide variety of people study economics and the subject is broadly useful and informative.

There seems to be a fundamental misunderstanding about what the discipline of economics is about and what questions it seeks to answer. While it seems like the popularly perpetuated stereotype is that economics uses questionable quantitative methods to make more money for the 1%, I think about the field much more broadly. The reason I love economics is because I see it as a systematic set of methods and assumptions that allow us to answer a wide range of questions about the world. That investigation can take many forms, but I will address three of the most important functions of economics as examples. 

Firstly, economics offers quantitative tools that illuminate narratives about the world, particularly those that are often brushed aside.  Economists are experts at collecting data, analyzing that data, finding trends, and reporting them for people to use in law, public policy, or everyday news consumption. For instance, Harvard economist Raj Chetty leads the Opportunity Insights lab, which uses data-oriented solutions to answer questions about economic mobility in America. A recent collaboration combined tax data and Census data for the largest study of intergenerational economic mobility to date, illuminating inequalities among neighborhoods, education levels, races, and gender among other things. Perhaps most striking, many economists said that the research put the “nail in the coffin” for Charles Murray’s biological racism, showing that mobility is much more tied to circumstances than to genetic components. Across economic fields, studies like Chetty’s allow us to combat deeply ingrained, long-held societal stereotypes and prejudices in a systematic, data-driven way that is hard to ignore.

The data need not stand alone. Economics also serves as a systematic way to create and evaluate policies that affect people’s everyday lives. While many people may think that economic theories always assume perfectly competitive markets, they actually take into account and combat common failures of a capitalist system, such as market power, external costs and benefits, and incomplete information for consumers. On an empirical level, economics also allows us to test the efficacy of proposed solutions. Just a few weeks ago, three professors from MIT’s Abdul Latif Jameel Poverty Action Lab were awarded the Nobel Prize in Economics. The lab uses Randomized Control Trials to investigate interventions such as providing children with glasses and deworming to increase school attendance and incentives to increase childhood vaccinations. To date their 948 evaluations have allowed researchers to see which programs are most effective, scaling up the interventions to reach more than 400 million people worldwide.

Finally, on a more macro level, economics sets the conditions for long-term stability and growth.  Many people cite the 2008 economic crash to argue that economic regulation is hopelessly corrupt or impossibly difficult to administer. However, many others would argue that the Fed’s mix of interest rate reductions and financial institution assistance prevented the mass unemployment seen in many other crises. While it is true that macroeconomic forecasting is often imperfect, it is hard to argue that a completely laissez-faire economy would be less volatile and provide more good for individual people.

A more nuanced critique of economics over the past few decades has been a criticism of the assumptions of neoclassical economics. It is easy to point out a range of flaws in the model – people are often not rational, do not have stable preferences, and do not behave in the ways we expect them to. However, in the same way that scientific disciplines have found ways to correct for error in their research methods, economics, too, has adjusted. Behavioral economics acknowledges the systematic ways people depart from the classical model, acknowledging the heuristics and biases of everyday individuals. Understanding those biases has led to powerful research, solving problems as small as eating healthily or going to the gym or as large as suboptimal levels of vaccination or retirement savings. Far from being a reason to dismiss the field, confronting the weaknesses of economics has only allowed new, innovative, applicable fields of research to appear. 

Those reasons, along with many others, leave me with no doubt that economics is a worthwhile, impactful thing to study. Beyond content critiques, however, I want to end with a word about the critiques of the people who study economics. The first broad critique is that people who enter the field are money-hungry or soulless. I think that the examples I discussed illuminate the fact that while some bad actors such as those who perpetuated Reaganomics or the 2008 financial crisis have given the discipline a bad name, many types of economics are neither lucrative nor remotely bad for the world, but I would also add that it is not the place of others to judge the financial tradeoffs their classmates have to make when choosing a career. Many people choose a finance career not out of greed but out of a need to fulfill familial or other financial obligations. Those who are not intimately familiar with the pressures on others should not jump to conclusions about what kinds of people their classmates are based on career decisions.

The second, more harmful version of the stereotype is that only a certain type of person, perhaps the type referred to as “Chip” in the meme, is welcome in the field of economics. While it is quantitatively true that economics has a diversity problem, and while I think I and many people I know can attest to instances of feeling ostracized or disrespected within the discipline, I would argue that the biggest hurdle to my success is the voice in my own head telling me I’m not supposed to be there, am unqualified, or don’t fit in with others in the department. Hearing people disparage the department for being too male, too white, or too finance-focused only reminds me of my own insecurity about being there, making me feel less passionate about sticking with the discipline in the future.

So despite the fact that economics is the most popular major at Swarthmore, I think people need to give it a fair chance. As a discipline, it does a lot of good for everyday people. And even if you don’t believe that’s true, perpetuating stereotypes about the characteristics and motivations of those who study economics only prevents those who might seek to enact meaningful change within the discipline from pursuing it in the first place.