9-5 Economists
A very long time, I had a colleague and friend who I concluded was only an economist in working hours. Having come across another example more recently, I thought it would be worth explaining the concept.
Suppose there is some issue on which economics implies a straightforward conclusion, but an implication short of a proof. Minimum wage laws provide a simple example. The conclusion that raising the minimum wage will reduce the employment of those currently receiving a minimum wage is a straightforward implication of the assumption that demand curves, in this case for a particular sort of labor, slope down. It is however possible, with sufficient ingenuity, to construct a model of the labor market (every employer of such labor is a monopsonist holding down employment in his tiny niche in order to hold down the wage he must pay) or the market for goods and services produced by low paid labor (customers for those goods and services much prefer to buy if they know the workers are all being paid at least $15/hour and there is no easy way for producers who pay that much to prove it to customers) which yields the opposite conclusion.
The response of a real economist will either be "raising the minimum wage almost certainly reduces employment for low skilled workers" or (less likely but not impossible–I am thinking of a real example) "one of those odd models might possibly be right, I will look for a natural experiment by which I can test it."
The response of someone who is only an economist in working hours is to believe whatever he would believe if he was not an economist. If that requires him to believe that raising the minimum wage will not reduce employment for low skilled workers and someone points out the inconsistency with economics, he will justify himself on the grounds that the economic argument is not actually a proof, so its conclusion could be false.
For an example on the other side of the political fence, consider a conservative economist who wants to support trade restrictions.
In either of these cases, there may still be a way for a real economist to support the conclusion he wants. In the case of the minimum wage, his argument might be that the loss of employment to some is more than balanced by higher wages to others, so that the total earnings of low skilled workers go up instead of down. If that is his argument he will want to look for evidence on the relevant elasticities, may support his point by observing that losing a ten dollar an hour job increases leisure by an hour for every ten dollars lost, and will be bothered by the possibility that losing a ten dollar an hour job removes the first step leading to a fifteen or twenty dollar an hour job.
In the trade case, the argument might be that although free trade produces net benefits for Americans the gains go to richer people than the losses, so a gain in value measured in dollars leads to a loss in value measured in utility. If he is a real economist he will want to make some effort to find out if the claim is true, to estimate the income distribution of gains and losses and their relative size. Alternatively, if he is both a real economist and a cynic, he may agree in private that the economic effects of trade restrictions are negative but support them as a way of getting the rust belt votes needed to elect politicians who will do other things whose effects are positive and larger.
In either case, the simple test is whether an economist's views tend to diverge from those of his ideological allies when the ideology clashes with the economics. If they do he is a real economist. If they do not, he is only an economist in working hours.
P.S. (added later) John Cochrane points at an example of something worse than a 9-5 economist, an economist who engages in public demagoguery that relies on the economic ignorance of his listeners and has the gall to do it while citing his professional qualifications as an economist.
In the trade case, the argument might be that although free trade produces net benefits for Americans the gains go to richer people than the losses, so a gain in value measured in dollars leads to a loss in value measured in utility. If he is a real economist he will want to make some effort to find out if the claim is true, to estimate the income distribution of gains and losses and their relative size. Alternatively, if he is both a real economist and a cynic, he may agree in private that the economic effects of trade restrictions are negative but support them as a way of getting the rust belt votes needed to elect politicians who will do other things whose effects are positive and larger.
In either case, the simple test is whether an economist's views tend to diverge from those of his ideological allies when the ideology clashes with the economics. If they do he is a real economist. If they do not, he is only an economist in working hours.
P.S. (added later) John Cochrane points at an example of something worse than a 9-5 economist, an economist who engages in public demagoguery that relies on the economic ignorance of his listeners and has the gall to do it while citing his professional qualifications as an economist.
0 Response to "9-5 Economists"
Post a Comment