Freeman

THE PURSUIT OF HAPPINESS

Why Are Economists So Misunderstood?

Economics Has an Image Problem

JANUARY 01, 2004 by RUSSELL ROBERTS

Here is a puzzle.

I’m at a social gathering that includes some doctors. One doctor is discussing a prescription drug for a particular ailment. I interrupt with a lengthy discourse on the medication, explaining that the doctor’s understanding is faulty. He has misunderstood the most important applications of the drug. His analysis of the side effects is absurd. I patiently explain to the other bystanders that the doctor is simply wrong.

This scene, of course, has never occurred. And yet in many a social gathering I have heard doctors explain to me that the minimum wage is good for the poor; it raises their wages at no cost in reduced employment. I have had doctors patiently explain to me that my understanding of the energy market is faulty, that there is no competition there, simply the greed of big multinational oil companies that jack up the price of gasoline from time to time and only lower it to mask their sinister ability to exploit us.

So here’s the puzzle. Why do doctors feel competent to contradict economists on economic matters while economists would never contradict doctors on medical matters?

There’s a simple explanation. Doctors are more confident than economists in their ability to understand the world around us. Doctors feel that they hold the power of life and death. This induces a certain measure of self-esteem leading to the occasional intellectual overreach.

There may be something to this theory, but I doubt many doctors would contradict an engineer about the safety of a particular bridge or correct an astronomer’s assertion on the identity of a particular constellation.

We are left with a more depressing conclusion. Doctors (and plenty of other folks) don’t respect economists as credible sources of information on many economic topics. I used to think that this was the inevitable result of being a social scientist rather than a “real” scientist. No doubt the imprecision of economics has something to do with our relatively low standing in the eyes of the public relative to the practitioners of more reliable disciplines, such as physics and chemistry.

But lately I’ve started to wonder if there is a more fundamental misunderstanding at work. That misunderstanding is about the very essence of the field of economics. I’ve come to realize that most people, even intelligent, educated people, have not the faintest clue as to what economists do or what the discipline of economics has to contribute to an understanding of the world around us.

I got an inkling of the problem one time when on an airplane, the woman next to me asked what I did for a living. I mentioned that I wrote books on economics. Too bad my husband isn’t here, she said. He loves books on the stock market. I wanted to reply that I was glad her husband had stayed home, given that I have no interest in books on the stock market. I held my tongue, but I learned a lesson that I have heard confirmed in subsequent conversations with even highly educated strangers—most people think economics has something to do with personal finance or the stock market. At best, non-economists think economics is all macro, dealing with GDP, interest rates, and the money supply. Most non-economists find these topics either intimidating or boring. No wonder that most people are unaware that economics has something to say about what Alfred Marshall called the “ordinary business of life.” That side of economics, the micro side, the side that focuses on human behavior at either the individual level or in groups, has been dwarfed by the emphasis on financial news, interest rates, and the stock market.

You can see part of the problem when you mention the word “markets” to a non-economist. He immediately thinks of the stock market rather than the slightly surreal concept of economics where buyers and sellers are linked by prices.

 

What Is to Be Done?

So what can we do to give non-economists an idea of what economics is really about? The simple answer, of course, is to teach more people economics. But it’s a Catch-22. If people have a preconception that economics is about financial matters and if people are either intimidated or bored to tears at the prospect of a lecture on finance, then this solution is unlikely to help. It’s a little like the old “Saturday Night Live” skit about Smucker’s jam. How do you market a product with such an unattractive name? With a name like economics, you know it must be fascinating!

A more attractive and practical answer is to pick a different name for the field, a name that gets away from that embedded term “economic,” which reasonably enough, makes people think of financial matters. When strangers ask me what I do for a living, I’ve stopped saying that I teach economics. It’s a conversation stopper unless you’re talking to a fan of the stock market.

I’d prefer to say that I study human behavior. But most people assume that means psychology. So I now tell people I teach spontaneous order. Instead of ending the conversation, I usually get a follow-up question asking about spontaneous order. That gives me a chance to talk about the insights of Adam Smith’s invisible hand and Hayek’s discussion of how markets make use of information.

My idea of talking about spontaneous order is just one way to improve the reputation of what George Stigler called the queen of the social sciences. Many of you understand that economics is about more than just the stock market or interest rates. I’d like to hear from you about how you think economics might improve its image problem. E-mail me your suggestions (or send them to me c/o FEE). If any of them appeal to me I’ll use them at cocktail parties and highlight them in a future column.


Download File

ASSOCIATED ISSUE

January/February 2004

comments powered by Disqus

EMAIL UPDATES

* indicates required
Sign me up for...

CURRENT ISSUE

October 2014

Heavily-armed police and their supporters will tell you they need all those armored trucks and heavy guns. It's a dangerous job, not least because Americans have so many guns. But the numbers just support these claims: Policing is safer than ever--and it's safer than a lot of common jobs by comparison. Daniel Bier has the analysis. Plus, Iain Murray and Wendy McElroy look at how the Feds are recruiting more and more Americans to do their policework for them.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION