Monday, April 16, 2007

Note to Sociology Pals

by Tom Bozzo

George Akerlof invokes your discipline a few times in "The Missing Motivation in Macroeconomics", in the AER deposited in my mailbox today (contents page with viewing options), but adapted from the Presidential Address at this past January's AEA meetings. Based on joint work with Maryland's Rachel Kranton (who taught me some I-O back in the day), "norms" are the "missing motivation" in microfoundations-based macroeconomics (*).

I would imagine few sociologists would find this shocking. Critique of Economics Methodology 101 is that economists love themselves their H. economicus beyond reason (often true). An advanced (and also largely true) version is that some economics — especially microfoundations-based macro — doesn't so much describe how the economy works but rather how hypothetical economies comprised of fully rational actors work, and at least some economists fail to notice the difference. See, e.g., Wisconsin's Daniel Hausman for additional details.

Part of the problem is with the mathematical methods that are the bread-and-butter of "neoclassical" economics. The "classic" microfoundations-of-macro models were cleverly set up so that equilibria existed and could be characterized with the use of math that may look easy or difficult depending on your frame of reference. That gives way to extremely difficult or impossible math if, say, consumption is subject to social externalities — e.g., Jane Mangement Consultant drives a BMW in part because Bob Management Consultant drives a Mercedes. (This also has implications that right-leaning economists find politically unpalatable). There's a tendency to push off really problematic stuff (in the sense of not being susceptible to proving "theorems") to the "fuzzier" social sciences.

Update 4/18/07: Brayden King picks up the gauntlet here, at, showing why Orgtheory got its 'thinking blogger' award; see also the contributions from Brayden's co-bloggers in the comments thread.

(*) I.e., behavior of the economy as a whole derived from models of optimizing or rational agents' behavior.

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It's posts like this that make me think we should replace the term "fuzzier" (as in "fuzzier social sciences") with "messier" as in, "When you actually pay attention to all the variables that are actually having an impact, the models get messy."

I have a ton of respect for economists, but over abstraction is just as much of a threat to a theory as over specificity.

Anyway, thanks for letting us know about this, Tom.
Well, I put scare quotes around 'fuzzier' basically for that reason.

I could have bored you at some length with my take on economists' mistrust of analytical methods that allow more messiness (e.g., agent-based simulations), but didn't have the time.
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