Victoria Chick Has A Point

And a good one too.

Victoria Chick is someone whom I hold in high regard, so when she takes me to task, I owe everyone, and her specifically, a response. She has a problem with some speculation I mixed into my recent rant about the state of ethics in economics.

Here is the offending paragraph:

“It isn’t just the error that ought raise the hackles of those affected by policies relying on R-R, but it is the way in which the error stood. My speculation is that R-R allowed the error to stand because the result was to their liking. They saw the magic line appear, it confirmed their pre-existing commitment or predilection for austerity, and thus they saw no need to check their calculation. They rushed out their paper in the afterglow of the acclaim of their book, and were swept up in the glaring light of celebrity. They sought fame not rigor.”

Here is her criticism:

“Although I share the author’s concerns with good practice and careful analysis, I am somewhat alarmed by his paragraph beginning ‘It isn’t just the error that ought…’, which imputes to R-R motives and even actions (allowing the error to stand) that he cannot possibly know. They may not have known of the error. The paragraph verges on libel, which is no more attractive than the ethical lapses attributed to R-R.

Time, too, to heap praise on UMass economists for assigning replication as a project for their research students. Replication is tedious, which is why it is seldom done, but it is one of the few weapons we have against sloppiness and worse.

Those interested in this article may like to know of a conference forthcoming in Cambridge, England, ‘Coding Economics? Professional Conduct and Scholarly Values after the Crisis’. See http://goo.gl/HKWnq for details.”

She is right.

I want to spend a little more time on the problem.

First: I think I made it clear this was my personal speculation, but, yes I went too far. I do not have sufficient inside knowledge to be certain as to  Carmen Reinhart’s and Kenneth Rogoff’s motives. That’s why I was speculating and not stating something I thought was certain. My wording falls short too. What I was trying to tease out is that it is often true that a result, because it conforms with expectations, can lull a researcher into less rigorous error checking. That a result of some test or research falls within an expected boundary can occasionally allow errors to slip through even the best researcher’s hands. This is why peer review and reiteration of the test or research plays such an invaluable role. And, yes, once the follow up replication was performed the error was detected. The team at UMass ought to be congratulated by all of us for their work. The error, however, still echoes around outside academia.

Second: It is this laxity due to prior expectation that seems to be a frequent problem within economics. Hence my ire, albeit misdirected or exaggerated. The economics profession is in dire straits. Since the crisis engulfed us we have been treated to endless critiques and self-examination from within the ranks of academic economics, and many far more important voices than mine have opined on the discipline’s parlous state. Yet not much appears to have changed. It’s as if recent history is being ignored. To cite another less contentious example: the last two or three days we have been treated to a spat between Alan Meltzer and Paul Krugman. With Meltzer proclaiming his puzzlement at why certain things have or haven’t happened and Krugman expressing astonishment that, for all the evidence, Meltzer refuses to change his mind.

Imagine that. A researcher. A scientist. An academic not changing his or her mind despite the evidence. I don’t know if Krugman is totally right, but the amount of similar commentary back and forth within economics in the past few years suggests he is not alone in thinking such a problem exists.

The commitment to an ideological or worldview clearly plays a key role in economics. It produces the laxity I was referring to. If some research suggests that a 90% debt to GDP ratio is an important threshold, and if the researcher whose research produces such a result had a prior commitment to that result – or some similar result – then the incentive for error checking in exhaustive detail is reduced. This is not to impute a malevolent intent to the researcher. It is simply a statement about the power of incentives, which within the world of economics can hardly be a novelty.

Third: And this gets us back to the heart of the matter. Economics gives off the impression of being stuck in some strange academic form of trench warfare. Everyone appears dug in, incapable of movement, immune to bombardment, unable to adapt to the environment, and above all unwilling to admit that their position is inferior. They appear content, instead, to lob scholarly bombs at each other. The problem being that these bombs, by the very nature of economics, have enormous real world consequences far from the academic battlefield. Stubborn and slow moving battles within the confines of peer reviewed journals are one thing, but when those battles engulf innocent bystanders – as economic theories are wont to do – another standard altogether seems justified.

That would be an ethical standard. Or at least a recognition that the work of economists can have an impact that reverberates way beyond the safety of the discipline’s internal discussions. This is in no way a new or controversial observation. Yet economics, almost alone in the social sciences, has yet to arrive at a performance standard, set of rules of engagement, or some equivalent incentive structure adjustment to mitigate or prevent the collateral damage it can sometimes inflict when mistakes are made.

So, yes, while I clearly went overboard, and while I do not mean to imply malicious intent to the motives of R-R, it seems to me that the consequences of their error has had more impact on those innocent bystanders than it has on them. This seems wrong. Very wrong.

This is not simply a question of a tweaking of scholarly standards. It also speaks to the heart of the subject itself, its methods, its curriculum, and its overall relationship with the society it purports to study and advise. This is a problem for all economists not just some. We could start by getting a better understanding of what to do about that collateral damage, because in the less forgiving realm of commerce a mistake that had large-scale and negative effects would bring a more severe response than scholarly rebuttal, however harmful that might appear within academia.