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Monday, June 9, 2008

The dismal science indeed

You don't have to read very many of my posts here to know that I'm a huge fan of Freakonomics. But Dubner's post on "locavores" (i.e., people who try to eat locally-grown food) versus the efficiency of specialization is a rare example of the type of economic thinking that drives me crazy (rare for that blog that is, though unfortunately not rare among economists in general). It's the view that efficiency must, or at least should, be the primary criterion for assessing whether something is 'sensible' or not. Dubner is partly trying to point out that proponents of buying local often try to use efficiency as an argument FOR buying local (e.g., it's cheaper, it's better for you and the environment, etc.) when it's much more likely that the gains from specialization make it less efficient. That's fine - I'm all for pointing out flaws in the positive analysis. And Dubner also points out that one person's labor is often another's leisure. But in pointing that out, he calls it "a curious fact," and the tone throughout the post is that this is somehow not 'sensible'.

I find that really disappointing because as a teacher, I try to help my students separate out positive from normative. That includes pointing out that economics, as a field, often has normative judgments embedded in our core principles, the primary one being that efficiency is valued above all else. I do find it interesting that the Voluntary National Content Standards in Economics all seem to be carefully written as positive statements; for example, Standard #8 reads "Prices send signals and provide incentives to buyers and sellers. When supply or demand changes, market prices adjust, affecting incentives". In contrast, Principle #6 in Mankiw's textbook asserts that "Markets are usually a good way to organize economic activity." Hard to get more normative than saying something is good or bad. And it's not even that I disagree, I just think economists would have more credibility (not to mention a better reputation in general) if we were more upfront (or even aware) of the biases that are embedded in how we see the world.

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