Economic Scene; Reality's the Thing This Field Needs

By Leonard Silk

NYT

Published: Friday, December 29, 1989

FOR the thousands of economists attending the annual meetings here of the American Economic Association, and for the millions of people in the world undergoing rapid and often chaotic change, there is a crucial question: How good is the state of economics?

The answer from some leaders of the profession: Not so good. Herbert A. Simon of Carnegie-Mellon University, a winner of the Nobel Memorial Prize in Economic Science, contends that the differences and sharp conflicts among economists demonstrate that the state of economic knowledge is insecure.

''The public is not mistaken in its perception that economists disagree frequently and vociferously,'' Mr. Simon said. ''We have Keynesian economics, monetarism, supply-side economics, rational expectations and budget balancing, not to mention free trade, protection for infant industries, and proponents of the income tax, the single tax, the sales tax and almost no taxes at all.''

Michael J. Boskin, chairman of the President's Council of Economic Advisers, sought to resolve these clashes by taking what he called a ''pragmatic, eclectic'' position. He said the public could not expect to find a ''pure monetarist, pure Keynesian or pure rational expectationist'' on his staff. ''We are not sticking slavishly to any one of them,'' he said, adding, ''This view is shared by most people in the Administration and fits in with the way President Bush thinks.'' He counseled much greater humility for economists.

Despite differences among economists on both analyses and policies, some critics insist that economists share a common and incorrect approach to understanding human behavior - that they exaggerate human rationality, alleging that people act on the basis of calculations and forecasts of how they can get the most income, profits or well-being.

Kenneth J. Arrow of Stanford University, who won the Nobel Memorial Prize in 1972, observed in an essay in a new book, ''The State of Economic Science,'' that ''the impossibility of carrying out such calculations is manifest from everyday observation and confirmed by the inability of economists using our theory and our computing power to make good forecasts - even good contingent forecasts.'' A contingent forecast is one based on certain assumptions.

Mr. Arrow noted that in experiments, cognitive psychologists had found systematic kinds of bias in human behavior, strongly contradicting the economists' assumption of rational behavior. Both Mr. Arrow and Mr. Simon urged the economists to learn from these psychological studies.

The inability of economists to forecast reliably remains a persistent criticism of the profession. There is increasing question, after the development of chaos theory in mathematics, about whether economic systems, given their complexity and the possibility that small changes in some variables will produce enormous changes in the overall system, is inherently chaotic and does not lend itself to dependable forecasts.

Even some of the most mathematical economists now complain that the field has become overly wedded to abstract theories and too careless and casual in amassing the empirical data on which understanding must be based.

While noting that no serious economist opposes applying mathematical techniques to economics, Henry Woo of the Hong Kong Institute of Economic Science said, ''What causes concern over present-day economics is the dominance of mathematics almost to the exclusion of other methods of inquiry and the imposition of a mathematical finality on the subject.''

Despite this bill of indictment, economists remain a cocky and feisty group. Because they are consulted routinely by public, press and Presidents, they believe, perhaps correctly, that they are the only wheel in town. Economics is certainly too important to be left to non-economists, with their own heavy political or personal interests.

But there is more to be said in behalf of the best of the profession. They have over the years developed concepts of the interdependence of elements within a system that are not obvious to lay people looking at one event at a time. They have tackled problems, increasingly interesting to other sciences, of decision-making in the face of uncertainty. And they have sometimes shown an imagination and inventiveness in problem-solving that society urgently needs.

The danger is that economists, with their infatuation with abstruse theory, neglect the hard empirical work on which public policies must depend.

In brief, as some outstanding economists see it, the field needs to be both richer in its intellectual and empirical content and more of a science in the true sense. As Mr. Simon put it: ''What distinguishes science from every other form of human intellectual activity is that it disciplines speculation with facts. Theory and data are the two blades of the scissors. But the metaphor is not quite right, for the blades are not symmetrical. When theories and facts are in conflict, the theories must yield. Economics has strayed from that simple principle, and it must return to it.''

One way of getting there is for more economists of this generation to get as involved in economic problem-solving as their predecessors during the Depression, World War II and the Marshall Plan.

drawing

against research cuts,

• DEAS & TRENDS; Sociology's Long Decade in the Wilderness

  Herbert A. Simon, a Nobel Prize-winning economist and psychologist at Carnegie- Mellon University, who has testifed before Congress against research cuts, ...

Published: Sunday, May 28, 1989

THE 1980's have not been kind to sociology. The field has become impoverished, fragmented, vulnerable, precisely the kind of subject sociologists like to study.

During the early Reagan years, Federal administrators, who considered the failures of the Great Society's antipoverty programs evidence that sociology was expendable, sharply cut funds for research on housing, crime, welfare and health. The level of financing is still 30 percent below what it was in 1980, and sociologists continue to scale down projects, forsake new inquiries and disguise their work as anything but sociological.

At the same time, fewer students are studying sociology or choosing careers in the field. The number of sociology doctorates dropped to 451 in 1986-87 from a peak of 729 in 1975-76. Even the content of sociology - the field that gave the world such concepts as ''the lonely crowd,'' ''the organization man'' and ''the power elite'' - is in turmoil. One part of the field advocates more rigorously mathematical studies, while others worry that such an emphasis would drive away students keen to solve social problems or learn about themselves.

''There isn't a certain body of knowledge that everyone would swear is of central importance,'' said Egon Mayer, a Brooklyn College sociologist. ''We are still teaching the same sort of things that we taught in the 60's and 70's, but we aren't as convinced as we were that it's worth teaching and not quite sure what it should be replaced with.''

A milestone in the discipline's slide was the announcement last month by Washington University in St. Louis that by 1991 it would disband its well-respected sociology department because of budget concerns. Several years ago, the University of Rochester eliminated its department.

''Sociology suffers from not being well-defined in the public mind,'' said Stephen Buff, assistant executive director of the American Sociological Association. ''On one hand, it's confused with social work. On the other hand, it's confused with socialism.''

Sociology, the study of human social behavior, is a relatively young field. The name was coined in 1838 by Auguste Comte, and the first American department was founded less than 100 years ago, at the University of Chicago. Throughout its short history, the field has been dogged by skeptics who wonder how much of its work is truly scientific and how much is ideological.

Nevertheless, by 1970, nearing the peak of its popularity, the number of doctoral programs in sociology had grown to more than 100. Flocking to the field were idealists who hoped to unravel the mysteries of poverty and reshape inner cities. A few were political radicals, true to a prophetic strain that along with a priestly strain of hard-working researchers have always made up sociology's double helix.

Then, impatience and disillusionment with many civil rights and antipoverty programs set in. In the fiscal year 1982, the National Science Foundation, one of the Government's largest supporters of behavioral research, slashed funds for sociology to $2.2 million, from a high of $3.9 million in fiscal 1980.

At the same time the field became balkanized as schools began offering degrees in competing disciplines like black studies, Jewish studies and women's studies.

''What used to attract people to sociology is that we were able to look at blacks and Jews and Italians and see what is universal,'' Mr. Mayer said. ''Now those same students who are Jews and blacks want to study what's unique about themselves.''

Sociologists find it disturbing that their field is suffering from budget cuts at a time when they see so many social problems that beg for understanding: the disintegration of American families, the patterns of drug use and AIDS, the causes of homelessness, the effect of a population that is rapidly aging.

Herbert A. Simon, a Nobel Prize-winning economist and psychologist at Carnegie-Mellon University, who has testifed before Congress against research cuts, says long-term studies, which are intended to provide the most useful information for Government policy makers, have been especially hurt. For example, he said, society knows very little about what eventually happens to teen-age mothers. ''Do they become just derelicts or do some find their way back into the mainstream?'' he asked.

There are many examples of the new era of limits. Marvin E. Wolfgang, a University of Pennsylvania criminologist whose research on habitual criminals prompted the creation of so-called career offender programs in many prosecutors' offices, proposes to have neurologists and other doctors examine 200 to 300 violent offenders to see if there is an increased incidence of brain damage, tumors and other medical problems.

He has asked two Federal agencies for more than $300,000 a year for five years, but he suspects the project's scope will have to be narrowed to 150 subjects. ''It certainly reduces confidence when the numbers go down,'' he said.

Still, some sociologists see hopeful glimmers. Though the country is hampered by a deficit, some researchers hope that President Bush's talk of confronting social problems will translate into more Government money for behavioral projects.

In the meantime, many young sociologists are applying their statistical and survey skills to the marketplace. Advertising and insurance companies have found that sociologists trained in polling methods and organizational dynamics are particularly canny about what kinds of people will buy what kinds of products.

But Mr. Mayer finds this trend as bittersweet as the exodus of students to ethnic studies.

''Either way you turn, the discipline itself loses,'' he said.

Drawing; graphs of sociology bachelor's, masters and doctoral degrees conferred at U.S. colleges and universities, 1960-1987 (Source: National Center for Education Statistics; American Sociology Association)

• Technology > New Company Starts Up a ...

  Vivisimo's co-founder and chief executive, Raul Valdes-Perez, was a protégé of Herbert A. Simon, a Nobel laureate who was a pioneer in artificial ...September 30, 2004 - By JOHN MARKOFF - Technology