Are math formulas washing common sense out of economic theory?
Boston — In the January 1985 edition of a Econometrica, a scholarly economics journal, there is a 23-page article entitled ``Rationalizing Revolutionary Ideology.'' It contains dozens of mathematical equations and subtitles like ``A revolution as a two-person game,'' and ``Tyranny doesn't pay.'' It is, according to Nobel Prize-winning economist Wassily Leontief, a ``ridiculous'' explanation of the Russian Revolution in ``pure mathematics.''
``People are just playing around,'' he says. ``These are events which cannot be measured. How can you put in mathematics Lenin's mind and actions?''
More and more economists are complaining about the ``overemphasis'' on mathematics in teaching economics in the nation's graduate schools and in the academic economic journals.
Dr. Leontief wrote about the problem three years ago in a letter to Science magazine, complaining that ``Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions.''
In a recent telephone interview, Dr. Leontief, director of the Institute for Economic Analysis at New York University, observed that ``it gets worse. The content of the journals has become even more full of speculative mathematics and devoid of empiricism.''
David Colander, a professor of economics at Middlebury College in Vermont, agrees that economics has become ``way too abstract. Liberal arts colleges have enormous problems in getting people [young professors] who are broad-based . . . trained in economic policy issues.''
When a slot opened in Middlebury's economics department, Mr. Colander and his colleagues looked at some 120 initial applicants and quickly narrowed it down to 15 for interviews. Many of the applicants had just spent three years or so at top schools studying what is often called ``econometrics'' -- a combination of economics and mathematics. Most, says Colander, ``were almost useless for us.'' They had inadequate background in economic thought or macroeconomics (examination of the entire economy, including such issues as monetary and fiscal policy). They had spent almost all of their graduate years working with mathematical models dealing with some aspects of the economy.
Eventually, the department chose a graduate with a joint religion and economics major from Williams College and graduate education at Stanford University. It was the undergraduate education which got him the job.
Massachusetts Institute of Technology Prof. Paul A. Samuelson, who won his Nobel Prize in economics partly for his application of mathematics to economics, notes that many economists themselves complain they can hardly read any articles in the professional journals because they have become so specialized and mathematical.
``There is really almost no escape from it,'' he says. ``In my career's lifetime, which goes back more than 50 years now, economics has become increasingly technical, mathematical, and statistical.''
Recognizing the increasing complaints, two economics professors at Simon Fraser University in Vancouver, British Columbia, are surveying some 1,000 economists, including Nobel Prize winners and presidents of the American Economic Association, as to whether economics nowadays embraces too much, too little, or an adequate amount of mathematics.
``Personally I think the trend [toward more math in economics] is very bad,'' says Herbert Grubel, who with Lawrence Boland, is conducting the survey. ``It is not good for the country. The profession is acting very irresponsibly.''
None of the complainants believe economics students should not be made highly competent in mathematics and statistics. Rather, they feel that too many graduate students have left the ground -- become too theoretical, too detached from the reality of economic life.
The late Norwegian co-winner of the first Nobel Prize in economics, Ragnar Frisch, has called this type of highly theoretical mathematical economics, ``playometrics.''
Two explanations are offered for the trend to unrealistic mathematical theorizing in economics.
One is that it has to do with the politics of graduate schools of economics. Pragmatic economists can relatively easily get jobs in government, foundations, or business where they do economic analysis, forecasting, or other practical tasks. The extremely mathematical economists, however, can only teach. ``They don't have the same kind of outside opportunities as others,'' says Professor Grubel. So they have concentrated on winning academic slots. And thus the graduate students get an overdose of math.
The second explanation involves a relatively new school of economics now popular in graduate schools known as the New Classicists. Graduate students must find an area for original research for their theses. But many hundreds of theses have been done on topics relevant to older economic theories like those of the monetarists or Keynesians.
So when Robert E. Lucas Jr. of the University of Chicago and Thomas Sargent of the University of Minnesota combined monetarism (a view that a steady moderate growth in a nation's money supply is the best monetary policy for defeating inflation and limiting the business cycle) with what is known as ``rational expectations,'' it soon became a hit subject for student research.
However, James Tobin, another Nobel Prize winner for economics from Yale University, holds that monetary and fiscal policy changes have little long-run economic impact on the economy because ``rational'' people nowadays anticipate those effects and act in ways that cancel out the expected effect.
Mr. Tobin isn't a fan of those theories. But some students are, he notes, and these often lose interest in economic policy debates because they are skeptical that they have any meaning to real life.
Economics students, he recalls, used to take up the profession because it was interesting, using mathematical, quantitative, and analytical schools, and because they thought they might do some good for the world by solving some problems.
Some students, he says, are a lot more cynical about the second motive. But others are not and would be good candidates for teaching at liberal arts colleges, Tobin adds. ``I don't think we are turning out people wholly unattentive to the problems of the day.''
Professor Samuelson talks of ``a period of anarchy and chaos'' in macroeconomics where ``the simplicities of Camelot do not stand,'' where monetarism is accepted only by a minority of economists, and where rational expectations has not been proven.
He maintains that undergraduate schools have long had a problem with economics instructors trying to teach freshmen what they have just learned in their PhD thesis, and thus having problems communicating. After spending so much time learning the intricate ``lingo'' of economics and other tools, some young instructors lose their common sense. This common sense, Samuelson notes, usually soon returns.
Nowadays, he says, the apprenticeship of economists may be so long and complex that it takes longer for common sense to return.
Middlebury's Professor Colander hopes so. As it is, he says, he has heard young economists fighting the same economic fights that were argued long ago. Lacking any history of economic thought, they do not realize that their topic is stale and has been better debated in the past.
``It is kind of sad,'' he says.