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Thursday, July 16, 2015

'What Economics Can (and Can’t) Do'

Gary Gutting interviews Daniel Hausman (both are professors of philosophy):

What Economics Can (and Can’t) Do: ...G.G.: Can we regard the findings of economics as purely scientific conclusions? Or do they also involve value judgments?
D.H.: Many economists would maintain that their role in policy is, like engineers, merely to specify how to achieve the objectives at which politicians aim. Sometimes this is an apt description of the contribution they make, but most economists also take for granted that public policies should enhance people’s well-being. So economists assess policies mainly in terms of their welfare consequences. Since economists regard people’s preferences as motivating their choices as well as indicating what is good for them, they evaluate policies almost exclusively by examining how well they satisfy people’s preferences.
Most economists would concede that other values, such as freedom, rights and justice should also influence public policies, but they regard their policy expertise as largely limited to the assessment of the welfare consequences of legislation and regulations.
G.G.: What help, then, are economists in debates about public policy?
D.H.: They tell us which are the right questions to ask if we seek to satisfy preferences. Knowing what to ask is enlightening even when it is hard to find the answers. Although helpful in these ways, economic knowledge is no cure for bias and shortsightedness. Knowledge does not benefit us if we make bad use of it.
G.G.: Can you cite some positive contributions of economists to public policy?
D.H.: Economists have chalked up some huge successes. ...

There's a lot more in the full post, including questions such as:

G.G.: I’ve found convincing Paul Krugman’s arguments that austerity hasn’t worked to solve Greece’s economic problems and that the best path is to forgive some of their debt and to put more emphasis on stimulating their economy. Since there is no consensus among top-level economists about Krugman’s views, should I withhold judgment on his recommendations? ...

    Posted by on Thursday, July 16, 2015 at 12:33 AM in Economics | Permalink  Comments (46)


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