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A Prize Worth Celebrating

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A Prize Worth Celebrating

The Wall Street Journal October 10, 2016
EconomicsOther
OtherCulture & Society

The Nobel for economics, first given in 1969, has been instrumental in recognizing and popularizing the work of laissez-faire economists.

Today the world woke up to learn that Oliver Hart and Bengt Holmstrom are the latest recipients of the Nobel Prize in economics. Journalists are scrambling to summarize their brilliant work on contract theory. But “The Nobel Factor,” by Avner Offer and Gabriel Söderberg, is a book about the prize itself. The authors claim that the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (as it is officially called), first awarded in 1969, has given economists a scientific aura that they do not deserve. The authors insist, moreover, that it has subtler effects, including supporting a laissez-faire ideology. “The existence of a Nobel Prize in economics,” they write, “implied that the ‘market turn’ since the 1970s was scientifically grounded.”

The best role for the Nobel Prize in economics is not to advance an ideology but rather to reinforce the requirement that economists should play by the same rules as scientists. 

The authors make two main arguments against the scientific status of economics. First, economists disagree about a lot. Second, economists write fancy mathematical models that aren’t empirically relevant. There is some truth to both statements. Economists do disagree, partly because doctoral programs attract both liberals and conservatives. Messrs. Offer and Söderberg point to surveys showing that economists disagree over statements like “the distribution of income should be more equal” or “the redistribution of income is a legitimate role for government.” They note that “one would hardly expect such lack of agreement over core issues in the application of physics, chemistry, or biology.”

Yet disagreements do not disbar a field from being scientific. In a recent poll of participants in a conference on quantum mechanics, for instance, 52% believed “that physical objects have their properties well defined prior to and independent of measurement,” and 48% disagreed.

Moreover, the authors have chosen questions whose answers depend far more on ideology than on economic knowledge. Economics can tell us whether higher tax rates will...

Read the entire piece here at The Wall Street Journal

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Edward L. Glaeser is the Glimp professor of economics at Harvard University, a senior fellow at the Manhattan Institute, and contributing editor at City Journal.

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