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This surely sounds like an indictment of the economics profession. Here were interesting, basically
sensible ideas, ideas that made sense to anyone who did not have professional training in economics.
And yet because they could not be modeled with the rigor required by the increasingly narrow standards
of the journals, they were ignored. Doesn't this say that we have made a fetish of formalism? Doesn't it
even seem to imply that the whole profession may have taken a wrong turning?
No: while many economists are indeed too narrow-minded, the insistence on models is right, even when
it sometimes leads us unfairly to overlook good ideas. To understand why, we need to stop for a little
while and ask why we need formal economic models in the first place.
The Benefits and Costs of Models
I have just acknowledged that the tendency of economists to emphasize what they know how to model
formally can create blind spots; yet I have also claimed that the insistence on modeling is basically
right. What I want to do now is call a time out and discuss more broadly the role of models in
intellectual inquiry.
It is said that those who can, do, while those who cannot, discuss methodology. So the very fact that I
raise the issue of methodology in these lectures tells you something about the state of economics. Yet in
some ways the problems of economics and of social science in general are part of a broader
methodological problem that afflicts many fields: how to deal with complex systems.
It is in a way unfortunate that for many of us the image of a successful field of scientific endeavor is
basic physics.
file:///D|/Export2/www.netlibrary.com/nlreader/nlreader.dll@bookid=409&filename=page_68.html [4/18/2007 10:30:28 AM]