Economics As a Science an Evening with Sue Nicholson Undercover for Cancer NZ Skeptics in the Pub

Economics as a science An evening with Sue Nicholson Undercover for cancer NZ Skeptics in the Pub number 93 - spring 2009 content editorial Economics as a science 3 An evening with Sue Another cracker of a Nicholson 3 Newsfront 10 conference Chair-entity’s report 14 Undercover for Cancer 15 HE 2009 annual NZ Skeptics Conference in Wellington was its usual mix of good times and thought-provoking material, though Bent Spoon Award 16 T with some unique touches. The Kingsgate Hotel was a rather more Forum 17 luxurious venue than we’re used to; the few problems that arose were How the NZ Skeptics in the mostly due to the high number of late enrolments, making this one Pub got started 18 of the largest gatherings in recent years. The vertical limit for Friday night entertainment was the first hint things would be a randomised trials 19 bit different, when a barbershop quartet, Quarter Tone, appeared to serenade us, closing with a rousing skeptical anthem. The right-hand side of the room then trounced the left side in a quiz competition, with each side in turn having to come up with an obscure question to stump the other. We all learned something, not least what a Mon- golian Death Worm can do to you. ISSN - 1172-062X Saturday saw a huge variety of presentations, from Hugh Young’s epic poem on the evils of circumcision, a subject he has written on Contributions previously (NZ Skeptic 86), to Brian Easton’s perspectives on the Contributions are welcome and scientific status of economics (see this issue). Also in this issue is should be sent to: Loretta Marron, who put her scientific training to good use taking David Riddell on the purveyors of dodgy alternative therapies in Australia, after 122 Woodlands Rd being herself diagnosed with breast cancer. Then there was Matthew RD1 Hamilton Dentith putting conspiracy theories in their proper philosophical per- Email: [email protected] spective, John Robinson on how refutations of the Club of Rome’s Deadline for next issue: gloomy predictions don’t stand close scrutiny, and Bernard Beckett, who gave a passionate exposition of what he thinks science is, and December 10 2009 why he thinks evolutionary psychology isn’t it. Look for more of Letters for the Forum may be edited these in upcoming issues of the NZ Skeptic. Or, if you can’t wait, as space requires - up to 250 words there’s audio of many of them available through the NZ Skeptics is preferred. Please indicate the website, courtesy of the Science Media Centre. publication and date of all clippings for the Newsfront. The dinner was a memorable occasion – first the food, then a Material supplied by email or CD is skeptically themed offering from Wellington Theatresports group appreciated. The Improvisors. The Italian Renaissance song about the view from Permission is given to other non- Sarah Palin’s window and the motion of UFOs was a highlight, profit skeptical organisations to although one of the performers had a bit of trouble picking that reprint material from this publication the channeled message from Vlad the Impaler was that it’s okay to provided the author and NZ Skeptic smack your kids. are acknowledged. The main event for Sunday was the AGM, which as usual was a Opinions expressed in the New Zealand Skeptic are those of the relaxed and painless exercise, followed by Matthew Gerrie on the individual authors and do not fallibility of memory, and why police line-ups may have put many necessarily represent the views of innocent people behind bars. Hugely en- NZ Skeptics (Inc.) or its officers. joyable all round, I’ll definitely be back Subscription details are available next year. from www.skeptics.org.nz or PO Box 29-492, Christchurch. number 93 - spring 2009 main feature Economics as a science Brian Easton Economics has been called the Dismal Science. But to what extent are economics scientific, and economists scientists? This article is based on a presentation to the NZ Skeptics 2009 conference in Wellington, 26 September. WANT to reflect on the extent Popper said the most important Some of the greatest minds of I to which economics is a sci- Platonic dialogue is The Apology the last two hundred years were ence and the extent to which it is in which Socrates reflects on economists – some were scien- not. In doing this I come from the the Delphic Oracle’s utterance tists. approach of someone who was that he is the wisest of men. He I want to begin by contrasting trained a scientist, who continues concludes that he is only wise the subtlety of economics and to think of himself as one, and because he knows how ignorant the crudity of its critics. A couple who is heavily influenced by the he is. As Isaac Newton described of examples will illustrate my philosophy of Karl Popper. I sup- himself, he was ‘only a child point. pose that makes me a sceptic. playing on the beach, while vast oceans of truth lie undiscovered The point about sceptics is that I am frequently told that econ- before me.’ they continually test the theo- omists believe that per capita Gross Domestic Product is the ries they hold against the facts, Newton also said ‘If I have measure of welfare of a nation. and try to improve them. As seen further than others, it is by such, they are what Thomas That is a strange claim since Kuhn called revolutionaries, every economist knows that challenging and replacing the more relevant measure is the conventional wisdom. I Net National Income. GDP am going to address some includes depreciation and of these false gods directly. measures the income of a Perhaps you hold some dear. region, not of the people who Please understand I am just belong to the region. Some of applying the standards of the profits of the region go to scientific scepticism to them investors outside it. as you would expect to be Such things are overlooked applied elsewhere. by the critics, but even more Popper points out that extraordinarily, they only even though you know your rehash what economists have always known. I do mean theories will be replaced by The Sceptical Economist: Brian Easton ‘always’. The creator of better ones, hold on to the addresses the 2009 Skeptics Conference. best you have until a better the statistical base out of one comes along. I will give which GDP comes was Si- standing upon the shoulders of some examples where scientific mon Kuznets who wrote in his giants.’ Science is the accumu- economics has held – even still original report in 1934: “the wel- lation of wisdom. We would do holds – theories knowing their fare of a nation can scarcely be well to recall and understand the weaknesses, and where we may inferred from a measurement of giants of our science before we make progress in the not too national income”. But you won’t claim some particular insight. distant future – one hopes. page 3 economics find him quoted in the standard GDP was originally derived for capita incomes in the rich world critiques of GDP, nor John Ken- tracking unemployment. Today quadrupled in the 180 years neth Galbraith who wrote an we know that it is not a very between Ricardo and Schum- elegant chapter decrying its use good short run indicator for this peter. You can set up auxiliary as a measure of welfare in his purpose, that economic activity hypotheses to explain the in- Affluent Society some 50 years and unemployment track dif- consistency but in the 1950s, ago. ferently. So even if the activity as the data became available, it contraction has ended we may became evident that a theory of I am not denying that some expect rising unemployment for economic growth dominated by people use GDP as the measure a while yet. pure capital accumulation was of welfare, or that GDP is an inconsistent with the facts. economists’ measure. My point is that properly trained I am likely to be deluged We now know, following economists use it for other in the next few weeks by a famous 1956 paper by Bob purposes – the purposes for sentiments of ‘hooray Solow, that what he called which it was designed. the recession is over and ‘technical change’ adds to eco- things are getting better’, nomic growth. By technical You might say, why in the change he meant “a shorthand followed up a little later by last 75 years have econo- expression for any kind of shift mists not constructed a better ‘you economists misled us, in the production function. measure of welfare? The short things have not improved Thus slowdowns, speedups, answer is that we have tried, that much’. improvements in the education and we have not been able to of the labour force, and all sorts develop a satisfactory one. of things will appear as ‘techni- Today there is another attempt My second illustration is that I cal change’.” by a committee led by Joseph am often told that economics de- pends upon unlimited economic The story of how the scientific Stiglitz and Amartya Sen, two community has misinterpreted other giants of the profession. growth. That cannot be true since many giants of the economics this economic research for its What I found interesting is that own political purposes belongs they have concluded there is profession – Thomas Malthus, David Ricardo, Karl Marx, John to another occasion. The point to no single measure of economic be made here is that it is simply welfare, and are looking for a Maynard Keynes and Joseph Schumpeter, for instance – were not true that economics says that number of indicators.

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