Wednesday, November 17, 2004

The Dismal Science

Kieran Healy writes:
When you’re a Sociologist like me, and your field has no credibility, people just assume you’re stupid and don’t bother sending you their Final and Completely True Theory of X in the first place. On the other hand, it does invite people to assume the answer to any problem you are studying is simply obvious common sense.
There certainly is a stereotype in popular culture that sociologists are given large government grants to study silly and mundane questions. John Quiggin responds:
But sociology is a victim of its own success here. All of the big insights of sociology, from its beginnings in the 19th century up to 1950s work like that of Erving Goffman are indeed common sense, not because they were already known, but because they have been incorporated into the intellectual baggage of everyone in Western societies, educated or not. No one, for example, would be accused of talking academic jargon if they raised the problem of “peer group pressure” at their local school, or made a reference to ‘social status’.

By contrast, almost nothing in economics has managed to become common sense. Something as basic as comparative advantage, a concept developed nearly 200 years ago, remains as counter-intuitive as quantum physics to most people. Opportunity cost also at least a century old, similarly requires years of intensive training before it becomes common sense rather than a memorised definition.

Has nothing in economics been accepted as common sense? Certainly comparative advantage has not. But the issue of trade is not so one-sided as to be solved by simply stating the theory of comparative advantage. And since it is multi-dimensional and controversial, the common sense that is comparative advantage has been overlooked or lambasted, despite its simple truth. But long before its conception as an economic theory, people used comparative advantage. For example, the division of labor has been around since hunters and gatherers. Early man realized that some were better suited for hunting and others for gathering nuts and berries.

And opportunity cost? Why is this concept so hard to grasp for so many people? After all, people make decisions based on it all the time. If I go to the concert, I can't write my paper. If I buy a t-shirt I won't be able to buy a CD. Etc.

So why is John Quiggin so sure that economics hasn't contributed to common sense? Well, because it hasn't. The vast majority of economic insight takes common sense that already exists and formalizes it. Even though people may not realize it, they make decisions based on opportunity cost every day. And any kind of specialization is based on comparative advantage. The difference between economics and sociology in this context is that whereas sociology seeks to add to common sense by studying behavior, economics studies common sense and draws conclusions about behavior by assuming that people generally act according to common sense.


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