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Ethics and Economics

The failing of economics have been widely discussed in the last few years, and now Professors Kim and Yoon have suggested in the Financial Times that ‘an eminent philosopher…should be appointed to take charge of economics’ Don’t all rush at once. I doubt they really mean it. And even if they do, we mustn’t fall for our own propaganda: philosophers don’t exactly have a good track record on practical matters.


The grounds for their suggestion is that economics is ‘not a science that only describes, measures, explains and predicts human interests, values and policies – it also evaluates, promotes, endorses or rejects them’ and for these kinds of reasons ‘economics is a dimension of ethics’ and ethics should be ‘organically incorporated into economic discourse’. This all sounds very exciting but I fear it is misleading.


The suggestion is that economics is value laden and as a consequence can’t be done properly without philosophers. There are two ways in which economics might be value laden but only one of them supports the conclusion that philosophers are needed.

Economics might be instrumentally ethical, that is to say, whilst ethics tells us about the value of ends, economics evaluates economic means to those ends. In this case economic prescriptions have the form ‘if you want this end then you ought to take these economic means’.  Such prescriptions have the same normative form as the prescriptions of engineers based in physical theory, but we have no temptation to think philosophers should be in charge of physics (philosophers no doubt have such a temptation, indeed, some think that they are in charge, but I hope nobody else does). It’s worth noting that being instrumentally ethical is a good explanation of most of the reasons that are used to argue that economics (and often the natural sciences) are problematically value laden, including all those that advert to the influence of ideological bias on resarch and those that appeal to the role of epistemic values in enquiry. Clearly, being instrumentally ethical leaves ethics and economics entirely separable.


So if we’re going to get the job we need  ethics and economics to be inseparable, and for that we need economic truths to be a variety of ethical truths, even when they don’t look like it. Unfortunately this has implausible implications. For example, could the truth of Gresham’s law really depend on whether hedonism or rational desire satisfaction is the true theory of well-being? Obviously not, but that is the kind of thing that would be required.

So thanks for the offer, guys, but it can’t really be defended and anyway, it’s likely to be a bad idea (phronetically speaking)

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5 Comment on this post

  1. Not only do I agree that it’s a bad idea, I would like to suggest an alternative, namely that economists (including Profs Kim and Yoon) finally understand and accept, once and for all, that if economics wants to be a social science then it MUST NOT at the same time promote, endorse or reject the phenomena it is trying to study. By trying to do both, it ends up doing neither – or at least doing both badly.

    I think there are two reasons why social sciences tend to fall into this trap to a greater extent than natural sciences. Firstly, because they deal with human affairs the temptations to introduce values (often without being aware of it, which is when the real damage is done) is greater than when we are, say, studying the behaviour of nematods. Secondly, various factors – complexity, the fact that we are directly changing the thing we are studying (what Soros calls “reflexivity”), and the ethical problems associated with experimentation – make it more difficult to stick to the levels of rigour that natural sciences tend to enjoy, and thus to spot the problem when it arises.

    Come to think of it, perhaps there *is* a role for ethicists: in shedding light on what kind of economic experiments are ethically permissible.

  2. Social scientists can’t help but take ethics (as a cultural artifact) into account when studying activity in a particular place, and seeking to make conclusions that are more generally applicable. Of course, the student must first figure whether the norms are actually at work as a limit or cause for conduct, and whether/how their effectiveness is limited by such things as exigency, passion, etc.

  3. Dennis, I agree that ethics need to be taken into account, but as an object of study not as a basis for promoting, endorsing or rejecting the thing one is studying. It is in the latter case that one crosses the boundary between science and advocacy.

  4. Economists have two kinds of jobs, I think. One is that of scholar, who describes the way markets work and tries to make predictions about how particular policies and natural events will affect price and supply of things, including services. Concepts of just distribution of wealth and opportunity may interfere with the economist’s outlook insofar as it involves choosing between alternative understandings of such things as what influences purchasers and suppliers of things, and what value to assign to such things as life, remaining years of life, enjoyment, national parks, endangered species, etc. Consider the disagreements between “liberal” economists (e.g. Paul Krugman) and more conservative ones (e.g., Bryan Caplan or Arnold Kling, and see Megan McArdle’s blog) about the proper response to the problems of unemployment and possible deflation. They can’t help it; social science is not exactly physics.

    The other is that of adviser, and there, the economist may find it impossible to avoid toadying to morals or sense of justice of the seeker of advice. Moreover, the toadying is easy when the seeker of advice chooses the economist for his or her point of view. Presidents, prime ministers, and legislators do this. Businessmen often do this too, in their choice of information media to which to pay attention.

  5. I agree with much of this Dennis. In particular:
    – yes social science is not physics, and it can be difficult to avoid allowing one’s own values to interfere with one’s judgement on the empirical issues; this is indeed the first of the reasons I gave why social sciences more often get confused with advocacy;

    – and yes, economists use their knowledge to advise people. This is where Nicholas’s point about economics being “instrumentally ethical” comes in. By the way, in this they are no different to natural scientists: you can use physics, for example, to build a nuclear bomb or a wind turbine.

    What I was objecting to in the quote from Profs Kim and Yoon was the implication that we should not even be *trying* to separate these roles. Just because it is difficult to separate values from the essential scientific (and valueless) back-and-forth between theory and experimentation doesn’t mean we shouldn’t try. I want there to be economists who operate as social scientists in search of the truth, not so much about what is the “proper response” to “problems” such as unemployment or possible deflation (because the words “proper” and “problems” already imply values) but rather in the sense of “if we do X, Y is likely to occur”. I’m not saying that economists (Krugman being an obvious example) should refrain from engaging in advocacy; rather that this should be seen (not least by economists) as a separate activity from the creation of knowledge about how economies work.

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