Ronald Coase plans new journal ‘Man and the Economy,’ makes call for a qualitative sociological economics

One-hundred-one-year-old economist Ronald Coase is planning to develop a new journal (apparently titled Man and the Economy), the goal of which will be to move economic study from “abstractions” and “numbers” to “firms” and “people.” This is indeed interesting news. Businessweek magazine recently reported on the plan (link). According to Businessweek, Coase thinks economic methods are “broken” and can’t be fixed by “tweaking models.” The problem is more fundamental. The problem is not with the models, but with the data:

When Coase and Wang hosted a conference on China in 2008, they noticed that many Chinese academics had never talked to either policymakers or entrepreneurs from their own country. They had learned only what Coase calls “blackboard economics,” sets of theories and mathematical relationships between bits of data. “I came from China,” says Wang. “We have a lot of nationals come here; they’re taught game theory and econometrics. Then they’re going home … without a basic understanding of how the real world functions.”

Strip it away, and Coase’s arguments add up to ‘economics needs more sociology.’ Indeed, the takeaway for me is how Coase’s vision of proper economics invokes the language, the methods, and the data of qualitative sociology:

In an essay published on Nov. 20 in Harvard Business Review, Coase argues that in the early 20th century, economists began to focus on relationships among statistical measures, rather than problems that firms have with production or people have with decisions. Economists began writing for each other, instead of for other disciplines or for the business community. “It is suicidal for the field to slide into a hard science of choice,” Coase writes in HBR, “ignoring the influences of society, history, culture, and politics on the working of the economy.” (By “choice,” he means ever more complex versions of price and demand curves.) Most economists, he argues, work with measures like gross domestic product and the unemployment rate that are too removed from how businesses actually work

The solution for Coase and Wang is a journal that presents case studies, historical comparisons, and qualitative data—not just numbers but ideas, too. In top economics journals, says Wang, “people think as long as you have a big data set, that’s enough. You can do all kinds of modeling and regression, and it looks scientific enough.” Julie Nelson, chairwoman of the economics department at the University of Massachusetts Boston says economists want the kind of immutable laws that physicists operate under. But Adam Smith’s 1776 idea that people are driven by self-interest is not the same as the law of gravity. “Ask an economist if they’d like to be thought of as a sociologist,” she says, “and they’ll look at you with terror in their eyes.”

Here’s the link to Coase’s Harvard Business Review article headlined “Saving Economics from the Economists.”

[Update: I’ve added a new post with further thoughts from my own point of view on Coase and qualitative sociological economics here]

This entry was posted in advanced capitalism, contextualized vs aggregative data, macro-economics, the database, theoretical drivel. Bookmark the permalink.

One Response to Ronald Coase plans new journal ‘Man and the Economy,’ makes call for a qualitative sociological economics

  1. Pingback: Ronald Coase and a qualitative sociological economics: my position | price of data

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