The economist’s economic growth bias
Posted February 19, 2008on:
Reading the titles of the last two posts (the birth rate vs the growth rate and growth forecasts and government) I realised that neither rauparaha or myself defined what ‘growth’ we were talking about. Like all economists, we took ‘Growth’ to be synonymous with growth in gross domestic product.
Could this possibly imply that economists such as rauparaha and myself have an inherent bias when discussing normative statements about welfare that points us towards pro economic growth policies – even when there is a hefty trade off in other social values. Do economists focus too strongly on technical and allocative efficiency without taking social efficiency and equity into account?
If economists viewed the results of such analysis as positivist statements (statements of fact) there would indeed be a problem with this linguistic bias that we have towards growth in the economic pie (the size of the economy). However, economists realise that this growth focused view of welfare only provides part of the story when it comes to policy – we realise that in policy terms you have to make some pretty steep value judgments to truly believe that all that matters is gross domestic product.
If economists accept this, there is still a good reason why they are keen to focus on issues of production and expenditure ahead of welfare. The reason is that they can be (relatively) objectively measured – its an area where we can work out what happens, without relying on a swathe of value judgments.
Many people find the focus on production irritating as there are other social issues – other things that matter. However, the trade-offs between these value laden concepts is best left to policy analysts, sociologists, psychologists, and experts of the given field. Economists are the guys you can come to in order to frame a problem for you. But if the problem involves value judgments we require a little help from our friends in the other social sciences.
When an economist says that something will happen to growth, it comes from his relatively objective analysis of the economic system. Whether the social trade-offs required to create this product is worthwhile is a question that must be answered before policy is implemented – it is not a question that most economists will attempt to answer.
One issue of difficultly arises when potential social values influence peoples incentives, thereby influencing production. In this case the very value of product depends on normative analysis – a difficult position for the typical economist.
Given these interdependencies, we are left with a question. Should economists learn to make normative judgments and dive into policy, or should they steer away from normative statements and stick to positive statements that the ‘experts ‘ can work with?
This distinction strikes at the heart of the difference between political economists (as the pre-marginalist economists) and economists. Tyler Cowen is a strong proponent of the pro-normative school, while Dani Rodrik tends to stick closer to the typical economists positivist focus.
For now, I’m siding with Dr Rodrik.