Economists have been known, on occasion, to joke about “physics envy”. The laws of physics are not up for debate, and most members of the public feel unqualified to offer opinions on whether, for example, string theory offers a promising route towards a Theory of Everything. The laws of economics, on the other hand, are treated as though they are based on no more than opinion or even ideology, and many people seem to feel qualified to offer opinions on whether, for example, carbon taxes will reduce emissions, all else equal.
I have been somewhat bemused to witness ill-informed opinions aired, and taken quite seriously, flatly denying the fact that changing our electricity market design may give rise to perverse incentives, or derail our decarbonisation agenda. It is also increasingly common to hear claims that new housing supply will increase housing costs, particularly rental costs.
Why is it that economic orthodoxy is so readily questioned compared to scientific orthodoxy? There are many obvious differences between physics and economics as academic disciplines, but are those differences so great that economists are unjustified in exhibiting physics envy?
Several years ago I encountered an idea that radically changed my worldview, both personal and professional. I speak of the idea that there are different kinds of facts. In other words, you can have two things that are both true, but for different reasons. There are many examples: it is true that the atomic mass of copper is 63.5, and it is true that I love my children. Both statements are statements of fact, but they are different kinds of facts.
One particular distinction between different kinds of facts has me returning again and again to physics envy: the distinction between anthropocentric and non-anthropocentric facts, proposed by the philosopher David Wiggins. Wiggins points out that some things are true regardless of whether and how humans interact with each other, and would be true had humans never evolved.
For example, the Earth is the third planet from the Sun. This was true from the formation of our solar system, long before any humans came to exist. As such it is an example of a non-anthropocentric fact. But consider the following fact: gold is more valuable than silver. This is undoubtedly a fact – even if I personally prefer silver to gold it in no way changes the fact that gold is more valuable than silver. However, this fact arises as a direct result of humans interacting with each other. The amount of gold and silver on planet Earth has remained constant for a long time, but their relative value has only emerged fairly recently, as a result of human activity. As such, the fact that gold is more valuable than silver is an anthropocentric fact.
This distinction is remarkably helpful in understanding physics envy. Economists may primarily deal in different kinds of facts to the hard sciences, some of which do of course embed assumptions about human motivation and behaviour, but we deal in facts nonetheless. It is quite frustrating to have economic facts continuously questioned, particularly when the questioning is accompanied by accusations of ideological bias.
There are other important distinctions between economics and hard sciences. For one thing economics often involves making trade-offs rather than choosing the objective best way of doing something. Economists can use economic facts and techniques to measure the trade-off, but a value judgement is required to decide what way to come down on the trade-off itself.
Value judgements, therefore, play a role in economic policy, but ideally academic economists would primarily measure and communicate the trade-offs. For example, the statement “failing to raise the retirement age will increase taxes on younger workers, all else equal” is not synonymous with the statement “we should raise the retirement age”. One concerns what will happen, the other what ought to happen. Economic analysis is best placed to inform what will happen under different policies, with policy-makers or the public choosing what we ought to do.
Economists can certainly be guilty of straying away from measuring trade-offs and into the realm of value judgements, and may deserve criticism for doing so. However, when this criticism extends to ignoring or even denying the existence of economic facts altogether the public is poorly served.
It is a good thing, for example, that whenever a media source reports a statement from a person or body that denies the efficacy or safety of Covid-19 vaccines, the outlet also tends to also note the overwhelming scientific consensus that vaccines are a safe and effective means of preventing severe disease and death from Covid-19. I would argue that the same media outlets should (for example) adopt the practice of noting the overwhelming economic consensus that increased housing supply puts downward pressure on housing costs, all else equal, when reporting on a person or body claiming that new housing supply will increase rents.
Economists are as prone as anyone else to hubris and bias, and as a discipline we must be rigorous to ensure our research is high quality and our conclusions and findings are evidence-based. Public discourse can aid by interrogating our biases, challenging us on our interpretations, and providing new data and perspectives we may not have considered. However, commentary that regularly denies the economic facts and tools with which we build our analyses undermines, rather than improves, our contribution to public discourse.
Muireann Lynch is a professional energy economist at the ESRI and amateur philosopher