“I have my own philosophical views, I have my own policy perspectives, my own preferred solutions to various policy problems. What’s changed is that I don’t delude myself into thinking that the reason I hold my views is because I have better evidence on my side: ‘My studies are the ones that are done well—the other side, those studies ah, they’ve missed this, they’ve left that out, this was mis-measured—that’s a crummy study!—that’s what THEY rely on!’ I think they’re all not so good now, even the guys on my side who purport to claim that this policy or that policy is the right one. Their empirical work is not so good either.”
In the course of the interview, Russ compares economics to physics. Economics measures the moving target of human action and interests. Physics—not without its own inaccuracies—measures the relatively stable physical world. The implications of physics on bridge building are largely known and quantifiable; the economic implications of bridge building are more complex and far reaching because of the moving targets of human action, reaction and interaction. Russ then compares the economic crash to a plane crash. Over time, the number of airplane crashes has decreased, whereas the number of economic crashes has increased. Engineering safer planes and guidance systems has given us increasingly safer air travel. An economy is far more complex than an airplane, so trying to engineer an economy with fewer crashes may create more problems.
I interpreted the interview in three different ways:
1) Russ is having a major crisis of confidence in his profession, brought on by the current economic crisis.
2) Russ is calling for enhanced empirical technique.
3) Russ is calling for an end to empiricism.
I think the reasonable interpretation is a mixture of 1 and 2. Russ isn’t really calling for an end to empiricism, just an end to a certain kind of empiricism, the incestuous kind that breeds smugness and hubris; the kind that convinces smart people they are wizards able to manipulate economies.
By the end of the interview, Russ makes sure to add:
“I don’t want to argue that facts don’t matter. Facts do matter, information does matter. What I’m talking about is the gussying-up of that information in fancy forms that academic economists use in the journal articles, which usually are not reliable.”
The hosts then chat a little bit about how satisfying it is to see someone question the value of his field, and one of them claims that the whole value of economics is based on its ability to predict the future. They compare economists to meteorologists. Yikes!