Scientific theory is always up for grabs

Laurence Kotlikoff (an economist at Boston University ) has written an important op-ed piece on Bloomberg about the politicization of the economics profession: "Economists risk labeling as political hacks". While I agree with the general thrust of the argument, and much of the specifics, I was troubled by the line "Economic theory isn't up for grabs". Below is my response, left as a comment after the original article.

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This is an excellent article and you raise some very important points that every economist should be concerned about.

However, in the last section of the piece (titled "Consumption Spree") I think you take the argument a step too far. In particular, I have a problem with the line "Economic theory isn't up for grabs. Economic facts aren't a matter of choice." Here you are doing a disservice to economics by exaggerating its claims to scientific impartiality. No theory exists in a vacuum and empirical "facts" must be interpreted in order for them to have any meaning (this is true even for the "hard" sciences, but especially so for social science such as economics)

The preceding discussion on savings rates provides a perfect illustration of this. You take an existing theory (life cycle savings model) and use it to interpret some empirical facts (savings rates, tax incentives) resulting in an explanation of America's low savings rates. This is all perfectly valid. But it involves the selection of a model - based on a particular world view - and the interpretation of the empirical evidence through the prism of that model.

Your argument sounds convincing - and I have no doubt this is at least part of the explanation for low savings rates. But the reader - and certainly other economists - should be free to agree or disagree with your particular interpretation, and to offer alternatives. Indeed alternative explanations of low savings rates have been offered by people who start with a different model or world view and make a different interpretation of the available evidence.

This is how good science should work. It is always up for grabs.

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Media disasters?

What influence does popular media coverage have on the allocation of humanitarian aid following a natural disaster?

In his excellent short films (see here and here) Arno Waizenegger documents the responses of both the international aid community and the international media to the tsunami that devastated the Indonesian province of Aceh in December 2004. Donors pledged so much money (about US$8 billion) to the region that one aid agency - Medecins sans Frontieres - took the unprecedented step of announcing that they would not be accepting any further donations for that cause. The tsunami also became a major international "news event". Was the massive aid response directly attributable to the intense media coverage of the event? Waizenegger points to another 'silent disaster' - a civil conflict that claimed 15,000 lives - that had been ongoing in the same region for 29 years prior to the tsunami, but received little of either international media attention - in part because the government had previously banned foreign journalists from entering the areas affected by the conflict - or humanitarian assistance for its victims.

Of course, the 2004 tsunami was of such a scale - around 170,000 were killed in Aceh alone - that it was almost certain to receive international attention both from the media and from aid organizations. The question is whether relatively marginal disasters are more likely to receive humanitarian aid if given media attention. In their elegant paper on this topic "News droughts, news floods and U.S. disaster relief", Thomas Eisensee and David Stromberg find evidence that U.S. disaster relief depends on whether or not a disaster occurs during periods when there are other newsworthy events - such as the Olympic Games - that effectively crowd out media coverage of the disaster.

This is the topic of my latest research. I use newspaper archives to quantify the amount of media attention given to a particular disaster event. Based on data gathered from the Washington Post archive, for disasters occurring in developing countries between 1995 and 2010 (a sample of around 3,400 events), there appears to be some distinct patterns of media coverage across regions and disaster types. Earthquakes and storms appear to generate the most media coverage on average (with about 0.6 news articles per person killed), floods generate considerably fewer stories (around 0.14 articles per person killed), while news coverage for drought episodes is an order of magnitude lower again (at just 0.03 articles per person killed). Part of the reason for the relative lack of attention on droughts may be due to the nature of such events, given that they are slowly evolving crises as opposed to dramatic lightning strikes. This also has the added effect of making it difficult to define start and end dates for a drought event. As a consequence the search window (from two days prior to the event onset, up to 40 days after the event) is unlikely to cover the entire drought 'event' - given that some drought episodes can last months or even years - and therefore may not capture the total amount of media attention that the event receives.

Turning to media coverage by region, again we find a distinctive pattern in the data. Disasters that occur in Latin America and the Caribbean generate the most news coverage (with an average of around 0.6 news articles per person killed), those occurring in either the East Asia Pacific or Europe and Central Asia regions generate slightly fewer stories (on average around 0.4 per person killed), while South Asia (with just 0.16 articles per person killed), the Middle East North Africa and Sub-Saharan Africa regions (each with just 0.11 articles per person killed) are relatively neglected. Of course these figures are simple averages and take no account of the relative distribution of disaster types across regions. Therefore the relative neglect of Africa could be a reflection of the relative lack of media attention on drought events, for example. A more structured analysis may uncover whether or not these patterns represent a genuine tendency for some disaster types and regions to be relatively neglected and if such media biases have any influence on the political decision to grant humanitarian aid relief to a disaster affected region.

The research will also extend to archive searches in major news publications of other countries (starting for linguistic convenience with Anglophone countries - US, Canada, Australia, UK and perhaps Ireland - reflecting the home bias of the author) to investigate whether the media's influence on relief decisions differs across countries. 

This is early stage research and comments or suggestions are most welcome.

The meaning of crisis

Crisis is a term rooted in Greek tragedy, meaning “a decisive moment or turning point in a dramatic action”. It is a moment of suffering and confusion, a time when everything that seemed to be fixed becomes suddenly unstable. The events of November 2010, with things spinning wildly out of control, certainly meet this definition. But the point of crisis in Greek tragedy is that it leads to catharsis, a sense of things being purged.

Václav Havel, then president of the Czech Republic and himself a distinguished dramatist, used precisely this metaphor while addressing his nation in 1997, when it had been hit by the twin scandals of political corruption and a banking bubble. “However unpleasant and stressful and even dangerous what we are going through may be, it can also be instructive and a force for good because it can call forth a catharsis, the intended outcome of ancient Greek tragedy. That means a feeling of profound purification and redemption. A feeling of newborn hope. A feeling of liberation.”

From that perspective, a cynic might be tempted to remark that the Irish are not even capable of having a proper crisis. We’ve had the unpleasant, painful and dangerous bit – and we’re going to go on having it for the foreseeable future. But we don’t do catharsis.

- Fintan O'Toole, Irish Times, 19 November 2011.

Tony Judt on Captive Minds

The following is an extract from Tony Judt's essay "Captive Minds" in the NYRB:

Today, we can still hear sputtering echoes of the attempt to reignite the cold war around a crusade against “Islamo-fascism.” But the true mental captivity of our time lies elsewhere. Our contemporary faith in “the market” rigorously tracks its radical nineteenth-century doppelgänger—the unquestioning belief in necessity, progress, and History. Just as the hapless British Labour chancellor in 1929–1931, Philip Snowden, threw up his hands in the face of the Depression and declared that there was no point opposing the ineluctable laws of capitalism, so Europe’s leaders today scuttle into budgetary austerity to appease “the markets.”

But “the market”—like “dialectical materialism”—is just an abstraction: at once ultra-rational (its argument trumps all) and the acme of unreason (it is not open to question). It has its true believers—mediocre thinkers by contrast with the founding fathers, but influential withal; its fellow travelers—who may privately doubt the claims of the dogma but see no alternative to preaching it; and its victims, many of whom in theUS especially have dutifully swallowed their pill and proudly proclaim the virtues of a doctrine whose benefits they will never see.

Above all, the thrall in which an ideology holds a people is best measured by their collective inability to imagine alternatives. We know perfectly well that untrammeled faith in unregulated markets kills: the rigid application of what was until recently the “Washington consensus” in vulnerable developing countries—with its emphasis on tight fiscal policy, privatization, low tariffs, and deregulation—has destroyed millions of livelihoods. Meanwhile, the stringent “commercial terms” on which vital pharmaceuticals are made available has drastically reduced life expectancy in many places. But in Margaret Thatcher’s deathless phrase, “there is no alternative.”

It was in just such terms that communism was presented to its beneficiaries following World War II; and it was because History afforded no apparent alternative to a Communist future that so many of Stalin’s foreign admirers were swept into intellectual captivity. But when Miłosz published The Captive Mind, Western intellectuals were still debating among genuinely competitive social models—whether social democratic, social market, or regulated market variants of liberal capitalism. Today, despite the odd Keynesian protest from below the salt, a consensus reigns.

For Miłosz, “the man of the East cannot take Americans seriously because they have never undergone the experiences that teach men how relative their judgments and thinking habits are.” This is doubtless so and explains the continuing skepticism of the Eastern European in the face of Western innocence. But there is nothing innocent about Western (and Eastern) commentators’ voluntary servitude before the new pan-orthodoxy. Many of them, Ketman-like, know better but prefer not to raise their heads above the parapet. In this sense at least, they have something truly in common with the intellectuals of the Communist age. One hundred years after his birth, fifty-seven years after the publication of his seminal essay, Miłosz’s indictment of the servile intellectual rings truer than ever: “his chief characteristic is his fear of thinking for himself.”