What Economists Get Wrong About Science and Technology

What's to come?
May 17 2012 2:54 PM

What Economists Get Wrong About Science and Technology

Trying to quantify research's effects on the economy always fails.

(Continued from Page 1)

To take another example of just how rudimentary economists’ understanding of the importance of technology to the economy is, look at a best-selling book that came out last year, The Great Stagnation, by prominent economist Tyler Cowen. The central argument of The Great Stagnation is that technological progress is slowing down, which will hurt economic growth.

But what is Cowen’s proxy for “technological progress”? He relies almost exclusively on a paper published in Technological Forecasting and Social Change by Jonathan Huebner, a physicist at the Naval Air Warfare Center. Huebner’s paper, “A Possible Declining Trend for Worldwide Innovation” relied on a simple methodology. He scanned a book called The History of Science and Technology: A Browser's Guide to the Great Discoveries, Inventions, and the People Who Made Them From the Dawn of Time to Today. It lists more than 7,000 “discoveries” by the year in which they were made. Huebner divided the number of discoveries made each decade since 1455 by the population of the world in that decade and made a graph. He then concluded that “worldwide innovation” might be declining.

So Cowen’s book—the “the most debated nonfiction book so far this year,” David Brooks wrote a month after it came out—ends up being based on a cursory tallying of discoveries from a high school-level reference book. But one “discovery” is not interchangeable with another. How do you compare the introduction of bifocal eyeglasses to the “invention of the Earth Simulator, a Japanese supercomputer” or Gutenberg’s moveable type to the polymerase chain reaction (all real examples from the book)? If you’re Huebner, or Cowen citing him, you say each counts as “one discovery.”

Advertisement

In his Nobel acceptance speech , Solow warned against such oversimplifciation, lamenting that economists are “trying too hard, pushing too far, asking ever more refined questions of limited data, over-fitting our models and over-interpreting the results.” But then he conceded that such overinterpretation is “probably inevitable and not especially to be regretted.”

He is right about the likely inevitability of this push. But his complacency (“not especially to be regretted”) comes from a comfortable lectern in Sweden. I can’t quantify for you the damage that such overzealousness causes without falling into the very trap I’m pointing out. It’s reasonable to ask the questions economists ask. But when they claim to have measured things that they haven’t—the importance of technology to the economy, the “rate of technological change,” or the bang per federal research buck—and policymakers believe them, it leads to bad policy.

Take the case of STAR METRICS, an effort by the Obama administration to “document the outcomes of science investments to the public”. STAR METRICS uses things like counting patents or how often a scientific paper has been cited to measure “the impact of federal science investment on scientific knowledge.” It’s easy to measure how many times a scientific paper has been cited. But make this of major bureaucratic importance, and you’ll get researchers citing things for the sake of citing them.

The notion that something is unquantifiable is alien to the mindset of the modern economist. Tell them it’s not quantifiable, and they will hear that it has not been quantified yet. This mistake matters, because economists and their business-school colleagues are very influential in the formulation of public policy. If economists rather than biologists decide what is good biology through supposedly quantitative, objective evaluations, you get worse biology. If economists decide what makes good physics, or good chemistry, you get worse physics, and worse chemistry. If you believe, as I do, that scientific progress, broadly speaking, is good for society, then making economists the arbiters of what is and isn’t useful ends up hurting everybody.

The greatest irony is that economists are ultimately no different from any other academics. Their argument for saying that we should give more money to study the economics of science is pretty much: “Trust us, what we’re doing is useful.” This is precisely the same argument with which they ding the physicists and biologists.

So really, what we need is to study the economics of the economics of science. Of course to know just how useful this is, we’ll need an economics of the economics of the economics of science. Where does it end?

TODAY IN SLATE

History

Slate Plus Early Read: The Self-Made Man

The story of America’s most pliable, pernicious, irrepressible myth.

Rehtaeh Parsons Was the Most Famous Victim in Canada. Now, Journalists Can’t Even Say Her Name.

Mitt Romney May Be Weighing a 2016 Run. That Would Be a Big Mistake.

Amazing Photos From Hong Kong’s Umbrella Revolution

Transparent Is the Fall’s Only Great New Show

The XX Factor

Rehtaeh Parsons Was the Most Famous Victim in Canada

Now, journalists can't even say her name.

Doublex

Lena Dunham, the Book

More shtick than honesty in Not That Kind of Girl.

What a Juicy New Book About Diane Sawyer and Katie Couric Fails to Tell Us About the TV News Business

Does Your Child Have Sluggish Cognitive Tempo? Or Is That Just a Disorder Made Up to Scare You?

  News & Politics
History
Sept. 29 2014 11:45 PM The Self-Made Man The story of America’s most pliable, pernicious, irrepressible myth.
  Business
Moneybox
Sept. 29 2014 7:01 PM We May Never Know If Larry Ellison Flew a Fighter Jet Under the Golden Gate Bridge
  Life
Dear Prudence
Sept. 30 2014 6:00 AM Drive-By Bounty Prudie advises a woman whose boyfriend demands she flash truckers on the highway.
  Double X
Doublex
Sept. 29 2014 11:43 PM Lena Dunham, the Book More shtick than honesty in Not That Kind of Girl.
  Slate Plus
Slate Fare
Sept. 29 2014 8:45 AM Slate Isn’t Too Liberal, but … What readers said about the magazine’s bias and balance.
  Arts
Brow Beat
Sept. 29 2014 9:06 PM Paul Thomas Anderson’s Inherent Vice Looks Like a Comic Masterpiece
  Technology
Future Tense
Sept. 30 2014 7:36 AM Almost Humane What sci-fi can teach us about our treatment of prisoners of war.
  Health & Science
Bad Astronomy
Sept. 30 2014 7:30 AM What Lurks Beneath The Methane Lakes of Titan?
  Sports
Sports Nut
Sept. 28 2014 8:30 PM NFL Players Die Young. Or Maybe They Live Long Lives. Why it’s so hard to pin down the effects of football on players’ lives.