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As a pre-med student, I was struck by the contrast between economics and physical sciences that became apparent to me as I read this article. I agree with Jenny that economics is most definitely a science – like she said, it is based on the scientific method and draws directly from concrete facts and empirical data. What it does not have is the advantage of running REAL-LIFE experiments; including independent and dependent variables, random subjects, and most importantly, CONTROLS. The importance of this had never occurred to me until I read Krugman’s article. No one in the physical sciences is compelled to write an article like Krugman’s, because there is no question about whether the use of models is a good way to think and research. Krugman himself alluded to this. In physical sciences, hypotheses are developed based on observations and inferences, and then they can be immediately tested. Physical scientists can control their subjects, changing only one factor of their environment at a time to get an accurate picture of what kind of variable invokes what kind of change. Physical scientists can get quick feedback about the validity of their ideas – if they turn out to be valid, they can publish them as “theory”. If they turn out to be invalid, they often have good insight into why, and what needs to be changed. They can remodel, retest, and remodel again until they get it right. Economists, on the other hand, only get to step 1) developing hypotheses based on observations and inferences. No doubt, these models can be re-applied and re-tested in a theoretical fashion, and their validity can be determined based on how well they explain certain real-world situations. But there is still no real-world feedback element similar to the feedback from a physical scientist’s experiment. So no wonder there was a period when economists wanted to step away from the simplifications of models and write long, boring, theoretical papers! They thought that they were finally including all the elements necessary for predicting the complexities of real life. But like Krugman and many other students have said, models are essential to the progression of economics as a science and its integration into the real world. The simplifications of models allow us to actually study economics, make valuable estimations about society, and efficiently function within our fast-paced world. The fact that economics doesn’t function like a physical science is a disadvantage simply inherent in its nature. I think the best thing we can do is continually retest and redevelop our models, and be aware of their shortcomings.
Sagemtimberline is now following Caseyj
Sep 11, 2013
Like every time I read an economics-based paper, I am disappointed by the conclusions drawn from the data, because I think they are missing important psychological and cultural factors that influence human behavior (granted, there IS interpretation, while many economic authors report only the data and leave the conclusions to the rest of us). The conclusion that sticks out most to me as being inadequate is the discussion of why the poor spend a big portion of their budget on festivals (this can be found on both page 5 and page 21). The authors ponder why countries spend so much money on this form of “entertainment”, when many people are malnourished, eat less than half the recommended daily calories, and/or have to skip meals sometimes. This is certainly a valid question. However, I feel it is necessary to point out that among this sample of countries, expenditure on food ranges from 49.6% in rural Mexico to 81.7% in urban Papua New Guinea, with most countries in the range of 60-70%. The authors seem to expect that people experiencing extreme poverty would spend up to 100% of their budget on food and water, driven simply by a desire to survive. But just as a reference – the BOTTOM quintile of Americans spends only 12% of their budget on food. Of course, they have closer to $30 or $40 dollars a day rather than less than $2, but many of them live with similar conditions – less than half the recommended daily calories, occasional skipped meals, etc… I think it is worth mentioning that citizens of these countries are spending a huge percentage of their tiny budget on food compared to what the poorest of the poor in America spend. We should also note, as Christine and “Get Freedom” did, the importance of culture, and living as a part of a community. Perhaps festivals are so ingrained into the culture that on some days they truly take precedence over eating. As Christine alluded to: there are communities in which it is more important to nourish spiritual health than physical. Or as “Get Freedom” mentioned: sometimes collaborative involvement may be more fulfilling than food to those individuals who live in constant stress. That would easily explain why some cultures spend 2-3% of their budget on festivals. We can be reflective here on our own community and realize the importance of physiological and cultural incentives. For instance – why would struggling young adults, many living completely off their parents’ income, spend an outrageous amount of time and money on drinking alcohol in college, when it is clearly detrimental to physical and mental health? Why wouldn’t they focus all their energy on planning ahead and investing in their future? Or, even more generally, why do Americans spend so much money on deodorant, perfume, cologne, razors, and beauty products, when our bodies gave us hair to protect from our environment and pheromones in our sweat to attract the opposite sex? Or – why do we spend thousands of dollars drenching our dead relatives in chemicals, dressing them in stylish clothes, and putting them in beautiful boxes, just to be buried in the ground? There are many cultural factors to be considered here, and I believe we need to do a better job of examining those present in these poor countries to get a better understanding of their spending habits, before calling what could be deeply cultural rituals “entertainment”. One other thing that stood out to me in this essay was the country Cote d’Ivoire. They seem to defy some trends present among other countries. For instance, they were the only country where rural houses actually had BETTER access to electricity and tap water than urban houses. Also, 79% of people earning less than $1 a day still had a savings account. I find these results to be borderline astonishing, and would love to read about their causes in more detail.
Toggle Commented Sep 12, 2013 on Economic Lives of the Poor at Jolly Green General
Sagemtimberline is now following The Typepad Team
Sep 11, 2013