The financial meltdown has inspired lashings out at economists by professors in other disciplines. A classic example: a posting on The MIT PressLog by Trevor Pinch, a sociologist at Cornell and author of "Living in a Material World: Economic Sociology Meets Science and Technology Studies."* Economists, Pinch points out, did a dreadful job of anticipating the current crisis -- just as, seventy years ago, they failed to foresee the length and depth of the Great Depression.
And yet "aren't economists revered, the people we turn to and depend on for economic policy, and don't we award them a Nobel prize every year?" That's what burns, you see. It's not just that economists get the world wrong -- in theory and in practice -- but that they view themselves as superior to their sister social-science disciplines. (See this post by N. Gregory Mankiw, defending Lawrence Summers' hypothesis that economists are quite simply smarter than most other professors.) And the world, to some extent, accepts economists' lofty self-regard.
If you're a sociologist, like I am, it was particularly annoying to see the 1997 Nobel prize for economics handed out to Robert K Merton's son -- also called Robert Merton -- while the father who founded a whole sub-discipline of sociology (the sociology of science), wrote a marvelous book on the self-fulfilling prophecy (isn't that sorta relevant to events of today?), and was without question one of the greatest modern sociologists, never got a Nobel, because sociology presumably isn't a science.
"And what," Pinch adds, "did Robert Junior" -- a professor at Harvard Business School -- "get the prize for? The Black-Scholes formula." Which, as you may know, just happens to be the mathematical formula Wall Street uses to value derivatives -- including the financial instruments that underpinned the entire mortgage industry. Let's just say the formula didn't quite nail the risk-reward ratio.
If sociologists can't have a Nobel of their own, Pinch argues, then let's at least install some accountability into the current reward system. Every 10 years, Pinch suggests, a special Nobel Prize Clawback Committee would convene to see whether a given scholar's work had stood the test of time. If such a committee existed, Pinch contends, Merton would presently hold the underwhelming title of ex-Nobelist.
PS Nassim Nicholas Taleb, the much-in-demand former trader and author of "The Black Swan: The Impact of the Highly Improbable," who made his name by more or less predicting the current debacle, has also been using Merton as a punching bag. On his Web site he goes further than to suggest that Merton's most prestigious award be revoked: "Robert C. Merton is perhaps the best case for the termination of tenure -- malpractice."
*UPDATE: Book title corrected 1/08/09, thanks to a commenter.
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