Female economists are at some notable points less convinced of market solutions and have more trust in the government in serving the public interest

Values of Economists Matter in the Art and Science of Economics. Hendrik P. van Dalen. Kyklos, March 15 2019. https://doi.org/10.1111/kykl.12208

Summary: What role do personal values play in the practice of economists? By means of a survey among economists working inside and outside academia in the Netherlands, we present novel insights on their personal values, how these differ from the average citizen, and how values impact their economic views and their methodological choices. Three overarching values summarize the value structure of economists: achievement, serving the public interest, and conformity to rules. Subsequent tests are performed to see whether these values affect (1) their opinion on economic propositions and (2) their attitudes towards methodological principles in economics. For the majority of economic propositions, personal values matter. Especially the value of serving the public interest has a strong effect on their economic view. Furthermore, it seems that economists who value achievement are the ones who are more likely to embrace mainstream methodological principles: thinking predominantly in terms of efficiency, rationality, and competition, believing that economic knowledge is objective and transparently produced and in agreement with Milton Friedman's view on positive economics. Female economists are at some notable points less convinced of market solutions and have more trust in the government in serving the public interest.


1 Introduction

    “All scientific work has to be based on value premises. There is no view without a viewpoint.” Gunnar Myrdal (1972)


Economists have been trained to think that their science should be Wertfrei, free of value judgements. Economics is concerned with ‘what is’ rather than ‘what ought to be’ (Coats 1964; Heilbroner 1973; Colander 2001). In large part, this stance may be derived from reading Lionel Robbins’ classic book An Essay on the Nature and Significance of Economic Science (1932). Still, economists do make policy recommendations involving value judgements or at least tacitly invoke ethical principles in making policy statements (Heilbroner 1973; Wight 2017) and some judgements of economists may unwittingly be affected by their personal values. Because of its tacit nature, it is hard to see or detect whether values actually matter, i.e. how do economists weight their values in making judgements. To the best of my knowledge, this article is the first to make the personal value structure of economists explicit (along the lines set out by social psychologist Schwartz (1994)). And subsequently, we examine how these values affect statements and attitudes on methodological principles in economics.

The intermingling of facts, theory and values is practiced by most economists when they judge a situation or try to give policy advice. It is essentially the art of political economy, as John Neville Keynes (1891) once described this grey area between positive and normative economics. And in this area values play a prominent role (Colander and Su 2015). However, these insights do not seem to be shared by most economists. Some ascribe these blind spots to the fact that modern economists lack a firm historical education (Blaug 2001; Colander 2011) or they look down upon economic methodology (Lawson 1994). Or perhaps because the professionals that are most well adapted to studying this aspect – economic methodologists ‐ stick to only criticizing economists. Indeed the lament of Hausman (1989) on the state of economic methodology is directly related to this point and captures the intentions of the current paper: “Although methodologists may find much to criticize, they had better begin by understanding as thoroughly as they can how economists go about their business and why they do what they do.”

Most economists would claim that their judgement or advice is based on Science, without invoking any value judgements. In other words, values do not enter the equation because it would make economists appear less ‘scientific’ and it would suggest that economic policy is ‘just a matter of taste’. This paper tries to uncover the role that values play in making positive and normative claims about the economy as well as explaining attitudes with respect to methodological principles and scientific norms, and hence it is written in exactly the spirit of Hausman's lament (1989). When economics is what economists do, one can learn a lot from the flourishing industry of the economics of economics or the sociology of knowledge literature. Numerous authors over time have added insights into how the economics profession functions, ranging from the sociology and institutional structure of the economics profession (Frey and Eichenberger 1993; Coats 1997; Coats 2005; Fourcade 2006; Fourcade 2009) to the registration of the consensus among economists (Frey et al. 1984; Gordon and Dahl 2013), a focus on elite economists and their education (Klamer and Colander 1990; Colander 2005), or discovering how an economic education changes behavior (Frey and Meier 2003). However, none of these studies have faced the issue of measuring the values of economists directly. 1
In modern tracts on economic methodology (Boumans and Davis 2015) the issue of value‐laden economics is an important issue, but empirical proof of how the economics profession is affected by this issue is conspicuously absent. In short, this paper focuses on a lacuna in the economics literature that might improve our understanding of “how economists go about their business”.

The method of analysis is a survey among economists, working inside and outside academia in the Netherlands. The Netherlands is a country that has achieved a top position within the economics hierarchy in Europe (Kalaitzidakis et al. 2003; Lubrano et al. 2003) and it could function as an appropriate case study for other countries as well because most universities outside the Ivy League have similar ambitions in moving up the various rankings. Furthermore, one should that note of the fact that economics at Dutch universities is certainly no longer a Dutch affair: 43 percent of the Dutch economics faculty consists of foreign born members (Rathenau Institute 2018) and most classes are taught in English.

The traditional null hypothesis to put to the test would be the one that is tacitly taught in economics namely that economic science is free of value judgements. The absence of value judgements will be operationalized by us as the thesis that personal values of economists do not affect their views or attitudes. We will test this hypothesis by focusing on two sets of variables: (1) the positive or normative statements made by economists as they are often used in studies on the consensus of dissensus among economists (Frey et al. 1983; Alston et al. 1992; Fuller and Geide‐Stevenson 2007); and (2) their attitude towards methodological principles in economics. The measurement of personal values relies on the value characterization of Schwartz (2012); a method that is often applied to European or worldwide surveys of individual countries. Because these general population data are available the current survey among economists also offers the possibility of comparing the differences between economists and the average citizen. It is sometimes claimed that economists have estranged themselves from the general public or laypeople. Economists tend to stress efficiency whereas in every day practice people value equity or fairness, as Rees (1993) once noted. Some research focuses on and shows differences of opinion between laypeople and economists but no research on differences in values. Research by Sapienza and Zingales (2013) shows that the opinion of the general public differs quite markedly from economists on technical issues and the reason for this divergence is that laypeople do not trust every link in the economist's logic because actors like governments or market participants are distrusted. And Johnston and Ballard (2016) show in a different setup how economists in the US are met with distrust when it concerns highly salient and polarized issues.

This paper makes three novel contributions. The first contribution is that personal values of the economists differ distinctly from the average citizen: economists in general care less about traditions or rules, they care less about the environment and they are more set on serving the public interest. This applies to both the academic and applied economists. However, at some points the academic economist differs from the applied economist. In particular creativity or innovation and being successful are valued far more by the academic economist. In other words, the academic economist is more oriented towards individual self‐enhancement than the applied economist.

The second contribution is the observation that values matter when it comes to making economic statements, although the influence of values is virtually absent when it concerns statements on monetary issues. And the third contribution is a demonstration that personal values also affect the attitude of academic economists towards methodological principals, and the importance attached to certain assumptions in economic theory. Self‐centered economists who prize ‘achievement’ are more likely to have ‘mainstream’ ideas about economics as a science: thinking solely in terms of efficiency, believing that economic knowledge is objective and transparently produced and in agreement with Friedman's (1953) view on positive economics. Furthermore, they also attach greater importance to the assumption of rationality and perfect competition.

The setup of this paper is as follows. In the next section we discuss how values of economists may impinge on their world view and their attitudes towards scientific principles applied in economics. In the subsequent section we will present the method and data used to test the relationship between values and economic and methodological statements, to be followed by the results of these tests. The final section concludes with a short summary and discussion.



2 The Values of Economists

Values in general express what people believe to be good or bad or what they believe that should or should not be done. In social psychology it is well established how important values are. They not only guide us to select actions and interpret events, values also affect people's focus of attention, the way they interpret information and values can explain their attitudes, decisions and behavior (Verplanken and Holland 2002; Schwartz 2012). If this insight is true, values may also help to interpret how economists make judgements and why their attitudes and decisions in their profession differ. Differences of opinion among economists can exist with respect to how they think about the functioning of markets, governments, families and its agents. These evaluations may to some extent be based on personal valuations about what an economist feels is good or bad. For instance, some may see the freedom to choose and the pursuit of enlightened self‐interest as the cornerstone of making capitalism work. Other economists may see self‐interest as the cause of market failures in the ordinary business of life and value the public interest more highly.

Modern economists may perceive values as the use of an extra‐scientific source in economic discourse. Something that should not belong in economics as a science. Samuelson (1947) is quite clear in his classic Foundations of Economic Analysis why values do not belong in the ‘science department’: “Wishful thinking is a powerful deterrent of good analysis and description, and ethical conclusions cannot be derived in the same way that scientific hypotheses are inferred or verified.” (p. 220). However, the use of values is, of course, not a novel element. Political economists of the past, like Mill and Senior, made a distinction between the art and science of political economy. They acknowledged that the science of economics does not give you sufficient guidance in giving policy advice. As Senior (1836) expressed this stance: “the business of the Political Economist is neither to recommend nor to dissuade, but to state general principles, which it is fatal to neglect, but neither advisable, nor perhaps practicable, to use as the sole, or even the principle guides to the actual conduct of affairs.” (Senior 1836, p. 2‐3) In moving from the science to the art of economics extra‐scientific elements creep in, such as ethical premises. Later, John Neville Keynes (1891) made a more refined distinction in three sections: (1) a “positive science” with the object of establishing uniformities; (2) a “normative or regulative science” with the object of determining ideals; and (3) the “art” of economics, a system of rules for the attainment of given ends and the economists who preoccupied with this art tried to formulate “precepts” or, in modern‐day terms, policy advice. However, with the appearance of Robbins’ (1932) Essay it became more or less an article of faith to refrain from value judgements and the proper economist dedicated to the cause of science, high theory, should focus on the task to understand choice and behavior as reflection of scarce means in search of given ends. What most economists forgot (see, e.g., Ng 1972) was that Robbins was preoccupied in his Essay with ‘high theory’ and economics as a pure science and not with the art of economics (cf. Colander 2009).

Paying attention to the fact that economists have values is done in a strand within economic methodology that has called into question economics’ scientific character. Values permeate in every aspect of economic science (Wilber 1994). This literature deals with the impact of values and ethical judgements on economics as a science and that value neutrality is an unlikely state of affairs. According to Wilber (1994, 2004) the value neutrality argument hinges on two tenets. The first tenet is the one taught to most students and is based on the belief that one cannot derive a normative statement from a positive statement (better known as Hume's guillotine, cf. Blaug 1992), fact and value, descriptive and prescriptive statements need to be separated, cut by the ‘blade of the guillotine’. In the world of John Stuart Mill this separation was quite evident as political economy was understood to be a separate but inexact science. To derive policy recommendations based on this narrow view would be a sign of negating the complexity of society. The second tenet supports the first tenet by claiming that economists have objective access to the empirical world through their sense experience, and because of this access economists “as scientists need not concern themselves with ‘what ought to be’.” (Wilber 1994). This second tenet is the weak spot. This objectivity argument has been rejected by Kuhn (1970). He argued that the empirical world can only be known through the filter of a theory; facts about the real world are thus always theory laden. Worldviews influence the paradigm with which one works and value judgements are closely associated with one's own worldview. Theories must remain coherent with this world view and this world view shapes the questions asked, models used, methods chosen, facts presented, etc. In short, this is exactly what Myrdal (1972) was arguing about when he said that values permeate in every corner of economic science:

    “… valuations enter into research from the start to the finish: determining the approach, the definition of the concepts, used and thus the facts observed, the way of drawing inferences, and even the manner of presenting conclusions reached.” (1972, p. 162)

In that respect one can understand why Myrdal (1973) was very supportive of studying the sociological and psychological mechanisms at work within the economics profession and to see how economists go about in their daily activities to uncover, what McCloskey (1983) calls, the rhetoric of economics. A view similar to that of Myrdal can be found in Boulding (1969) who argues that “knowledge of the social sciences is an essential part of the social system itself, hence objectivity in the sense of investigating a world which is unchanged by the investigation of it is an absurdity.” And he goes on to claim why values matter: “as science moves from pure knowledge towards control, that is, toward creating what it knows, what it creates becomes a problem of ethical choice, and will depend on the common values of the societies in which the scientific subculture is embedded.” (p.3) In short, values permeate every aspect of the way economists work.

We will first focus on a domain– views or judgements on economic topics ‐ by the following (null) hypothesis to reflect the tacit belief among modern economists (cf. Colander and Su 2015) that values do not matter when they express their positive or their normative views:

    Hypothesis on the values‐views nexus: The personal values of economists do not affect either their positive or normative economic views.

A second domain in which values permeate economics concerns the attitudes towards methodological principles and the norms of science. The reason for including this domain is simply related to the argument made by Myrdal (1972) that values permeate in every corner of practicing economics and not just economic judgements as in the first hypothesis. He suggests that ascribing to a particular way of practicing economics – one's methodological principles ‐ is also influenced by one's values. For instance, embracing self‐centered values may be traded off against the value of serving the public interest of science. This trade‐off process could be pushed in the direction of self‐centeredness as most universities use an up‐or‐out system to grant tenure or prizes in general. The key factor in this system are publications and citations generating a publish‐or‐perish culture (van Dalen et al. 2012; Stephan 2012a; Stephan 2012b; Seeber et al. 2019). Success in science is solely defined in terms individual academic success and may set in motion a drive towards self‐centeredness or an inward turn in which economics is the queen of the social sciences, academic economists no longer have an ambition to function as gatekeepers of a public debate or who do not engage in organizational citizenship behavior. Some note that this internal directedness (Colander 2015; Fourcade et al. 2015) may well be the Achilles’ heel of economics. A case in point may well be the recent Great Recession. In the midst of the crisis Krugman (2009) challenged (mainly) economists with a Chicago background on sowing the seeds for the crisis by making economics a beautiful but irrelevant science. Economists had mistaken mathematical beauty for truth and have lost sight of reality in assessing the state of economies. The criticism of Krugman and the ensuing debate (Cochrane 2011; Colander 2011) suggests that methodological principles on the application of theory to policy lay at heart in the answer to how economists got it wrong. Especially the way economists have come to practice ‘positive economics’ in macroeconomics and in finance has blinded economists, according to Krugman. Although, he does not mention it explicitly, the essay on The Methodology of Positive Economics by Friedman (1953) has played a pivotal role in developing economics as an exact science and it certainly is not restricted to economists with a Chicago background. To stay away from value judgements Friedman downplayed the role of values very early on in his essay: “differences about economics policy among disinterested citizens derive predominantly from different predictions about the economic consequences of taking action [..] rather than from fundamental differences in basic values.” (p. 5). Instead he focused on developing positive economics: theories should be judged by their predictions not by the realism of their assumptions.

Friedman's economic methodology has ever since its publication been fiercely debated. To name two criticisms that are relevant in this regard is, first, the objection made by Hausman (1994). He argues that the instrumentalist approach of Friedman precludes serious research in examining the realism of assumptions. ‘Why look under the hood?’ is the implicit message of Friedman. A second and different critique is expressed by Coase (1994) who remarks that the essay of Friedman is not so much a positive theory but a normative theory: “What we are given is not a theory of how economists, in fact, choose between competing theories, but [..] how they ought to choose.” Economists ‐ according to Coase ‐ do not use “valid and meaningful predictions about phenomena not yet observed” as their sole criterion. Many economists do not test theories in their papers at all. Most of the work of pure theory economists consists of “logical constructions based on assumptions about human nature”. And their scientific efforts can best be described as “measurements of an effect, the nature of which was already well established but of which the magnitude was unknown” (Coase 1994). Economists and many other social scientists are unsophisticated positivists (Colander and Su 2015).

The second part of this paper aims first to discover (1) the attitudes economists share with respect to scientific working principles, as they are sometimes summed up in the Mertonian norms of science (Merton 1979); and (2) their assessment of key theoretical assumptions in understanding today's society. We will subsequently test to see whether personal values affect these two elements of scientific practice. The second null hypothesis that we will use as our guide is the following:

    Hypothesis on the values‐principles nexus: The personal values of economists do not affect scientific working principles and their assessment of assumptions in understanding modern‐day society.




6 Conclusions and Discussion

    “Valuations enter into research from the start to the finish” (Myrdal 1972, p. 162).

Economists are often seen by laypeople as a quarrelsome lot who agree to disagree. To know the world of economists and the forces that impinge on the choices they make is of some importance for anyone trying to understand developments in economics and economic policy. This paper has taken the novel and exploratory route by assessing the effects of (personal) values of economists on their view on methodology and the state of the economy. Three general findings stand out.

First, the personal values of economists differ from the man in the street. In particular, economists attach more importance to serving the public interest than the average citizen and the economist is less attached to the status quo, or to put it differently, the economist does not value rules or traditions and the academic economist is someone who values creativity more than the average citizen or the applied economist.

Second, for the majority of economic positive and normative propositions about economic issues personal values matter. Indirectly, these findings affirm what Gunnar Myrdal always claimed: “There is no view without a viewpoint”. Especially the value to serve the public interest has a strong effect on the perception of how the world works, or how it should be changed. It is only in monetary policy matters that values do not seem to matter a lot.

And third, with respect to methodological issues, it seems that economists who value achievement are the ones who are more likely to embrace mainstream methodological principles in economics: thinking predominantly in terms of efficiency, rationality and competition, believing that economic knowledge is objective and transparently produced and agreement with Friedman's view on positive economics.


6.1 Discussion

These findings are not without limitations and should be interpreted with some care. In particular, the personal values as measured in this paper are assumed to be exogenous. Given the extensive experience with research that has been carried out with the Schwartz approach to values this seem like a reasonable assumption, but the question of value formation should not be neglected. For instance, we have noted that economists differ in their values at some crucial points with the average citizen, but the intriguing question is how have economists come to adopt or acquired their values? Is it socialization or is it a question of self‐selection? Gandal et al. (2005) provide some evidence of values for students that suggests that self‐selection is present into the study of economics, where self enhancement is valued more than serving the interests of others by economics students. However, they do not focus on or examine the issue of socialization to dominant group values or education experience. There is a large of body of experimental literature focused on the minds of students that seem to suggest both forces – selection and socialization ‐ are at work (Carter and Irons 1991; Frey and Meier 2003).

Although the picture presented in this paper of economists is limited to one moment in time, the findings are intriguing and warrant some further discussion. The findings may shed light, doubt and may reinforce preconceptions of how the world of economists works. In closing I want to make two remarks on the possible implications of these findings.

First of all, the divergence in values between academic economists and the average citizen helps one to understand why economists with the best of intentions have a hard time convincing the general public. For instance, Barr and Diamond (2009) once discussed the skills that are needed to make a credible pension reform. Such reforms are too often top‐down technical design issues, whereas communication and implementation of a reform is an equally important part of effective reform. The fact that the average citizen likes stability and traditions, whereas the average economist is always on the lookout for improving and changing the status quo is a revealing fact. It helps one understand why economists are perceived as arrogant number‐crunchers, just like in the days of Charles Dickens when political economists were seen as dismal scientists.

Second, ‘achievement’ values are positively associated with economists embracing mainstream principles or having mainstream opinions. This is a novel and important finding as it suggests how ‘normal economic science’ is connected with a particular type of economist, who is focused on his or her own achievements. It is important because it might shed some light on the concerns of insiders (Colander 2011; Osterloh and Frey 2015; Heckman and Moktan 2018) on how the character of economics has changed and has become more focused on internal questions. A likely force seems to be the publish‐or‐perish culture that many sciences have implemented as their selection mechanism. And economics has (more than other disciplines) a tendency to focus on publications and citations as indicators of the quality of ideas. Osterloh and Frey (2015) urge universities to back away from such ranking games as these games end up substituting a ‘taste for science’ by a ‘taste for publication’. ‘Taste’ is here an appropriate phrase as it suggests that values are key in making a science work. Science has this unique mixture where public goods are produced by individuals who are triggered to produce knowledge by means of a non‐market reward system that appeals to their intrinsic motivation (Dasgupta and David 1994). Naturally, economists are influenced by a mix of values. But by making publications and citations the only coin worth having in science, a non‐market reward system is being replaced by a market‐reward system. And under those circumstances one should not be surprised to see the unintended consequence of such a publish‐or‐perish culture materialize. Mimicry could be the result as young and aspiring economists try to adapt to their environment and follow the rules and customs that make the likelihood of publication in top‐tier journals greater or of obtaining grants. Economists who favor and strive for individual success are perhaps also the ones who dislike acting in the public interest, because doing jobs or tasks that have a public good nature generally do not earn the credits deans playing the ‘ranking game’ would like to see. One of the consequences may be that the value structure of economists may change, as one is almost forced to act as an ‘achiever’ and the group may become more homogenous. The basic dangers of a drive towards a homogenous group of economists is uniformity in approach, outlook and advice. Fourcade et al. (2015) and Heckman and Moktan (2018) have registered these tendencies and as Heckman and Moktan note: “The current system of publication and reward does not encourage creativity. It delays the publication and dissemination of new ideas. It centralizes power in the hands of a small group of editors, prevents open discussion and stifles dissent and debate.” It is perhaps the old insight and warning of Kerr (1975) that surfaces in academia: whoever wants to attain A (read: creativity) by rewarding B (read: publication), will not attain A, but will end up with B.