A Capitalist’s Perspective on the Economics Sub-disciplines

Disclaimer: While Fridays are typically reserved for polemics and analysis, I am currently preparing for upcoming examinations that require me to allocate more energy away from this blog for the next few weeks. The Friday posts for the next fortnight will lack rigor, and until then, readers will have to be satiated by my opinion pieces. Furthermore, these rankings are based on my personal affiliations, anecdotes, and experiences in studying and dabbling in these respective fields. Many disciplines are purposefully excluded simply because I have do not have enough experience or knowledge of the field to feel that I can adequately “rank” it against others. Remember, these are my personal opinions and it is not stipulated for you to cosign them.

Least favorite: behavioral economics.

Behavioral economics is the subfield of economics in which the analysis of economic decision-making is conducted using knowledge of psychology and the behavioral sciences. While behavioral economics can be very fascinating and interesting, and I enjoyed reading what can be considered the behavioral economics bible (Thinking Fast and Slow by Daniel Kahneman,) the truth of the matter is that much of the research which constructed the foundation for behavioral economics has recently shown to be rather dubious, and unable to be replicated. When I am inquired about my opinion of behavioral economics, I like to refer to it as every economist’s summer dalliance: fun, exciting, short-term, silly, and quickly forgotten.

I am not particularly fond of econometrics.

Before I lay my opprobrium of econometrics, I will discuss the good it offers. Since econometrics is the application of statistical methods to economic analysis, students of econometrics and econometricians are well-studied on statistics, probability theory, and modeling programs. The implementation of econometrics in economics curriculum increases students’ human capital as it enhances their quantitative skills and programming language skills, and conspicuously, there is a high demand for these skills by firms. Without econometrics, many students of economics would be not much better off in the labor force than students of other low-skill social sciences such as psychology, sociology, anthropology, linguistic science, and political science. At the very least, econometrics allows for economics students to not be just another under-skilled social science student. The study of econometrics allows for those who studied it to be able to find employment in highly demanded quantitative fields such as data science, market research, analytics, finance, statistics, and actuarial work.

Furthermore, all that is good about econometrics is the “metrics” and not the “econ.” In other words, the only value econometrics has is a result of its relation to statistics and mathematics, rather than to economics. Economics, is foremost, a social science. Sadly, economists often have physics envy, and feel concern that their work will not be taken seriously without being cloaked in a thick layer of mathematical complexity. While rudimentary statistical models can aid in modeling the application of economic theories, economics does not need this much more than any of the other social sciences. While statistics has applications in fields such as psychology and sociology, there are no fields such as “psycholometrics” or “sociometrics.” Any applications of statistics to any social science other than economics is just regarded as statistics, or applied statistics. To conclude this opprobrium, I will quote Murray Rothbard who put it best.

… the very concept of “variable” used so frequently in econometrics is illegitimate, for physics is able to arrive at laws only by discovering constants. The concept of “variable” only makes sense if there are some things that are not variable, but constant. Yet in human action, free will precludes any quantitative constants…

Murray Rothbard. Economic Controversies

I am mostly indifferent to macroeconomics.

While the subject matter of macroeconomics is surely interesting, such as employment/unemployment, GDP, international finance, etc. I find much of it rather tedious and fallacious. A lot of macroeconomic axioms have a foundation built upon Keynesian theory, of which I am not a particularly large proponent or endorser.

Many people’s first exposure to an academic topic of economics is under the macroeconomic umbrella, so macroeconomics has seduced many aspiring economists. Moreover, there haven’t been many contributions to lately, and this is unsurprising given the issue of praxeology. Indeed, it is very difficult to try to model aggregate variables with any degree of accuracy, and the use of third-rate mathematics does not make it salvageable.

I enjoy labor economics.

Labor economics, as the name implies, is about the functioning and trends of the labor market. Many would call labor economics applied microeconomics. I have mixed-feelings about this description, but my point is that I do find this field to be very interesting. Labor economics is the parent of several other subfields of economics such as health economics, and education economics.Most fully functional, and able-bodied are involved in the labor market one way or another.

If one is entering to the studies of economics because they want to understand the effects of controversial variables such as minimum wage laws, immigration shocks, or the effects of the welfare state, then labor economics is the subfield that one would want to spend time studying.

I have a strong predilection for economic history.

Economic history is truly an underrated subfield of economics. One can see both how history shaped economics and how economics shaped history. With more data becoming available for analysis on economic history, it is a growing subfield of economics.

Another aspect of economic history that I have affinity for is the lack of the aforementioned dreaded mathematical theory involved in it. You, the reader should not misunderstand, I adore mathematics. I love studying mathematics and refining my mathematical prowess. With that being said, the overuse of highly advanced calculus theorems in addition to unnecessary partial differential equations, and of course, mathematical statistics, it is nice to be able to open a textbook on economic history without being assaulted with multivariate functions.

Economic history, while being a different study from the history of economic thought, is intertwined with it. Economic history studies is a largely what I assert the field of economics should be. A social study that uses historical and apposite statistical analysis.

Published by Daniel Ballesteros

An aspiring labor economist.

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