The article in the url below is a review of a book titled, Cents and Sensibility: What Economics Can Learn from the Humanities. As the subtitle suggests, the goal of the book is to point out that economics (the study of human exchange) loses much of its predictive value without an understanding of the humans it is trying to study:
"Covering such topics as university admissions, child-rearing, organ harvesting and economic development, the chapters each analyze public questions first through economics, and then through literature. The conclusion is that economics—a hugely influential approach to studying human societies—isn't worth all that much without first understanding what it means to be human."
This duality is demonstrated excellently by Adam Smith's massive contribution to the field of economics:
"They exhort students of economics to grasp that the author of The Wealth of Nations also wrote The Theory of Moral Sentiments. The real Smith observes that human beings summon qualities of sympathy balanced with their self-interest. People are not merely economic maximizers: They are ethical creatures from the get-go."
An excellent example illustrates the intuitive nature of the book's argument:
"You can't measure gross domestic product or unemployment without first saying what they are, qualitatively, as categories of interest to humans. If we were to decide that a society were best judged using the number of houses of worship erected—or, for that matter, the number of M&M candies consumed—such a measure, not dollar-value output, is what we would study. There is no God-term telling us from the outside what categories humans care about. Economics, physics, biology, history—all need the first, humanistic, categorizing step."
The book's authors build on this fundamental point to critique the current focus of education in many Western societies. Concerned about the West's declining prowess in math and science subjects, reformists are calling for the pendulum to swing too far in the opposite direction:
"… most of what actually goes on in STEM's 'M' and 'S'—and even a good deal of the 'E'—is, like the humanities, an inquiry into the artistic or intellectual products of humans."
The message here is great, I think. The Financial Crisis of 2008 shows us many things, not least of which is that an over-reliance on economic models that incorporate unrealistic assumptions about human behavior are destined to lead to poor public policy decisions. While this is very true, however, the opposite is also true—there is much that the humanities and social sciences can learn from economics. Models of corporate social responsibility that make unrealistic assumptions about human behavior have little of value to offer contemporary debates about economic and social life. As this book reveals, it is essential to incorporate ideas from across the intellectual spectrum in order to have a mature discussion of where we are and how we got here and, of course, set a reasonable path to changing the situation (if that is what we decide to do).
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A Human Face For Economics
By Deirdre N. McCloskey
September 14, 2017
The Wall Street Journal
Late Edition – Final