The power of “mapping the territory”. Why economists should become more aware of the performativity of their models

Economics is not simply about representing reality; it is also about shaping it, an approach encapsulated in Donald MacKenzie’s aphorism that economics is best conceived as an “engine, not as a camera” (MacKenzie and Millo (Am J Sociol 109(1):107–145, 2003). The making and application of economic theories and models contribute actively and intentionally towards the making of our social world, by encouraging, guiding and legitimizing actions and decisions, or discouraging others, and by steering them in certain directions. It follows that economists do not simply draw maps of the economic territory within their compass: they are not straightforwardly the cartographers of the economy, and cannot be seen as the disinterested observers that they commonly represent themselves to be, and indeed are often thought of as. Their theoretical work has or aims at practical consequences for the economy, and indeed for society at large, and their interests and influence are thus by no means confined to academia alone. This article calls for a discussion of the ethical responsibilities of economists, and of economics, and challenges the discipline properly to assume those responsibilities; and it concludes by considering the key questions—what makes a ‘good’ economic model; and what criteria should be used to distinguish the good models, and the ‘good ways’ of handling models and their results, from the bad ones. As far as epistemology, the methodology of research programmes and the relation of theory and (social) practice are concerned, the insights of mainly von Hayek (Br J Philos Sci 6(23):209–225, 1955, The pretence of knowledge. Lecture to the memory of Alfred Nobel, 1974; Individualism and economic order, University of Chicago Press, Chicago, pp 33–56, 1980a; Individualism and economic order, University of Chicago Press, Chicago, pp 57–76, 1980b; The theory of complex phenomena. Readings in the philosophy of social science, MIT Press, Cambridge, 1994) and Popper (e.g. The myth of the framework: in defence of science and rationality, Routledge, New York 1994a; Models, instruments, and truth. The status of the rationality principle in the social sciences, pp 154–184, 1994b) provide the background of my discussion of the mentioned issues.     

A model company

HUGIN Expert is a small company writing software that can be used to create expert systems, using probability in the guise of graphical models. Steffen Lauritzen describes his part in the genesis and development of the company.     

High dimensional multivariate mixed models for binary questionnaire data

Summary.  Questionnaires that are used to measure the effect of an intervention often consist of different sets of items, each set possibly measuring another concept. Mixed models with set-specific random effects are a flexible tool to model the different sets of items jointly. However, computational problems typically arise as the number of sets increases. This is especially true when the random-effects distribution cannot be integrated out analytically, as with mixed models for binary data. A pairwise modelling strategy, in which all possible bivariate mixed models are fitted and where inference follows from pseudolikelihood theory, has been proposed as a solution. This approach has been applied to assess the effect of physical activity on psychocognitive functioning, the latter measured by a battery of questionnaires.     

Informational cascades in the laboratory: Do they occur for the right reasons?

Recently, the theory of informational cascades has been tested in an experiment by L. Anderson and Ch. Holt (American Economic Review, 87 (1997) 847–862) who report that their data support the theory amazingly well. In this paper we report on an experiment designed to find out whether observed cascades are indeed due to rational Bayesian updating. However, we find little support for rational updating. The simple heuristic “follow your own signal” does much better in explaining our data than Bayesian rationality.     

Social Anomie and Racial Segregation in South Africa

The concept of anomie is one of the classics of sociological theory. Developed by scholars such as Emile Durkheim and Robert K. Merton, the concept refers to the absence of clear social norms and values and to a lack of sense of social regulation. However, whereas Merton focused on features of relative deprivation that cause anomie, Durkheim was primarily interested in the link between rapid social change and social anomie. According to the latter, normative regulation is threatened with being undermined and people are likely to lack the social and psychological means for adjustment in times of rapid social change. Drawing on survey data from the South African General Household Survey polled in 2002, the article examines the ethnical differences in levels of social anomie in the South African society. In order to do so, we, first, place the South African levels of anomie into comparative context. In a second step, we look at the race specific levels of anomie. Third, we investigate whether the differences in anomie between the races are related to the still existing socio-economic inequalities or whether race can be regarded as an independent factor that impacts on anomie. Finally we scrutinize to what extent socio-economic factors account for different levels of anomie within the races.     

The long run consequences of unilateral divorce laws on children—evidence from SHARELIFE

Previous research has shown adverse effects of growing up under unilateral divorce laws on long-term outcomes of children. It remains an open question of whether these effects of early childhood conditions arise due to divorce laws raising the likelihood of parental marital disruption or whether unilateral divorce laws also affect children in intact marriages by changing intra-household bargaining. Using recently available data from SHARELIFE for 11 Western European countries, we address this question employing a difference-in-differences approach and controlling for childhood family structure and socioeconomic status. Like previous research, we find adverse effects of growing up under unilateral divorce laws on the well-being of children. This effect remains even when controlling for childhood variables. We conclude that unilateral divorce laws affect children by changing family bargaining in intact marriages.