Sunday, November 9, 2008

Sociology and Economics

I went to a Sociology talk last week; a professor was presenting a
paper on work-life balance. It started off fairly well; he had a
decent data set and a passable model. But then it fell apart. He
didn't really know how to work with the numbers, and his logic started
to get muddled, so he didn't get any useful results. But the real
howler was something he wrote on the last slide:

"We need theories to explain how people make trade-offs when they
cannot get exactly what they prefer."

The entire field of Economics is devoted to how people make decisions
in the face of scarcity. Anyone who sat through an introductory Econ
class could give you several useful theories to explain how people
make trade-offs when they cannot get exactly what they prefer.

The entire premise of that question reflects a mind-boggling
misunderstanding of reality. Do sociologists really believe that the
normal state of affairs is for everyone to get exactly what they want?
Do they believe that every social fact they observe in reality is
there because someone wanted it to be there?

But, in defense of Sociologists, I have seen equally bone-headed
statements in Economics papers. In fact, we often make the very same
mistake. There are some people who take the Efficient Markets
Hypothesis and rationality assumptions way too far, and assume that
any economic behavior we observe is a 'revealed preference' and
corresponds exactly to what people chose to do to maximize utility.

This is why you need to study outside your field. Economists can
explain how people make reasonable choices and what happens as a
result. Sociologists can explain why people are often constrained by
social forces so that they are unable to think rationally, and what
happens as a result.

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