Economics, the Queen, and the Wrong Sort of Maths

Last year the Queen attended a tutorial at the LSE about the credit crunch, and asked the not-unreasonable question, why economists hadn’t seen the economic crisis coming. Her Majesty’s question has raised a very defensive response from a number of economists who have written and published answers for her. One such answer comes from ten leading economists who argue that the training of economists has led them down the path to more maths, and less understanding. Bridget Rosewell, one of the economists who wrote the letter, spoke with Evan Davis about it on the Today programme on Saturday – the link to that interview is here. She is Chief Economist to the Greater London Authority and her research interests focus on the economic performance of local economies, the performance of markets, and business organisations. In 2007 she was named as one of the 25 most powerful people in London by the Evening Standard newspaper, and so she was an excellent person to explain the solution offered to the Queen on the Today programme on Saturday, which is that the ethos of economics has been distorted by the Wrong Sort of Maths.

The basis of the argument presented is that economics training and education in University has placed too much emphasis on clever but inflexible mathematics and models, which work along straight lines to reach an equilibrium which is unlikely to reflect the real world. The argument is that the balance of opposing forces which operate upon that equilibrium are constantly changing so that models must, in practice, be inherently unstable. Ms Rosewell would like to see economists taught to question the underlying assumptions that they are making so that they can understand them better – which is a skill that I think we try hard to encourage in our A level students as they learn to evaluate. She emphasises the importance of understanding the behavioural and psychological side of the subject, which is, after all, a social science. If students are to appreciate the widely differing viewpoints and objectives of economic agents, they have to attempt to understand what motivates them, and that those motivations can be vastly different from one agent to another.

The Guardian have also recently reported on responses to the Queen’s questiion, with a greater emphasis on the ‘psychology of denial’ in the financial and political world - again, a failing which could be improved with a more questioning attitude.