Well Done, Yogi Berra (and Arnold Kling)

Over on The Library of Economics and Liberty Blog contributed by the lively duo of Arnold Kling and Bryan Caplan we get this morning’s offering (as it is 8 am in France it was probably last night’s offering):

Bryan Caplan asks: “Arnold, please tell us: What's not junk?”

And Arnold Kling replies:

“As I believe Yogi Berra said (if not, it sounds like something he would say), "You can observe a lot just by watching." I think economists should put more effort into observation and data-gathering and rely less on regression techniques.”

To which I say: ‘What good sense Yogi Berra speaks.’ Pity he was not an economist.

Alas, I fear the “extremely complex, data-intensive 'regression' analyses standard in economics” are so well entrenched and so much investment has gone into bringing the subject to its present state, and you only get the "coveted Bank of Sweden prize in Memory of Alfred Noble" for adding to the knowledge base using such techniques that the current generation, and the next, and the one after that presently in grad school, of scholars are going to press on, Mandarinate-like, spewing out products in the firm determination never to ‘look outside their windows’, that Arnold’s plea will be treated with total disdain and his (though Bryan might still be in with a chance as a ‘defender of the faith’) Bank of Sweden prize in Memory of Alfred Noble has gone out of the same window that few economists look out of, and worse, I await the derision Yogi Berra’s good sense will receive.

However, if any budding economist wants to see how the ‘observation’ approach works, and what it did for the profession, they can examine a prime example from the alleged founder of the subject (I have my doubts about the historical accuracy of that allegation, but you could run a deep regression on data from Google hits if you like), none other than Adam Smith himself.

Or as good, if time is short, look at your current project and ask: "what exactly is it adding to the knowledge base of the world that exists as opposed to adding to the technique that has been invented for the knowledge base of a fantasy world that doesn’t?"

[Read Arnold and Bryan’s amusing exchange at:

http://econlog.econlib.org/archives/2006/05/economics_nonju.html]