Values in Economics

The lore of neoclassical economics tends to instill attitudes toward values in budding professionals which are. rather roughly captured in the following set of principles: 1 Economics is a positive science. As a science it studies what has happened and what may happen, but not what should happen. 2 Of course each economist has his own set of values, and these influence his choice of topics and even his choice of research procedures. Such value-laden biases are inevitable. The only defenses against them are the scientific insistence on the spelling out of assumptions and procedures, plus the critical interest of those economists with other sets of values in this economist’s research. 3 Every decision is based on a criterion, a set of values which provides the decisionmaker with the value-information needed to select the best alternative for him. These criteria may be studied positively by economists. For example it would be perfectly legitimate for positive economics to study the role that attitudes toward risk play in investment decisions. 4 When policies are being discussed scientifically, the economist starts by assuming some given set or sets of values and can then make his professional contribution, which is to analyze the consequences for each set of values of adopting alternative courses of action. 5 Efficiency is such a weak value, so widely believed to be desirable, that it can be treated as if it were a purely factual concept.1 6 It is usually convenient to assume that individuals are motivated by self-interest, and to give primary status to the tastes that capture this self-interest. Usually one also assumes that these tastes are stable, uninfluenced by the environment. 7 It is hard enough to make cardinal comparisons among alternatives: to find out whether an individual prefers one alternative much more than another. But to make interpersonal comparisons, to compare the relative states of two individuals, is really impossible. Such a comparison is no more than an opinion, over which there are likely to be great and essentially irreconcilable differences among any set of judges. This can of worms is best left out of economics entirely. The masters have set the tone for this procedure by writing very general “social welfare functions” which, in principle, capture the interdependence, and by then discouraging anyone from attempting closer specification by enumerating the very great and complex problems that lie in the way. 8 Welfare economics, the field which formally attempts to connect values and facts in economics, is uninteresting and pretty near empty of content.