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Professor of Law
Antonin Scalia Law School

Joshua D. Wright is University Professor and the Executive Director of the Global Antitrust Institute at Scalia Law School at George Mason University. In 2013, the Senate unanimously confirmed Professor Wright as a member of the Federal Trade Commission (FTC), following his nomination by President Obama.

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Economics & Ideology Again

Crooked Timber has a very interesting post up on the minimum wage debate (HT: Brian Leiter).  I want to comment on the sub-theme of the post (and the theme picked up in the title of Leiter’s post), which was that economics ideologically driven by pro-market bias which results in the publication of pro-market findings over those that would favor regulation or demonstrate some sort of market failure.  Here’s an excerpt:

Another thing that must be pointed out: given the anti-regulation ideological bias of the economics profession as a whole, it’s not hard to imagine that studies that do find that the minimum wage has a disemployment effect are considerably more likely to be published.

And later:

The ideological character of much of the economics profession in the United States suggests that there are rewards for producing scholarship that confirms the idea that the minimum wage causes unemployment, and punishment for scholarship that finds otherwise.

I am not a labor economist and don’t have much to say about the substantive economic disputes here.  Card, Krueger, Kevin Murphy and others can certainly fend for themselves.  But I want to make two points here that are relevant to this larger debate about what Leiter describes as the “ideological character of economics.”

The first is that the evidence that the economics profession exhibits a pro-market bias is suspect (see, e.g., Klein & Stern (2007)).  I do not dispute that there might exist pockets or sub-specialties of the economics world where a pro-market bias influences what scholarship is published in top journals, though I have no evidence in support of that proposition.   It becomes popular once a year or so to lament the free-market nature of the economics profession.  Last year, it was in conjunction with this NY Times piece, which prompted several economists to respond.  My favorite came from Mankiw who wrote:

Many economists in the past have questioned “free-market orthodoxy”–for example, Samuelson, Tobin, Modigliani, Solow, Sen, Stiglitz, Akerlof, Phelps,…. Does the economics profession consider these guys “deluded or crazy?” No, we give them Nobel Prizes! Maybe it’s because I have spent my education and career at Princeton, MIT, and Harvard, rather than Chicago, but I have never viewed the economics profession as being dominated by free-market orthodoxy.

The point is that these caricatured descriptions of the political leanings of economists, and the trouble facing those who dare to dissent from the “free market orthodoxy” are overplayed.

The second point, and one which I‘ve mentioned before, is that my own experiences in industrial organization economics and law and economics more generally, I strongly disagree that there is any sort of “free market orthodoxy”.  I wrote previously:

I find these observations [ed: that free market dissenters do quite well within the profession] consistent with my experience in the antitrust branch of industrial organization economics where top journal publications are in large part reserved for theoretical models demonstrating the possibility that some conduct might be inefficient or result in market failure under some set of (usually fairly stylized) conditions. As a colleague of mine once warned: “nobody gets tenure for demonstrating that markets really work.” At the end of the day, I highly doubt that any “interventionist leaning” antitrust economists are looking over their shoulder in fear of the AEA taking back their membership.

While I am not prepared to back the statement with evidence, casual empiricism suggests to me that free market economic principles do not dominate the “law and economics” world either. A look at the ALEA program for the last 5 or so years would probably confirm this suspicion. For example, I don’t believe any law school L&E types would be willing to support the position that those relying on behavioral L&E insights to argue in favor of various intervention proposals have suffered on the job market, in law reviews or peer-reviewed journals, or amongst their peers in recent years. Perhaps I’m wrong about this. If you think I’ve underestimated the plight of the dissenters in the L&E world in particular, I’d love to hear about it in the comments.

My anecdotal evidence in IO, antitrust, and law and economics certainly does not prove that no such free-market bias exists in other pockets.  Perhaps labor economics is different.  Or perhaps I’m wrong about my own fields.  But my sense is that the ideological character of modern economics is driven by much less pro-market bias than the post at Crooked Timber suggests and it is no longer accurate to talk about the “anti-regulation ideological bias of the economics profession as a whole.”