DU Professor Pens Book on the Pitfalls of Economist-Led Public Policy

In his new book, “The Tragic Science: How Economists Cause Harm (Even as They Aspire to Do Good),” University of Denver professor of international economics George DeMartino explores the role that economists play in economic policy—and argues that they can often cause more harm than good.

The New York Review of Books’ Cass R. Sunstein writes that DeMartino’s book “offers both epistemic and ethical objections to economic analysis, especially insofar as it influences public policy.”

“[DeMartino] insists that economists cause damage that ‘can be severe, even devastating,’ including the destruction of lives,” Sunstein writes. “That, he says, is ‘the tragedy of economics.’”

DeMartino recently joined the DU Newsroom to answer some questions about his work—and explain “the tragedy of economics.”

What drove you to dive into this subject? 

Over a decade ago, I began a project to create a new field of inquiry in economics—the field of professional economics ethics. Economics has never given attention to the responsibilities of economists to those whom they purport to serve. As a consequence, well-meaning economists do a lot of damage. And that damage can be serious and extend over generations. As a member of the profession, that troubles me. The new book is the next step in a series that is intended to provoke economists and others to confront deep ethical problems in economics that we’ve been too willing to repress.

You talk about the “tragedy of economics” in the book. What does this mean, exactly?

The tragedy of economics is this: well-meaning, well-trained economists necessarily cause harm as they aspire to do good. The problem can’t be entirely resolved. It has to be managed. And in my view, the profession does not manage the problem responsibly. At its root, economics is grounded in a paternalistic approach, in which the economist is thought to know best—to judge when people are harmed; how badly they’re harmed; and when it’s ok to impose harm on some people for the benefit of others.

In my view, we need to move toward an ethic that is grounded in the autonomy and integrity of those who stand to be affected by economic interventions. Those people—not economists—should be central to deliberations over which harms to impose, in pursuit of which valued objectives. 

You assert that economists are “irreparably ignorant.” Is this an insult, or simply an unfortunate fact?

This is just a statement of fact; it’s not a criticism.

Economists need to know much more than they can possibly ever know in order to do much of what they do—like cost-benefit analysis of policy proposals, forecasting of the inflation rate and other variables, economic impact studies and so much more. The problem is that economists treat their models, which they rely on to do all this work, as time-travel machines! The models provide the illusion that economists can see tomorrow, today. And that’s a serious problem.

When you have immense influence in the world, and you act on the belief that you know more than you do, then you’re very likely to cause immense, avoidable harm. And that claim is a criticism of my profession. When working with non-economists, we should lead with what we don’t and can’t ever know, so that others don’t take our forecasts as certain or even dependable when deciding what endeavors to pursue. We should teach our audiences about the limits to our “science,” so that they don’t put too much faith in our guesses about the future. 

What is an example of the damage that economists might cause?

Economists cause harm every day when they advocate for policies that benefit some members of society at the expense of others. Take, say, gentrification of urban centers. Economists are happy to demonstrate by way of cost-benefit analysis that gentrification promotes social betterment, even though it will displace families and entire communities. And even though those displaced by gentrification are already among the most vulnerable in society, many will lose shelter altogether when they lose affordable homes as a consequence of gentrification. The same arguments apply to cases like, say, trade liberalization. Economists advocate for free trade constantly, even though it causes severe damages to disadvantaged communities. 

In your opinion, what is the best solution to this problem?

First, the economics profession needs to establish the field of professional economic ethics, where these kinds of issues are carefully examined, in conjunction with ethicists and those beyond economics who will be affected by what economists do.

Second, we need to stop pretending we know the unknowable.

Third, we need to shift away from paternalism toward an orientation that conveys respect for laypersons who stand to be harmed by our interventions. They should be central to policy assessment. The good news is that some economists are now doing much better in all these regards.

In the book, I highlight one community of practitioners—those involved in what is called decision making under deep uncertainty (DMDU). This approach engages stakeholders as equals in searching for policies that will be “robust”—that stand to do well in the face of an unknowable future; and that minimize harms to all those affected by policy choices. This is, in my view, best practice at the moment. And I am hopeful that other economists will follow the lead of the DMDU practitioners, looking for new approaches to policy engagement that convey respect and that take serious account of potential harms.