Wednesday, November 26, 2014
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In Praise of Foxy Scholars

PRINCETON – We live in a complicated world, so we are forced to simplify it. We categorize people around us as friends or foes, classify their motives as good or bad, and ascribe events with complex roots to straightforward causes. Such shortcuts help us navigate the complexities of our social existence. They help us form expectations about the consequences of our and others’ actions, and thereby facilitate decision-making.

But, because such “mental models” are simplifications, they are necessarily wrong. They may serve us well as we navigate our daily challenges, but they leave out many details and can backfire when we find ourselves in an environment in which our categorizations and ready-made explanations fit less well. The term “culture shock” refers to situations in which our expectations about people’s behavior turn out to be so wrong that we find ourselves jolted by the experience.

And yet, without these shortcuts we would be either lost or paralyzed. We have neither the mental capacity nor the understanding to decipher the full web of cause-and-effect relations in our social existence. So our daily behavior and reactions must be based on incomplete, and occasionally misleading, mental models.

The best that social science has to offer is in fact not much different. Social scientists – and economists in particular – analyze the world using simple conceptual frameworks that they call “models.” The virtue of such models is that they make explicit the chain of cause and effect, and therefore render transparent the specific assumptions on which a particular prediction rests.

Good social science turns our unexamined intuitions into a map of causal arrows. Sometimes it shows how those intuitions lead to surprising, unanticipated results when extended to their logical conclusions.

Fully general frameworks, such as economists’ beloved Arrow-Debreu model of general equilibrium, are so broad and encompassing that they are totally unhelpful for real-world explanation or prediction. Useful social-science models are invariably simplifications. They leave out many details to focus on the most relevant aspect of a specific context. Applied economists’ mathematical models are the most explicit example of this. But, whether formalized or not, simplified narratives are social scientists’ bread and butter.

Stylized historical analogies often play a similar role. For example, international-relations scholars use the famous meeting between Neville Chamberlain and Adolf Hitler in Munich in 1938 as a model of how appeasing a power bent on expansionism can be futile (or dangerous).

But, as inevitable as simplification is for explanation, it is also a trap. It is easy to get wedded to particular models and fail to recognize that changed circumstances require a different model.

Like other humans, social scientists are prone to over-confidence in their preferred model of the day. They tend to exaggerate the support for the model and discount new evidence that contradicts it – a phenomenon known as “confirmation bias.”

In a world of diverse and changing circumstances, social scientists can do real harm by applying the wrong model. Neoliberal economic policies, predicated on well-functioning markets, misfired in developing countries – just as planning models, presuming competent and capable bureaucrats, failed in an earlier era. The efficient-markets theory led policymakers astray by encouraging them to undertake excessive financial deregulation. It would be costly to apply the analogy of Munich in 1938 to a specific international conflict when the underlying situation is more reminiscent of Sarajevo in 1914.

So how should we choose among alternative simplifications of reality? Rigorous empirical tests may eventually settle questions such as whether the US economy today is suffering more from Keynesian lack of demand or from policy uncertainty. Yet often we need to make decisions in real time, without the benefit of decisive empirical evidence. My research on growth diagnostics (with Ricardo Hausmann, Andrés Velasco, and others) is an example of this style of work, showing how one can identify in a specific context the more binding among a multitude of growth constraints.

Unfortunately, economists and other social scientists get virtually no training in how to choose among alternative models. Neither is such an aptitude professionally rewarded. Developing new theories and empirical tests is regarded as science, while the exercise of good judgment is clearly a craft.

The philosopher Isaiah Berlin famously distinguished between two styles of thinking, which he identified with the hedgehog and the fox. The hedgehog is captivated by a single big idea, which he applies unremittingly. The fox, by contrast, lacks a grand vision and holds many different views about the world – some of them even contradictory.

We can always anticipate the hedgehog’s take on a problem – just as we can predict that market fundamentalists will always prescribe freer markets, regardless of the nature of the economic problem. Foxes carry competing, possibly incompatible theories in their heads. They are not attached to a particular ideology and find it easier to think contextually.

Scholars who are able to navigate from one explanatory framework to another as circumstances require are more likely to point us in the right direction. The world needs fewer hedgehogs and more foxes.

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    1. CommentedMukesh Adenwala

      In simpler terms, capacity to doubt has a value - even survival value. However, markets reward only certainties and not doubts. How then can we have a social system where fox like thinking is promoted and rewarded?

    2. CommentedChristopher Graham

      With all the complexities of today's world (not the 20th century from which all Dani's examples are taken) one engaging in decision-making needs to be both hedgehog and fox - circumstance will dictate. It is woefully deterministic and smplistic to value the role of one frame of mind over the other. So perhaps what the world really needs more of are 'foxhogs' - which may not fit into any pre exitsing model (whether 'wrong' or 'right').

    3. CommentedSergey Ivanovitch

      Practical policy decisions are made from a discrete set of (often) mutually exclusive choices. Do we lower taxes for the wealthy or raise them? Should we trim the national deficit or should we wait until employment is stabilized? Binary decisions such as these require equivalently dichotomous perspectives on economics. Acknowledging alternative models is one thing; not having a point of view is this taken to a deleterious extreme. We have seen the effects of this indecisiveness in US policy towards Syria and, more recently, Ukraine.

      Maybe what this world needs is not more hedgehogs, but less fanatical foxes.

    4. CommentedWayne Davidson

      “There are still harmless self-observers who believe that there are "immediate certainties"
      Friedrich Wilhelm Nietzsche

      “I have nothing more than opinion, my judgement is but a play of the imagination”
      Immanuel Kant. *

    5. CommentedMarc Laventurier

      Dani might benefit from a brush-up on the work of two of his predecessors at Princeton, the philosopher Richard Rorty and the cultural anthropologist Clifford Geertz. Rorty's work represents the sophisticated hedgehog's view of conceptual foxiness as the natural attitude to adopt toward a world that doesn't admit of static or ultimate representation, and Geertz, who I once heard describe himself as a Wittgensteinian, who saw deeply that "It is not against a body of uninterrupted data, radically thinned descriptions, that we must measure the cogency of our explications, but against the power of the scientific imagination to bring us into touch with the lives of strangers." Another hedgehog, burrowing deep.

      When I recently came across another article here on PS by the economist Prof. Rogoff, where he rather crudely used Malthus and Marx as foils for a thoughtful but utterly conventional neoliberal essay, 'Malthus, Marx, and Modern Growth', it struck me that it would be interesting to see a century hence whether Ken would be seen as having been one of those mouthpieces for the status-quo that Marx predicted, i.e., an imperialist running dog, or was he merely being foxy.

      lapdog

    6. CommentedRachel Green

      Isn't this in and of itself a simplification? Sorry, I couldn't help but point out the irony.

    7. CommentedNichol Brummer

      The ultimate risk of both hedgehogs and foxes is that they become ideologues: when they defend a certain conclusion, by limiting their activity to the search for arguments that are consistent with that concusion, in stead of being open to results that they don't immediately agree with. Some people are highly intelligent, and even quite foxy, but apply all their foxyness towards one pre-determined goal. And thereby they become hedgehogs of the weak kind.

      It isn't necessarily bad to be a hedgehog in your methods, but it is mandatory to be foxy in your beliefs.

      But then we should ask: is this being rewarded when people want to find a job? I'm not so sure. That is why it is important that articles are written in praise of foxes.

    8. CommentedJames Goodman

      It is hard to deny that over-confidence and faith in reductive simplifications of reality is a reflection of ignorance, which is quite relevant in the social sciences given that our socio-economic world is becoming more and more complex. This is the basic problem with using equations to model the organization and behaviour of a complex system such as our environment. Because such an approach is essentially an impossible task, a lot of research is instead turning to agent-based simulation. Hopefully, agent-based modelling will promote more of a fox-like evaluation of the models underlying the various strains of political ideology. First on the list – neoliberal ideology.

    9. CommentedDoug Carmichael

      In the choice of models, vaguenes gives room for ideology and interest to play a major role. Economic models tend to favor technocratic criteria rather than the impact of policies on people. The impression is that the world is rational when jt suppresses things like inequality, class differences, power implications. The choice of models is never so innocent.

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