Healthy Economics Healing Autistic Accounting Theory: Visiting a Neglected Area of Institutional Economics
Lanis, Roman, McFarling, Bruce R., Journal of Economic Issues
In June 2000, French students of economics rose up in revolt against the economics that they were being taught, coming to world attention with a student petition against autisme-economie (autistic economics), declaring, as their second point:
The instrumental use of mathematics appears necessary. But resort to mathematical formalization when it is not an instrument but rather an end in itself, leads to a true schizophrenia in relation to the real world. Formalization makes it easy to construct exercises and to manipulate models whose significance is limited to finding "the good result" (that is, the logical result following from the initial hypotheses) in order to be able to write "a good paper." This custom, under the pretence of being scientific, facilitates assessment and selection, but never responds to the question that we are posing regarding contemporary economic debates. (Post-Autistic Economics Network 2000, paragraph 5)
Of course, one of the most obvious culprits for autistic economic theory is neoclassical theory and approaches derived from it. The students recognized this in their first point, which declares in part:
Most of us have chosen to study economics so as to acquire a deep understanding of the economic phenomena with which the citizens of today are confronted. But the teaching that is offered, that is to say for the most part neoclassical theory or approaches derived from it, does not generally answer this expectation. Indeed, even when the theory legitimately detaches itself from contingencies in the first instance, it rarely carries out the necessary return to the facts. (Post-Autistic Economics Network 2000, paragraph 4)
We focus on an approach to the question of the influence of culture on corporate reporting standards, drawn from the theory of accounting. We argue that the formalization chosen, together with the empirical techniques that are used, leads to an "autistic" theory. However, the theory in question is not based upon neoclassical economics, which implies that the problem of "autistic" theory identified above is not restricted to the neoclassical approach. When responding to the challenge laid down by the students in the post-autistic economics movement, it is important for us to be conscious that "autistic" theory is not restricted to any one theoretical approach. It is especially important to beware habitual choices of empirical technique that lead in the direction of an "autistic" theory. It is possible to feel that the problem has been resolved by adopting a more appropriate theory, only for the problem to reappear as the result of inappropriate choice of statistical technique.
There are several reasons to present this argument to an audience of institutional economists. One derives from the particular formalism being examined. This is the formalization of hypotheses in an effort to permit them to be tested by regression analysis. Given the heavy reliance on regression analysis in much of what passes for applied economic research, it is important to have a clear understanding of the situations where the preliminary formalization of hypotheses to prepare for regression analysis is enough in itself to lead toward "autistic" theory.
However, the primary reason is to begin reclaiming ground for institutional economics that has been lost by mainstream economic approaches. A consequence of autistic economics is that those who require an effective understanding of an aspect of the economy must frequently pursue this understanding outside of the mainstream economics literature. This is particularly for the theories of accounting, marketing, management, and the other "business disciplines." In accounting, corporate reporting standards play an important role in the corporate information that is made available to shareholders and other members of the public. …