The Primacy of Economics: An Explanation of the Comparative Success of Economics in the Social Sciences

By Demsetz, Harold | Economic Inquiry, January 1997 | Go to article overview

The Primacy of Economics: An Explanation of the Comparative Success of Economics in the Social Sciences


Demsetz, Harold, Economic Inquiry


I

The strong export surplus economics maintains in its trade in ideas and methods with the other social sciences is an important indicator of the success of economics. Not much has been said about the source of this success, but it has been attributed largely to advantages offered to other social sciences by the economics tool kit. Thus, Gary Becker, who has earned Commander-in-Chief ranking in the EEF (Economics Expeditionary Forces), attributes the interdisciplinary influence of economics to our relentless and unflinching application of "The combined assumptions of maximizing behavior, market equilibrium, and stable preferences..." (Becker [1976]). This view, but with a different emphasis, is shared in by Hirshleifer [1985], my distinguished colleague, who leads an active EEF group now reconnoitering sociobiology:

What gives economics its imperialist invasive power is that our analytical categories - scarcity, cost, preferences, opportunities, etc. - are truly universal in applicability. Even more important is our structured organization of these concepts into the distinct yet intertwined processes of optimization on the individual decision level and equilibrium on the social level of analysis. (p. 53)

The emphasis here is on the broad scope of phenomena that can be explained with our tool kit. Such breadth suggests the possibility of unifying the social sciences in an economics-led hegemony.

Brief statements such as these cannot be taken as adequate representations of full views, but there is a disposition among most economists to accept the interdisciplinary influence of economics as a measure of its success and to identify its tool kit as the source in this success. The most important exception is R. H. Coase [1977], who doubts that the interdisciplinary influence of economics will continue. He believes the economics tool kit is easily mastered by practitioners of other social sciences when they find it useful. As Coase judges the situation, a sustained influence from economics requires that economics and the other social sciences share interests in the same problems.

The nub of the disagreement between Coase and those, like Becker and Hirshleifer, who remain optimistic about a continuing strong influence from economics, turns on two issues that are not discussed explicitly. One relates to the definition of a "problem." Those who are optimistic seem to be distinguishing between problems according to whether their solutions do or do not depend importantly on scarcity and maximizing behavior. Interpreted this way, many problems across the social sciences are of the same type. Coase, on the other hand, distinguishes between problems according to differences in the factual knowledge needed to understand them. For Coase, understanding the firm is a different problem from understanding the marriage relationship because factual knowledge about one does not transfer to the other. For Becker, the essential similarity between these problems rests in utility maximization subject to constraints.

This difference in interpretation raises a second issue, one that is more substantive. Coase's view is that the tools of one social science discipline, in this case economics, are easily learned by practitioners of another, but that factual knowledge is not. Those optimistic about the interdisciplinary influence of economics implicitly have the view that mastering the tools of economics is more difficult than Coase presumes; repeated practice in their use is needed to become their master. It is difficult to judge which side has the best case. I am even puzzled as to how to define a researcher's discipline if he or she is trained in the tools of one social science and applies them to problems in another. One possibility is to determine whether the researcher's work appears in economics journals or in the journals of other social science disciplines. I am most familiar with interactive work between law and economics. …

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