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Environmental Ignorance Is Economic Bliss

by Philip Barnes

In The Descent of Man, Charles Darwin wrote that “ignorance more frequently begets confidence than does knowledge.” This single line succinctly describes a recently conceptualized psychological phenomenon called the Dunning-Kruger Effect. David Dunning and Justin Kruger, two researchers from Cornell University, have concluded that there is an inverse relationship between a person’s knowledge and skill level in a particular area and the person’s self-rated ability to perform in the area. Dunning and Kruger argue that people who are unknowledgeable and unskilled at performing an activity are also unable to recognize their own incompetence, which is why they tend to overestimate the quality of their performance when asked to self-evaluate. (Likewise, those individuals who are highly knowledgeable and highly skilled tend to underestimate their performance when asked to self-evaluate.)

Enter the economics discipline. Despite the overwhelming scientific evidence that economic activity is exceeding environmental limits and destabilizing both global and local ecosystems, demonstrably flawed pro-growth economic theory continues to be touted as the cure to our ailments. Could the collective of practicing economists, policy-makers, economics professors, and economics students all be suffering from something akin to the Dunning-Kruger Effect? As a community, are these individuals so unknowledgeable about the environmental consequences of pro-growth economic activity that they tend to systematically overestimate the discipline’s environmental performance?

A good place to start investigating these questions would be in the departments of economics at higher education institutions. After all, economic knowledge and skills are taught and cultivated at universities. Suppose, for example, that an economics department offers a course which introduces and analyzes the scientific evidence that economic activity has surpassed environmental limits. The students — those future economists, policy-makers, and professors — would then have critical knowledge of the environmental consequences of economic activity. On the other hand, if the department does not offer any ecologically-minded courses or address the limits to growth, the students would be unknowledgeable about the environmental consequences of economic activity and would therefore, as per the Dunning-Kruger Effect, overestimate their discipline’s environmental performance.

To determine which universities to survey for ecologically-minded courses, it is reasonable to look at the US News and World Report’s highest ranked economics departments. While the rating methodology is frequently criticized and debated, departments undoubtedly want to be placed at the top of the US News listings. A high ranking means more prestige for both the university and its graduates, and the department is seen as an influential leader in the field.  Other lower-ranked departments can aspire to achieve the same standard of excellence. So if you want to find a representative sample of courses being offered in the leading economics departments, looking at the US News and World Report cream of the crop is a useful approach. The top ten economics graduate programs are:

  1. Harvard University,
  2. Massachusetts Institute of Technology,
  3. Princeton University,
  4. University of Chicago,
  5. Stanford University,
  6. University of California-Berkeley,
  7. Northwestern University,
  8. Yale University,
  9. University of Pennsylvania, and
  10. Columbia University.

I visited the websites of each of these economics departments and looked at the descriptions of courses for both the undergraduate and graduate programs. For the 2012-2013 academic year in all ten of these departments, only one single course presented alternative economic theories through alternative learning methods. The one-off course entitled “Buddhist Economics” was a seven-week-long sophomore seminar at UC Berkeley taught by Dr. Clair Brown. Eight students enrolled. They read and discussed works by E.F. Schumacher, Richard Norgaard, and Amartya Sen in order to reconceptualize economics from a Buddhist perspective. Students kept weekly journals detailing instances where neoclassical economics transgressed Buddhist economic principles in their lives, and they even had the opportunity to practice meditation with Anam Thubten, founder of a local Buddhist temple.

Yet Dr. Brown’s course was the exception rather than the rule. For all the other economics departments surveyed, no other course focused solely on the environmental consequences of economic activity or the limits-to-growth critique. Most departments offer a course called “Environmental Economics,” but the content centers on traditional cost-benefit and public policy approaches to resolving natural resource problems such as negative externalities, public goods underinvestment, and other market failures. Moreover, in introductory courses for micro and macroeconomics, ecologically-minded economic theory and knowledge is woefully absent. This claim is supported by a recently published paper in which the author, Tom Green, reviewed the most popular introductory level economics textbooks and found that the causal relationship between economic activity and environmental consequence was either systematically ignored or underrepresented.

This warning from Adbusters can be inserted into textbooks.

This warning from Adbusters can be inserted into textbooks.

Economics departments are churning out graduates who are blissfully ignorant of their discipline’s environmental performance. According to the Dunning-Kruger Effect, these graduates will tend to overestimate the ability of the pro-growth economic paradigm to operate without causing serious environmental damage. This conclusion is disconcerting because these graduates are the future economists, policy-makers, and professors who will contribute to decisions about the scale of economic activity. If, because of their incomplete economics training, they are so incompetent that they cannot recognize their own discipline’s poor environmental performance, then they are likely to continue to make the same mistakes that created the current set of environmental crises. A rapid and massive reevaluation of economics curriculums which takes into account ecologically-minded theory, methods, and knowledge is desperately needed. Dr. Clair Brown’s course is a good place to look for inspiration. Whatever is done, it is clear that “ignorant,” “incompetent” and “unknowledgeable” should not be the adjectives used to characterize the future’s most influential decision makers.

Economics departments must be compelled to integrate ecological considerations into their courses. Professors, department heads, and deans will not voluntarily take action. For decades now, limits-to-growth theorists have been following the Quaker dictum by “speaking truth to power.” Unfortunately, the neoclassical economics discipline and its gatekeepers are either deaf or not listening. I propose an alternative strategy, what I call “speaking truth to people.” When the fall semester begins here at the University of Delaware, I will print a warning label on notecards and place them in the economics textbooks as they sit on the shelves in campus bookstores. Hopefully, this technique will start some discussions among economics students and, with some luck, lead to more direct action and calls for reform, perhaps something like the student walkout that occurred in Gregory Mankiw’s class at Harvard. Economics departments will supply ecologically-minded courses, but only if the students demand them first. Without demand, there is no supply. I learned that logic in my microeconomics course at college.

Philip Barnes is a doctoral student at the University of Delaware School of Public Policy and Administration.  He is also the host of the Beyond Rhetoric radio program.

10 Responses to “Environmental Ignorance Is Economic Bliss”

  1. Paul Baer says:

    Well you’re not wrong, but it’s a big problem. I joined the International Society for Ecological Economics near the time of its founding (and, as a grad student, helped start the US chapter). But its momentum kind of topped out before I graduated in 2005 (I was a student of Dick Norgaard’s).

    I did just finish teaching a small graduate course on Ecological Economics here at Georgia Tech’s public policy school; this year I used Common and Stagl’s textbook, two years ago I used Daly’s. But it’s not going to crack most econ departments (to say nothing of the top 10) until there’s some more high-profile economists who “get it.”

  2. Paul Baer says:

    ps are you familiar with the “austistic economics” movement that started a few years ago around similar issues?

  3. deShoebox says:

    I appreciate Mr. Barnes’ extension of the “Ignorance leads to over-confidence” principle to “Flawed intellectual discipline leads to over-confidence”, and I’m sure this is true of many a pseudo-science in which doctoral degrees are now offered. From my own investigations, however, I think economics has a more fundamental flaw. This is that it purports to be a rigorously logical system of thought, but it is based on premises that are almost all demonstrably false. The basic assumptions of economics – that it’s about allocation of scarce resources, that people make decisions based on rational self-interest, that a dollar is worth the same to a rich person as to a poor person, that there are such things as ‘externalities’, and so on – are never actually examined in Econ 101. But a very little investigation shows them all to be completely wrong. (For a hilarious explanation of why this really isn’t a problem, try wading through Friedman’s “Methodology in Positive Economics”. In its way, it’s funnier than P. G. Wodehouse.) If you ever took a basic logic course, you know that from a contradiction you can prove anything. This means that in any system of thought that includes even one false premise, anything at all can be rigorously demonstrated. (See Bertrand Russell’s concise proof of the fact that he was the Pope, starting from the premise that one equals two.) So in economics, which is based on a number of completely bogus premises, one can develop elaborate and logically watertight proofs of virtually anything you can imagine. We see economists doing this all the time. But when was the last time you heard an economist, or even a non-economist, questioning the fundamental assumptions of conventional economics? What would happen if we demanded an economics that was based on true assumptions and sound reasoning, and that led to good public policy decisions?

  4. Philip Barnes says:

    Paul,

    To answer your question, yes, I am familiar with the post-autistic movement, now called the Real-World Economics Review. Unfortunately, as I show in the essay, their ideas are not being incorporated into economics departments. They are making some headway and appearing in related departments however. As you know, Richard Norgaard is not a faculty member of the Berkeley econ department and you taught your ecological economics course in the public policy school. I agree with you that it is a serious challenge and that it’s not going to change unless econ departments do some serious soul searching. But like I said, I don’t think they will do so voluntarily. They will only be compelled to reevaluate from within by the students, not from without by people like me.

    deShoebox,

    You are absolutely right that the economics discipline is rife with flawed assumptions. But I don’t think this is groundbreaking news to economists. I’ve read Uncle Milty’s essay, “Methodology of Positive Economics” a couple of times now and, as you say, it doesn’t matter to him if the assumptions are proven faulty or not. What is important to him is the capacity to predict the future. So as long as the methodological toolbox has superior predictive power, then who gives a hoot if we are not always rational utility maximizers with full information? But as you’ve pointed out, once your assumptions are flawed, you can demonstrate anything you want. So we need to continue to make those assumptions problematic, but I believe we also have to show that there are core values and ethics underlying those assumptions which can be at odds with the long-term health of the planet and the societies that inhabit it.

    Phil

  5. PHayes says:

    True, Uncle Milty (UM) did make the claims… and the faulty logic system provides an excellent support net for the claims.

    I suspect that a large part of the problem lies with economists, their beliefs in the system, and (possibly as significant) the ability of the assumptions to be twisted to justify economics’ failure to predict because… (choose one or more) government intervention, lack of government intervention, market emotions, lack of free markets, and so forth for a correlated and dependent but seemingly separate reasons. And they are all logically justified by the faulty logic that can basically prove anything to the skilled practitioner.

    A larger part – the application – involves those who really have no idea what the basis of economics theory is about. They are ignorant of Walrus, Marshall, or any other of the theoreticians, but they know the characteristics that the theory has postulated (and by some contortion of UM’s standard, demonstrated). But his group includes our politicians, business leaders, and others who hold positions of greater-than-average influence and who also act on the basis of the precepts they mistakenly hold so dear.

    I think the fall of ‘economics’ in the latest (and continuing) crash may provide the ‘shock-and-awe’ counter to the dogma and provides an opportunity for starting new rationale’s. The economists (many) will often call for an alternative to the economic theory on which we’ve depended… I’m not sure that there is an alternative theory so neatly bundled, intuitively rewarding, and simply descriptive. There is, however, reality, in all its complex, gory, confusing details… and maybe providing that which exists as a counter to the former theory’s ‘that-which-should-exist-for-Pareto-Optimimum’ (or some other crazy claim) is sufficient to change the discussion.

    It’s time to leave the dogma behind and realize that the real world doesn’t necessarily follow simple models.

  6. Philip.

    First, you should had mention the existence of the Heterodox Economics Newsletter (http://heterodoxnews.com/n/htn146.html) published weekly by two professors, with the contribution of many others, and received by a large worldwide group of teachers and others.

    Second, the reason that environment is unconsidered is not ignorance but ideology. Today’s economics is here to serve the established interests and not to change them.

    This is why heterodox economists are kept away from the mainstream institutions and do not teach at the Universities you mentioned. They struggle a lot for finding a teaching position, elsewhere.

    This is why also that change won’t come from economics students having a better knowledge of the relationship between environment and economics, but from social movements that by its turn will bring a macroeconomics that is built considering people and the planet first.

  7. Dennis Anthony says:

    For the past couple of years or so I have asked many economists and politicians who speak of the need for economic growth, one question – ‘What is the fundamental source of economic wealth/growth?’

    Many think I am asking how to increase economic growth. I now say that I am not asking that question. I have never received a ‘correct/informed’ answer even when I say that the question can be answered in only two words, one of which is ‘the’.

    Arrgh!!

  8. BC says:

    Dennis, how about the (human) mind?

    Or, more broadly, the (human) community of minds acting in an ecologically sustainable/self-regenerating, enlightened, self-interested manner.

    We have been collectively “educated”/socialized in the West to be “consumers” for the purpose of encouraging endless desires/compulsions and increasingly conditioned towards infanile impulses and distractions with little regard to the effects on the ecological system on which we rely for survival.

    The human mind can surely devise a better system and concept of “wealth”.

  9. Dennis Anthony says:

    BC – yes I agree.

    Have you or anyone you know ever asked the question I have asked? It seems to me that this is the very first question to be raised and answered in the very first elementary class of economics to indicate the fundamental basis of economics.

    Strangely, or perhaps not, in contrast to some economists and politicians, a few of my ‘ordinary’, non economist friends have instantly gave the logical response.