Friday, April 30, 2010

NOVA's Disservice to Science

I couldn't contain my dismay while watching the latest NOVA episode titled "Mind Over Money." The subtitle of the program, "can markets be rational when humans aren't?", is the kind of statement that you would normally file under "drivel by some ignorant antiscience lunatic." It's however a statement made by a show that is supposed to be the "highest rated science series on television."

Just think about it: if humans are really as irrational as NOVA says they are, why should we limit the effects of irrationality to the domain of economics and markets? Why pretend that political behavior is less irrational (when it's exactly the opposite) and that government is the solution to the problem? Is NOVA implying that those supposedly irrational humans shouldn't be allowed to engage in demanding rational tasks such as to vote in a democracy?

I'm not alone in this negative assessment of the show. Nancy Dewolf Smith does an excellent job describing how bad this NOVA episode is in this WSJ article, how it's filled with intellectual dishonesty and grocery counter magazine sensationalism. She says:

... It's disappointing, part-way into "Mind Over Money," to see the show staggering toward a pit of ancient dung about an alleged struggle between economists who believe in efficient markets and study price signals, and behaviorists who study examples of seemingly nonrational economic behavior, such as "present bias." The "NOVA" episode even trots out the likes of the University of Chicago's Gary Becker for the efficient marketeers and Chicago's behavioral economist Richard Thaler for the other team. Journalists have been trying to whip up a war between these two groups for what feels like decades. But the dogs won't fight because their paths toward finding explanations for market outcomes usually run parallel, not at cross purposes.

As it turns out, "Mind Over Money" isn't really on either of those paths anyway. Like many in Washington these days, producer, writer and director Malcolm Clark appears to believe that the free market shouldn't really be free. But he's not out to skewer Wall Street. Instead, he pounces on us, the fragile humans who can't be trusted to look after ourselves and every century or so do stupid things like pay too much for tulips.

In the world according to "NOVA," the story of what's wrong today goes like this: For the past 50 years, our economy has been driven by disciples of a guy named Adam Smith, who believed that human beings always seek to act in their own best economic interest, and can detect and serve that interest best in markets free from government interference. A few decades ago, the potted historical narrative continues, some free marketeers developed a giant mathematical equation which has been used to run the economy ever since.

But the recent crash in housing prices and subsequent crises proved that the formula was wrong because it did not predict that people can be crazy and panic and do dumb things with their money. Actually, we're told, many years ago, a wise man named John Maynard Keynes did figure all this out, but he didn't have a giant equation so nobody listened to him. But fortunately there are other brilliant seers among us now, including Yale's Robert Shiller...

It's really sad stuff. Obviously, NOVA totally ignored experiments that show how markets can be extremely efficient, like the ones that I run in my classes, and that, I suppose, are also run by thousands of other professors of economics around the world every semester.

The lack of intellectual integrity and the ideological bias of this show is absolutely shocking. If NOVA can misrepresent an entire field of science so blatantly, what does it tells us about the scientific standards that they apply to every other show they produce?


victor said...

Hi Pedro,
Can you tell me what kind of experiments you run in your classes?

Pedro H. Albuquerque said...

Hi Victor, sure, in principles I run the experiments available in Mankiw's Aplia textbook companion modules. They give the students a pretty good hands-on understanding of how and why markets work, and how they're affected by different types of market interventions. Most students seem to enjoy taking part in them.