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The Soulful Science: What Economists Really Do and Why It Matters

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It is always pleasant when somebody says nice things about your profession. Especially when you are, like me, a graduate student of economics, and you are used to criticism and misunderstanding from non-economists.
In fact the book explicitly aims to counter the standard criticisms of modern economics (autistic, removed from the real world, obsessed with macho mathematics, centered around irrealistic concepts as rationality and equilibrium etc.) by showing, as the subtitle announces, "what economists really do and why it matters".
Although admitting and defending the fact that rational economic man still forms the core and benchmark of economic analysis, this means that Coyle spends a lot of time on relatively new and sexy subjects in economics. Behavioral economics, evolutionary economics, happiness economics, economics of social capital and social norms, and the economics of asymmetric information all have their own chapters. If you like the questions of social science, it all makes fascinating reading. Coyle has clearly read herself to the frontier of many research fields and does a very good job at making them come alive. Even while being an economists myself, I found plenty of new insights. Although she does not write quite as well as for example her natural science counterpart Bill Bryson, she is clearly passionate about the subject and manages to convey this very well.
In the end, the subtitle a bit misleading, since the reader will not find chapters on things that economists clearly also "really do" such as industrial organization, macroeconomics, finance, international economics or monetary economics. The only older and more established field that is extensively covered is growth theory cum development economics, with the aim of tackling big questions about poverty and global income inequalities.
But given the aim of the book we can forgive her for that, as we can forgive her for the sometimes over-ubiquitous-ness of superlatives such as "incredibly insightful" and "extremely fascinating" with which insights are presented. However, it is also this enthusiasm plus the displayed knowledge of discipline that make this an interesting and entertaining book for both economists and non-economists, and a must read for everyone who criticizes economics without knowing what's been going on in the last 20 years.

Want to find out about quantum mechanics without sweating out all the partial differential equations? There are a dozen excellent books. Want to find out about what's happening in economics without slaving over arcane journal articles? You are out of luck. Once in a while an interesting economics book will come along, but invariably by someone proselytizing for his own particular take on the policy issues of the day, or eager to teach you the bizarre behavior of the neoclassical rational actor. I have longed for a solid description of what's been happening in the field recently by a competent economist without a policy bone to pick. At last I would have something to offer my friends and family so they could actually answer the oft-repeated question "What do economists actually have to say about the issues of the day when they're not simply expressing their personal political views, or those of their employers?" Coyle's book the rare example of such a book.

People are generally ignorant of modern science and they know it. They are even more ignorant of the basic principles of economics, but they think they know more than they do. Therefore, they despise and fear economists, who are easily pilloried as other-worldly academics who throw around big equations but couldn't meet a payroll or punch a time clock if their professional future depended on it. Conservatives and liberals alike cherish basic principles of economics that are as stupid and inane as intelligent design and flat-earth-ism. We need a dozen more books like this excellent contribution by Diane Coyle.

Coyle covers the history and theory of economic growth, the sources and potential cures for world poverty, the nature and source of happiness and its relationship with income and wealth, the economics of adverse selection and moral hazard, rent-seeking and the politics of state intervention, evolutionary economics, behavioral economics, and the new, analytical institutional economics. Since she has a Ph.D. in economics from Harvard, Coyle for the most part acts as a participant in dealing with the issues, not simply a journalist reporting the news. Generally, her take on the various issues is insightful, balanced, and engaging. However, I would be remiss if I failed to find something in the book to grumble about, so I will discuss her treatment of behavioral economics, which I consider more of a journalistic than a professional account.

The common take on behavioral economics is that traditional economics assumes people are rational optimizers whereas the experimental evidence is that they are boundedly rational, or even irrational, non-maximizers. This is incorrect and indeed dangerous. I say this is incorrect because the evidence shows that people are not purely self-interested and they are prone to committing decision-making errors based on both weaknesses of human nature and on having incorrect theories of stochastic events. But there is no evidence that people are not fully rational. This is very important, because the economist's "rational actor model" is probably the most important tool in their tool box, and one which other social science disciplines (e.g., sociology and social psychology) ignore and thereby render systematic social theorizing impossible. It is even incorrect to say that people are boundedly rational, because basic information theory tells us that bounds on information processing are ensured by the laws of physics and not due to human frailty. Moreover, confusing incomplete or asymmetric information for bounded rationality is a highly serious error that leads us to study human psychology as opposed to the social conditions that determine the distribution of information among agents.

Of course, behavioral psychologists love to criticize the rational actor model, but in fact, there would be no modern behavioral psychology (a la Tversky and Kahneman) if it were not for the rational actor model, which they use in each and every one of their experiments. Prospect theory, for which Kahneman was awarded the Nobel prize in economics, is totally predicated upon the rational actor model, adding to the standard choice model only the notion that choice is always with respect to a status quo position. Since I have gone into this issue in detail in a recent target article in Behavioral and Brain Sciences ("A Framework for the Integration of the Behavioral Sciences"), I will forgo the pleasure of expanding on the subject here.

Coyle's thesis is that general equilibrium/neoclassical economics peaked in economics departments around 1985. At that point, economists realized that they had reached the end of the line with neoclassical theory and began to develop more interesting and useful approaches to their field. Thus, thinkers who criticize economic theory as unrealistic really are criticizing a "caricature" of economics that economists themselves already have abandoned.

I am not convinced by her argument, but she does provide an excellent overview of much of the recent work in economics. She talks about endogenous growth theory, game theory, "information" economics, behavioral economics, new institutional economics, and efforts to develop more realistic psychological models of economic behavior. Although she has a Ph.D. in economics, her prose is clear and accessible. She usually gets to the heart of the matter and tries to be fair to both sides of an argument.

She does convince me that economists have done some interesting things in the last twenty years. But she doesn't convince me that economists have abandoned neoclassical orthodoxy. She admits that almost all introductory classes in economics still teach neoclassical equilibrium theory and that students are not exposed to the new stuff until they get into advanced graduate studies. This suggests that the new ideas that Coyle discusses haven't given economists themselves much reason to doubt the value of neoclassical theory. They still see it as a solid foundation for learning economics and understanding economic behavior. To most economists, the new ideas that Coyle discusses seem to be additional stories to add to the existing foundation rather than a fundamental challenge to existing theories.

That is the basic question that Coyle fails to address directly. Should the various challenges to neoclassical equilibrium theory radically alter the way that economists think about the economy? I would assert that the neoclassical emphasis on rigor and mathematics lends a false sense of precision and universality to their theories. Really, the economy is a complex phenomenon and those who study it are confronted by the same ambiguities and limitations faced by other human sciences such as sociology and history.

First let me say that I approached this book with trepidation, based on the reviews of certain economists, fearing that it would be a smug apologetic for mainstream economics.

It is not a smug apologetic, it is an up-to-date, superbly well-written and entertaining survey of interesting recent trends in economics. However - I agree with John Wenzler here - the argument does not support the conclusion, which is that mainstream economics is basically healthy.

Why is this? It starts by profiling an economic historian. Great. But economic history is generally shunned by mainstream economists, and widely deleted from curricula. It emphasises that empirical work is important in economics - excellent - but you won't learn solid, painstaking empirical work as a foundation for a career in the best economics departments. It cites Keynes several times; but Keynes's books are labelled "obscure" by prominent mainstream economists. And it emphasises growth as an important issue - brilliant - but scarcity is the foundation for neoclassical economics, not growth.

One reads with amazement that "culture, institutions and technology interact subtly", hardly daring to think that this could be a brilliant insight into the kind of reconciliation that is needed in the human sciences. And one's caution is ultimately warranted. Because lurking at the end of this work is an all-too-familiar conclusion, that if "rational choice and the use of equilibrium... are limitations, so be it"; and the same old assertion of the "power" of neoclassical models.

Whenever I hear an economist talk about the "power" of mainstream modelling, I can't help but recall the phrase "the violence of abstraction". Coyle even cites recent sociological research (p 252), to the effect that individuals learn to use financial economic theorems, as evidence of the power of the model! That's not the power of the model, it's the power of the ideology. I feel Michael Brady's review is right in this regard - Nassim Taleb's critique of mainstream economics and finance is relevant, and is underplayed. Furthermore, Coyle cites Holander's recent research on graduate economics students as support for her thesis that economics is changing - without mentioning the much more pessimistic view of his colleage Klamer, on the basis of the same evidence, and included in the same book. It would also have been interesting to see a reference to Steve Keen's work, also, which is a good, thorough critique of the internal inconsistencies of mainstream economics.

I do appreciate Coyle's concession that not all critics of mainstream economics must be derided for not wanting to learn mathematics - that is a concession that should be accepted by some other reviewers of this book. As the French students have pointed out, there is no general objection to learning mathematics, providing it is an aid to understanding actually existing economies.

Ultimately, mainstream economics has retarded understanding of economies for too long - the new areas of research that Coyle reveals are based on insights generally well known to other social scientists, and to institutionally minded economists such as Galbraith (who is insultingly labelled a non-economist). They could have been absorbed much earlier if economists were not so blinkered.

Ultimately, economics will for many people not be worth serious study in universities until it is recognised that maximizing behaviour and equilibrium are limited "tools". There is indeed a place for theory. I recommend Edward Nell's theory of "transformational growth". When that is awarded a Nobel (assuming the author would accept that currency), it may be generally safe to return to the professional study of economics. Until then it will be generally safer to rely on the insights of those working outside the mainstream, and to resist attempts by orthodox economists to ram reality into their image.

The Ecole Normale Supérieure (also known as Normale Sup', or as "rue d'Ulm") gave the world one Nobel prize in economics, awarded in 1983 to Gérard Debreu, as well as two recent John Bates Clark medals, the highest award from the American Economic Association, granted first to Emmanuel Saez in 2009 and then to Esther Duflo in 2010. But Normale Sup' also gave birth to a peculiar movement that calls itself Post-Autistic Economics and that now has followers throughout the world. It all began as a petition circulating among Parisian students with a core of militant activists domiciled at the rue d'Ulm. They complained about the narrowness of their economics education and expressed their desire for a "broadband approach" to economics teaching that would reflect a broad spectrum of analytical viewpoints. Their manifesto proclaimed their wish to "escape from imaginary worlds" and to get real by studying economic facts unfiltered by the analytic lenses of neoclassical economics.

For a time, the disgruntled students found support among Parisian intellectuals and the French news media. This is a country, after all, where a literary critic specializing in nineteenth century poet Arthur Rimbaud can write a book about L'Horreur économique and get invitations to talk shows where she would comment on the state of the economics discipline. Form matters more than content for the French literati who have never accepted the fact that economics no longer belongs to the humanities. Essayists with a vague veneer of economic culture but a sharp pen and a wide social circle can pass as experts on a wide range of issues they comment upon in the pages of Le Monde or Le Figaro. Likewise, the post-autistic students were smart, they wrote well and, even though their grades in university exams did not improve as a result of their campaign, they tended to carry the day in the public debate on the direction economics should take. Orthodox economists were simply too busy to care. Those who did were overwhelmed by the rhetoric of the protest students, and retreated from the debating arena with bruises and frustration.

That is, until the publication of the Soulful Science by Diane Coyle. The Parisian students have found their match in this British-born, Harvard educated economist who combines academic knowledge with witty humor and a real pedagogical talent. Her goal is to introduce a wide readership to the developments in the economics discipline that occurred since people ceased to care and sound bite commentators replaced learned scholars in the media. Although her role is not to defend neo-classical economics from its critics--economics is a vibrant science and doesn't really need a defense, thank you--she argues that most of the critics attack a caricature of economics, for reason related to their ideological belief or personal agenda. For its critics, neoclassical economics is a multifaceted straw man, a shorthand for student frustration with math assignments, leftwinger anger against market reforms waged in the name of neo-liberalism, and the general public's puzzlement with a discipline that addresses seemingly "soft" issues with methods directly borrowed from the hard sciences.

Economics is sometimes referred to by its critics as an ideology, the only one remaining after communism exited from the world scene. But as communism should be judged not according to its promoters' ideals, but through the experience of countries which tried to implement "really existing socialism", likewise economics needs to be referred not to the image that its critics paint of it, but to what economists actually do when they practice their discipline. As the author writes, the "popular unpopularity of economics" rests on perceptions which are twenty or thirty years out of date and were always a bit of a caricature anyway. In fact, "actually existing economics" as it is practiced in universities and government agencies has experienced, virtually unnoticed by the wider public, a golden age of discovery. It is this tale of intellectual renaissance that Diane Coyle attempts to tell, charting the new terrains where economics is reclaiming its soul.

She begins by asking the big questions. Why do some economies grow and get rich, while other stagnate in abject poverty? Is there something we could do about it? Among the many development projects and policy interventions, what works, what doesn't, and why? As Nobel prize winner Robert Barro once remarked, when you start thinking about these issues, you can't think about anything else. But you should, Coyle may add, because progress in one corner of the discipline may affect the way economists think about the whole system, and the tools they use to answer the big questions. It is therefore important to keep an eye on the broad picture, and to monitor what other economists are up to these days, even when one specializes in one corner of the academic field. This is in a way an impossible task: it is hard enough to keep track of all the new publications in one's own subfield, let alone in the whole discipline. Any survey on the state of economics will inevitably miss some developments that may exert a huge influence on the future of the discipline, and dwell on some research topics that sound exciting on the moment but may prove to be dead ends. Coyle's random walk through economics should therefore be taken not as an extensive survey, but rather as an invitation to the voyage by a sympathetic and humorous guide.

One of the themes throughout the book is the importance of new data sets, allied with cheap computer power and the development of econometric techniques, in the current renaissance in economics. The author draws the spotlight on unsung heroes such as Angus Maddison, who patiently gathered statistical estimates of the levels of material output and growth for the whole world from the year 1000 to the present. As she writes, it is hard to overstate the importance of the painstaking statistical detective work in assembling the figures of past growth performance of many countries. It is the equivalent of the detailed forensic search of the crime scene and the dull door-to-door and telephone enquiries made by the police--this, rather than the brilliant insights of a charismatic detective, is what solves crimes. In particular, Maddison's estimates show the West overtaking China by 1400, and not by 1800 as alleged by other historians like Paul Bairoch and Kenneth Pomeranz. This point of timing matters: those who argue that China remained the world's economic leader until around 1800 see the subsequent Western growth takeoff as the direct result of European exploitation of the resources of the rest of the world and imperialism, including the submission of China. On the other hand, those who think the West overtook China much earlier see nineteenth- and twentieth-century growth in the West as the acceleration of an internal process, driven by technology and social change.

Other, more theory-minded economists, also get their tribute. Joseph Stiglitz, the guru of the antiglobalization crowd, is credited early in his career with finding a very tractable way of introducing monopolistic competition, product differentiation, and fixed costs in models that had hitherto relied on the twin assumptions of perfect competition and constant returns to scale in production. Paul Krugman, now the famous New York Times columnist, made his name applying increasing returns to scale to models of international trade, and subsequently to questions of industrial location in general. Paul Romer pioneered the theory of endogenous growth by introducing knowledge spillovers, whereby individual decisions have an immediate effect on others. In the new growth theory, as in reality, long-run growth is driven primarily by innovation and the accumulation of knowledge. In the mid to late 1980s, economists working on endogenous growth models and those working on new models in industrial organization and trade transformed all three areas of the discipline, in a spectacularly fruitful period of mutual exchange of ideas.

If Diane Coyle extends lavish praise to the statisticians-detectives and to the theoreticians who helped solve the growth puzzle, she is less charitable to the aid community and particularly to its most vocal advocate, Columbia economist Jeffrey Sachs. Having a stake in the aid business, I may have developed what the author labels "an institutional self-interest in keeping the money flowing". But I would be more positive than she is on the aid effectiveness debate, which she nonetheless summarizes beautifully. I was less familiar with her treatment of happiness research and well-being accounting. I found her introduction to the topic much better than Stiglitz's, and much more funny too (see her prescription that, to increase national well-being, more people need to have more sex). I was on even less familiar grounds in her covering of recent research in behavioral economics, and on the field of neuroeconomics which applies insights from brain science to study the cognitive aspects of economic decisions. But this is what this book is all about: not to rehash what readers already know, but to introduce them to new and exciting areas of research.

As mentioned in the beginning, Diane Coyle is harsh on economics critics, who simply haven't done their homework and paint a distorted picture of neoclassical economics without observing what economists actually do. She also scratches in passing the political scientist Karl Polanyi, a revered figure of the thinking Left, who seemed to wish we could all go back to reciprocal barter and the gift economy. She rightly points out that the so-called Washington consensus is a fact- and research-based convergence of minds among professional economists about macroeconomic policies, not a conspiracy on the part of Wall Street financiers in cahoots with the IMF, as the critics have it. But she is also lucid about why economists are so unpopular in so many quarters. Perhaps the greatest vulnerability of economists is also their greatest strength: their inability to compromise. "We economists, she writes, are unwilling to tolerate imprecision, wishful thinking, or flattering illusion in the study of human behavior and society." If some disgruntled French students want to label as autistic this passion for rigor and unwillingness to yield ground to the fads of the day, then so be it.

This book provides a nice overview of economic theory, with an emphasis on how it has been changing recently. The style is eloquent, but the author is too nerdy to appeal to as wide an audience as she hopes. How many critics of economics will put up with quips such as "my Hamiltonian is bigger than yours!"?

The most thought-provoking part of the book, where she argues that economics has a soul, convinced me she convinced me she's rather confused about why economics makes people uncomfortable.
One of her few good analogies mentions the similarities between critics of evolution and critics of economics. I wished she had learned more about the motives of her critics from this. Both sciences disturb people because their soulless autistic features destroy cherished illusions.
Evolutionary theory tells us that the world is crueler than we want it to be, and weakens beliefs about humans having something special and immaterial that makes us noble.
Likewise, economics tells us that people aren't as altruistic as we want them to be, and encourages a mechanistic view of people that interferes with attempts to see mystical virtues in humans.

Some of her defenses of mainstream economics from "post-autistic" criticism deals with archaic uses of the word autistic (abnormal subjectivity, acceptance of fantasy). These disputes seem to be a disorganized mix of good and bad criticisms of mainstream economics that don't suggest any wholesale rejection of mainstream economics. It's the uses of autistic that resemble modern medical uses of the term that generate important debates.

She repeats the misleading claim that Malthusian gloom caused Carlyle to call economics the dismal science. This suggests she hasn't studied critics of economics as well as she thinks. Carlyle's real reason (defending racism from an assault by economists) shows the benefits of economists' autistic tendencies. Economists' mechanistic models and lack of empathy for slaveowners foster a worldview in which having different rules for slaves seemed unnatural (even to economists who viewed slaves as subhuman).

I just happened to run across this thought from an economist describing his autistic child (A Different Kind of Boy by Daniel Mont): "his utter inability to comprehend why Jackie Robinson wasn't welcomed by every major league team".

She tries to address specific complaints about what economists teach without seeing a broad enough picture to see when those are just symptoms of a broader pattern of discomfort. Hardly anyone criticizes physics courses that teach Newtonian mechanics for their less-accurate-than-Einstein simplifications. When people criticize economics for simplifications in ways that resemble creationists' complaints about simplifications made in teaching evolution, it seems unwise (and autistic) to avoid modeling deeper reasons that would explain the broad pattern of complaints.
She points to all the effort that economists devote to analyzing empirical data as evidence that economists are in touch with the real world. I'll bet that analyzing people as numbers confirms critics' suspicions about how cold and mechanistic economists are.

She seems overconfident about the influence economists have had on monetary and antitrust policies. Anyone familiar with public choice economics would look harder for signs that the agencies in question aren't following economists' advice as carefully as they want economists to think.

I'm puzzled by this claim:
"The straightforward policy implication [of happiness research] is that to increase national well-being, more people need to have more sex. This doesn't sound like a reasonable economic policy prescription"
She provides no explanation of why we shouldn't conclude that sex should replace some other leisure activities. It's not obvious that there are policies which would accomplish this goal, but it sure looks like economists aren't paying as much attention to this issue as they ought to.

She appears wrong when she claims that it's reasonable to assume prediction market traders are risk neutral, and that that is sufficient to make prediction market prices reflect probabilities. Anyone interested in this should instead follow her reference to Manski's discussion and see the response by Justin Wolfers and Eric Zitzewitz ("Interpreting Prediction Market Prices as Probabilities").

Think back to those economics classes you took in college. You can probably still define a few concepts like price elasticity, opportunity cost and diminishing returns, but the rest may be somewhat hazy. Like most busy people, you probably haven't stayed abreast of the latest research on the causes of economic growth or poverty, the metrics for economic policy, the economics of information and the use of evolutionary modelling. Don't worry. In this pleasant fly-over, economist Diane Coyle shows you the newly discovered economic territory you might have missed. Her presentation is all right, though she's defensive about her chosen profession and sometimes dodges around a bit before coming to the point. Still, we believe you'll find her book sensible, accurate, apolitical, fairly well-organized and far more "utility maximizing" than econ class.

Coyle has written a defense of the economics profession.She wants to hold on to the basic core position of neoclassical economics,which is the "rational economic man",Benthamite utilitarian ,theoretical decision making approach . Its 20th century extension is the Subjective Expected Utility(SEU) approach ,which is based on the Ramsey,De Finetti,and Savage Bayesian,subjective probability approach.See below . This is then combined with the application of some type of normal probability distribution(joint,bivariate,multivariate,log)when econometric " empirical " work is done by an economist .The foundation of the modern day version of Benthamite utilitarianism is the subjectivist,Bayesian theory about probability set forth by Ramsey,de Finetti,and Savage between 1926 and 1954.This is a very special theory that can only be applied when the mathematical laws of multiplication and addition apply.These purely mathematical laws hold only in the special ,limiting case where the decision maker knows for certain what the sample space will be in the present and the future or,equivalently,knows for certain what the particular probability distribution is now and for all future time.J M Keynes,F Knight ,and D Ellsberg pointed out the general inapplicability of this approach.In general,the probabilities facing decision makers in the real world are not the point estimates of subjective probability theory or subjective expected utility but the intervals of J M Keynes or the multiple sets of different probabilty distributions of D Ellsberg.These are the crucial constraints on rational decision makers in a world of uncertainty and ambiguity,as opposed to the world of risk postulated by the Bayesian subjectivist approach ,which inevitably leads them to restrict their choice of probability distributions to the normal.The behaviorist approach of Kahneman-Tversky and Thaler or the experimantal approach of V Smith do not deviate from the standard ,neoclassical,subjectivist story supported by Coyle ,since the rules of thumb,heuristics ,and other anomolous behavioral shortcuts are defined as being irrational.Tversky-Kahneman and Smith do not deviate in their support for the application of the subjectivist- normal probability distribution approach,although there is practically no economist who ever does any goodness of fit tests before assuming a normal distribution .The fields of macroeconomics,monetary economics,econometrics,money and banking,and financial economics continue to apply normal probability distributions to data sets where no goodness of fit test supports the use of the Normal.
Another severe problem with Coyle's book is her attempt to downplay the work of Benoit Mandelbrot and Nassim Taleb.A careful reading of Mandelbrot and Taleb requires the complete abandonment of an economic "science " based on the presumption that you can just assume a normal distribution.Mandelbrot is famous for much more than the Mandelbrot set.Mandelbrot has demonstrated,for over 50 years,that the data sets in all(national and international) financial markets fall a long way short of being even approximately normal.The data can be represented by either a Cauchy or power law distribution.A decision maker in these markets faces the " wild " risk of the Cauchy and not the " mild" risk of the Normal.Mandelbrot completely rejects the corpus of economic theory that is based on the assumption of normality.Economic theory has no goodness of fit tests to support it.The assumption of normality is equivalent to the assumption of epicycles in Ptolemaic astronomy .Coyle's references to Mandelbrot(p.145,201) and Taleb(pp.30-35,etc.),who similarly rejects the standard model that Coyle is,like the Ptolemaic opponents of Galileo,desperately trying to save,are disingenuous and misleading.
Coyle's book can be summed up in her own words: " The grand unified theory of the economics mainstream offends those who feel the assumptions of rationality psychologically unrealistic,but it works extremely well,with just a bit of reasoning from the psychologists when it comes to how we predict the future"(Coyle,p.145) or "However,the applicability of the results is narrow,and economics as a whole doesn't need the psychological research to restore its worth as a subject"(Coyle,p.124).

Instead of this book I recommend Hudson and Mandelbrot's 2004 book " The (Mis)behavior of Markets " or Nassim Taleb's 2007 book " The Black Swan " or D Ellsberg's 2001 book," Risk,Ambiguity and Decision ".For the truly daring reader I recommend Keynes's 1921 " A Treatise on Probability ",which Taleb,correctly ,views as the best book ever written on probability,as opposed to numerous treatises written on mathematical probability.Economics needs alot more than just a "...bit of reasoning from the psychologists...".It needs a complete house cleaning before it ends up in the dustbin of history along side Ptolemaic astronomy.

Perhaps the most important thing to know, if you want to be a good citizen, is some basic economics. This book is a good way to learn it.

The Soulful Science is -- but there is no soulful science. Sciences are defined by their objectivity in their pursuit of transcendent truth. Meanwhile, soulfulness isn't even subjectivity, but is the emotional subtext for an individual's view. Soulfulness is the feeling underlying articulated emotion: tones, expressions, etc. Soulfulness, admittedly, could make an interesting way to present economics -- if mankind didn't have pressing needs and a science to promote prosperity.

Ironically, this book titled "The Soulful Science" is intended to teach that today economists are scientific. It points to the new access to the more abundant evidence. This results from the computer age of the last two decades. Economists are scientists. They put aside old prejudices. They don't have to make the neoclassical economist's assumptions. Those include utility maximization, the rational consumer, and perfect information. Prejudices against economists appear in the mass media, based on the economics of previous eras.

Coyle frequently injects her opinions into her descriptions of economics. This book would have much broader appeal if it did not offend those other souls who do not happen to share the values of the one who conjured it up. Here is a scientist with a thing for designer shoes (113) who thinks one can be a good economist and oppose taxation of luxury goods. Here is one who finds ridiculous a social scientist troubled by the multitude of clothing store options (117). Feelings like these are scattered throughout a book that could have been an enjoyable source of information for everyone interested in current economics. They interfere with the science of the book. The positions they evoke could not be argued in a compelling way, given the space limitations. Instead, they are meant to show that the author disagrees. What is the significance of one soul's feelings versus the authority of the science? It's a whole 'nother question.

Despite the soulful element, and the failures of the copyeditors, this book remains a valuable survey of contemporary economics.

But the mission of economics is to improve world prosperity. This book hardly addresses rapidly growing income inequality within developed nations, failures of global trade to develop trading partners in the undeveloped world, energy allocation under the control of petroleum, natural gas, and coal companies, and the dominance of GDP per capita in formulation of economic policies.

Meanwhile, early on, the writing is sometimes awkward. Coyle's description of Solow's Neoclassical Theory (42), for example, is loaded with inconsistencies. She identifies two inputs into an economy, physical capital and human labor, she does not define them, and readers will confuse them with the production function. If new machinery is part of the inputs into an economy, how can the relationship between inputs and outputs also depend on the state of technology?

Another example is diminishing returns. If a chair manufacturer uses three machines and three laborers to produce twelve chairs, you could say the output is double the input. But diminishing returns would not mean that if you add a fourth machine you get fifteen chairs. The fact is that is not a diminished return. This is basic economics.

Coyle observes that governments and nongovernmental organizations do use measurements of well-being other than just GDP. But their assessments are not usually considered economics. The numerical remains decisive in economic policy. People continue to mean by "the economy grew" that "GDP increased". There are distorting qualities to GDP.

Twenty percent of the income earners in the United States are doing 65 percent of the spending (U.S. Statistical Abstract, 2007). But you wouldn't guess that from GDP per capita. It's just an average. Either we fix this statistic or economic measurements remain warped.

Appeals to the numbers on the bottom line are effective in the U.S., land of "quantophrenics". Pitirin A. Sorokin called "quantophrenia" "a psychological compulsion to grasp for the numeric". (Wilson Quarterly, Winter 2006, pg. 28). Quantophrenics obsess over numbers. Even if numbers are unreliable or misapplied, they at least are backed by consensus. As a result, producing more haircuts and more cars comes out more important to political leaders than producing such nonmonetary phenomena as intelligent voters and unpolluted waters.

Coyle writes that policy makers should monitor all the indicators that are important to national well-being, rather than "instead adopting an alternative indicator such as the GPI". (108) That makes a straw man of the Genuine Progress Indicator. GPI advocates recognize value to the GDP, using GPI alongside of, not in place of it.

Coyle chides supporters of the King of Bhutan for including equitable distribution of wealth and preservation of the forests in with his measurement of his nation's wealth. Bhutan is an authoritarian state. It does not respect individual rights and freedoms. But they are may be sensible if they support the king's new method of measuring prosperity.

The King of Chutan, a mythical neighboring country, would be more interesting. The only income earner there last year was the king. He earned a billion dollars; his country has a population of forty thousand. The GDP per capita is therefore twenty-five thousand dollars. International economists therefore respect this nation as among the most affluent in the world. The king's relatives were unemployed divorce lawyers and wildlife preservationists last year. They read library novels last year. This year, because they paid for novels, the nation's GDP increased. This year, village husbands began arguing with their wives and seeking divorces. The king's relatives gained employment as divorce lawyers, which increased the nation's GDP per capita. These ex-husbands left for the woods, where they survived by killing endangered wildlife. The king's unemployed environmentalists found work. This is economic activity, in the world according to GDP, a nation growing in prosperity. Economists would admire these changes in Chutan.

Coyle focuses in her first three chapters on GDP growth, even though, as she eloquently explains, "many noneconomists wrongly believe that economists only care about GDP, or about incomes measured in money terms, and while this may have been true a decade or two ago, it is certainly no longer the case." (16) Later, she eventually dismisses the GPI and the HDI, (108) and never shows exact ways that she would like economists to consider factors like income inequality, environmental degradation, and illiteracy alongside GDP. And most of her study relies on GDP per capita as a measure of economic growth.

Accordingly, Coyle points out that the proportion of the world's population living in extreme poverty has declined rapidly since 1980. This is mostly because of China and India. Sixteen of the world's most polluted rivers are in China. The air in Beijing is choking, the Gobi Desert is encroaching. The Ganges has been forbidden to bathing for years. If policymakers should consider the GDP side-by-side with separate statistics for environmental degradation, Coyle, who has just been arguing this, should consider it this way here herself.

GDP puts together on the same spreadsheet factors that are wildly incomparable: "haircuts, cars, food, insurance" (108). Yes. What is insurance doing in this list? But since GDP includes services like this, it might as well be as comprehensive as it can be about it. It might as well include those other things that are more wildly incommensurate. Left as is, as Clifford Cobb and Jonathan Rowe point out, GDP is saying things like literacy have no value. If things have to look commensurate to be included, no reasoning justifies drawing the line at the lower incommensurability rather than the higher.

The strong objection to alternative indicators is an alleged impossibility of consensus. Different indicators include very different factors. For example, the U.N.'s HDI includes literacy rates, another does not. That is true right now, but it is early in the negotiations. And economists are more devout scientists than they are insistent souls. They are too mature not to recognize the value of consensus on behalf of rough numbers over enslavement to precision in the face of continuing public disrepute.

Glimpsing a GPI paper, Coyle asks, "What is the rationale for including pollution but excluding literacy rates?" She could look further. In a book about the latest research, she could mention the Genuine Progress Indicator 2006 report. It actually answers that.

Most economists are part of a consensus that GDP per capita measures prosperity. In being so, they may be persisting in an arcane discipline. They're something like the neo-classical economists. And that's a shame. These are supposed to be the wise men and women in our world.