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Dr. Sigrid Stagl held a lecture in which she spoke about plural economics, as well as a brief history of economic revolutions and the different schools of economic thought today. This lecture taught us about the role of plural economics in contemporary discussions and the way in which plural economics can provide explanations and possible solutions towards solving the current climate crisis.
One takeaway was that there is a necessity to understand multiple fields and theories in order to explain systems. Sigrid introduced a large diagram, intertwining specific economic schools of thought, which included neoclassical economics (which is considered as orthodox) and behavioural economics as the core mainstream schools of economic thought. On the outskirts of the mainstream economic fields are ecological economics, post-Keynesian economics, feminist economics, institutionalis economics, evolutionary and Austrian economics - which all have their own individual overlap.
Sigrid Stagl outlined three past economic revolutions: Neoclassical, Keynesian and Neoliberal. Neoclassical beliefs had been mainstream and influenced many of the following periods up until the 1930’s where Keynesian economics was introduced to understand the Great Depression, and Neoliberalism was used as a way for West Germany to rebuild after WW2. Sigrid spoke about the two ways of looking at neoclassicism, firstly the ‘Ivory Tower of Economic Theory’, where economic processes are explained by economic causes, and secondly ‘Economic Imperialism’, in which economic theory explains everything. An example is optimisation, where the rational agents act to maximise their utility, hence explaining the nature of their behaviour. A specific example is where an optimistic agent maximises his utility through positive thinking, having hope for the future etc., whereas a pessimistic agent maximises her utility by having a more negative view.
Sigrid outlined the “methodology of scientific research programmes” as a ‘scientific core’ surrounded by a ‘protective belt’. The scientific core reflects the key theorems and axioms, while the protective belt is the empirical testing of these core theories. She highlighted the relevance of research programmes and their ‘methodological rules’ that help identify and organise certain pursuits of scientific research.
While discussing behavioural economics, Sigrid spoke about the main critiques. In particular, the impossibility of measuring an individual’s utility is a critique when looking at behavioural economics from a neoclassical view. Other proxies have been used in place of utility such as income, but there are no proxies which will ever be a perfect replacement for utility. This led to a further critique of how behavioural experiments are undertaken. Sigrid argued that the predominant preference for laboratory experiments is another downfall of behavioural economics due to how it creates a very narrow view of the field. Alongside these main critiques, Sigrid brushed over ‘Prospect Theory’ which we personally found to be particularly interesting. This relatively recent theory looks at an individual’s behaviour with regard to a value function rather than a utility function, as well as its emphasis on the reference point which is how individuals perceive outcomes as gains or losses. This allows for a much more versatile approach towards analysing people’s behaviour, which can further be pivotal in understanding destructive-to-environment behaviours.
During the Q&A section, one notable response from Sigrid called attention to the role students have in applying plural economics but also the growing interest in interdisciplinary programs from students. As researchers, we should move away from the ‘default setting’ beliefs and methods of discovery due to the complexity of understanding social sciences. A quote from K.W Rothschild, who Sigrid Sagl brought attention to, is that the “plurality of paradigms in economics and in social sciences in general is not only an obvious fact but also a necessary and desirable phenomenon in a very complex and continually changing subject…”. This challenges the orthodox view that specific assumptions should be accepted in a model when in reality they are inherently flawed.
Based on the lecture "Introduction Plural Economics" during AEMS 2022 by Sigrid Stagl.
Written by: Elliot Soar and Charlie Hancock