Ben Bernanke to Economists: More Philosophy, Please

This week Bernanke spoke to the International Association for Research in Income and Wealth, and, as Bloomberg Businessweek notes, he was singing a different tune.

“On Monday, Ben Bernanke wasn’t talking like a scientist,” Businessweek says. “He was talking like a philosopher.” Bernanke questioned the purpose of the economics, including his own past record as central banker. “The ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being,” he said, suggesting that economics has not sufficiently fulfilled this role.

Businessweek notes that, “to a roomful of economists, he suggested that the measurements they were using, like gross domestic product and personal consumption expenditures, were inadequate to that understanding.”

Businessweek decodes Bernanke’s statements to show how they challenge the basic assumptions of economics:

“‘Aggregate statistics can sometimes mask important information,’ he said. Translation: People are unhappy, and we don’t know exactly why. ‘We should see better and more direct measurements of economic well being,’ he said, ‘the ultimate objective of our policy decision.’ Translation: I know it’s hard to measure happiness. Start doing it, anyway.”

Bernanke’s change of heart highlights that, “as a discipline, economics is not doing a good job of examining its core assumptions,” Businessweek says. “Bernanke was nudging economists to ask tougher questions of themselves.”

Bernanke’s calls for more self-awareness by economists represents a return to economics as moral philosophy, not technocratic discipline. For example, this “sounds a lot like Adam Smith,” Businessweek says, “who considered himself a moral philosopher.”

Central to Bernanke’s questions is the notion that economists serve society, an insight that has at times been lost by the profession that often now influences the fate of entire nations. Economists, as a whole, fell down on the job up to and through the current economic crises. And now one of the profession’s top members is calling for change.

As Businessweek writes, “To the profession of economics, Bernanke is now saying: Money doesn’t buy happiness; figure out what does.” Bernanke’s call for philosophy is reason to be hopeful that this important task will receive the attention it deserves.

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