"Industrial psychologists and sociologists have been exploring the institutions and practices that are internal to business organizations for decades. Attention by economists is more recent, and the economist's approach to analyzing internal labor markets is somewhat different from that of the psychologist or sociologist. The trademark of an economist is to focus on prices and income as central determinants of observed behavior. Other social scientists place a much lower weight on these variables, instead awarding the major role to social or psychological factors. Indeed, the word "institution" in economics generally connotes that the behavior is affected by constraints other than price.
The economic approach is more rigorous, more rational and probably better for prediction than that of the industrial psychologist. It is based on optimizing behavior in an environment where constraints are well-defined. The economic approach is also somewhat less accurate as a description of labor market phenomena. Thus, psychologists have concepts and data which would be useful to economists. A number of their ideas have already made their way into economics and more will follow."
- Ed Lazear - Labor Economics and the Psychology of Organizations, JEP 1991
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"The economic approach is more rigorous, more rational and probably better for prediction than that of the industrial psychologist."
ReplyDeleteAh! A testable statement. :)
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ReplyDelete"The economic approach is more rigorous, more rational and probably better for prediction than that of the industrial psychologist."
1. As a psychologist, I don't think "more rational" is a strength given the demonstrable irrationality of a great deal of individual human behavior. But of course, that is in part why I am a psychologist and not an economist.
2. What's the argument for "more rigorous"?
More on the latter -- I think it is rarely appropriate to try to rank sciences by things like "rigorousness". Rigorous, if we assume it to mean "extremely thorough, exhaustive," is not productively associated with a specific scientific field. Economists and psychologists approach behavior from different perspectives and using different methods -- both approaches, broadly construed, can be done in more or less rigorous ways. And both are and will be needed if we are going to develop and accumulate knowledge on human behavior; it is rarely (if ever) useful to praise one's own discipline above another's in such a broad-reaching way (and for the record, I feel that way about this writer's praise of IO as well).
ReplyDeleteI should add here that I think that we could get better dialogue if we focus on specific strengths and weaknesses rather than broad-sweeping declarations. For example, in my experience -- small n, it appears that economists do a better job, on average, than psychologists on testing the assumptions of the statistical models they use. On the other hand, psychologists tend to have a stronger background (that I have seen thus far, again, small n!) on the philosophy of measurement, measurement error, etc. when it comes to constructs. So, there's a lot that could be learned on both sides there.
Ya, but I think the first sentence of the second paragraph needs to be read in the context of the whole second paragraph - which leads me to think he was saying something a little different: that when the constraints are well defined and people are optimizing against them (optimizing behavior is really all economists mean by "rational"), economics is relatively strong - where that's not what's going on psychology is relatively strong. A lot of the article is dedicated to what labor economists can learn from IO psychologists after all.
DeleteI wouldn't have posted this if I read it as a slight to you :)
I didn't take it as a slight :) I just didn't also find his points very actionable, which was more or less what I was trying to get to in my above, far-to-long response. And you know me . . . I love practical and actionable!
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