Thursday, June 4, 2009

Microfoundations? We Don't Need No Stinkin' Microfoundations

. Thursday, June 4, 2009

Matthew Yglesias says that economists shouldn't concern themselves with microfoundations for macro theories:

From an outside perspective, what seems to be going on is that economists have unearthed an extremely fruitful paradigm for investigation of micro issues. This has been good for them, and enhanced the prestige of the discipline. No such fruitful paradigm has actually emerged for investigation of macro issues. So the decision has been made to somewhat arbitrarily impose the view that macro models must be grounded in micro foundations. Thus, the productive progressive research program of microeconomics can “infect” the more troubled field of macro with its prestige.

Which, as a sociological matter, I think you’d have to say has worked.

But as a methodological matter, it seems deeply unsound. As a general principle for investigating the world, we normally deem it desirable, but not at all necessary, that researchers exploring a particular field of inquiry find ways to “reduce” what they’re doing to a lower level. To make that concrete, in the modern day we have achieved a decent understanding of how principles of chemistry are grounded in physics’ understanding of the behavior of atoms. But it’s just not the case that advances in chemistry were made by demanding that chemists ground all their models in subatomic physics. On the contrary, chemistry moved forward in the first instance by having chemists investigate issues in chemistry and see which models and theories held up.

A lot of these same issues creep up in political science, and especially in IR where everything we study is macro. But I think that Yglesias' analogy is horrible and leads him to the wrong conclusion. The differences between chemistry and physics are not equal to the differences between micro and macro variants of the same discipline. A more appropriate comparison is between astrophysics and particle physics. I think Yglesias would have a difficult time arguing that the micro has no bearing on the macro in that case.

So why do microfoundations matter for the social sciences? Historically, they have not been a primary concern. Theories of social relations -- whether political, economic, or sociological -- were typically deductive attempts to explain the way the world worked (or the way it should work). This tradition still continues, but as the disciplines became more and more systematized and data-driven, we've noticed something: deductive "grand" theories don't do a very good job of explaining the past, and do even worse at predicting the future. More often than not, these theories perform poorly because they make inaccurate assumptions about the micro systems on which the macro structure stands.

The move to shore up the (micro)foundations of our theories is an attempt to rectify the tendency to assume what we should be seeking to explain. And despite the imperfections which remain, this trend has had many positive benefits for both economics and political science.

There is a danger in becoming too reductionist. Indeed, social scientists give much weight to parsimony and tractable theory-building. We often ask if theories pass the "Grandmother Test". And in International Relations, if a theory doesn't travel then its worth is severely limited. So there is often a trade-off between elegance (and broad applicability) and the precision that comes from reductionism. Social science is often about balancing several levels of inquiry at once. If we eschew the micro in favor of the macro, we will get poor results.


Microfoundations? We Don't Need No Stinkin' Microfoundations
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