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““Rhetoric and Economics”Rhetoric and Economics”

Stuart BirksStuart Birks

Massey UniversityMassey University

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What is rhetoric?What is rhetoric?

• Logic Logic proof proof

• Rhetoric Rhetoric persuasion persuasion

• Adam Smith:Adam Smith:– Deliberative eloquence (policy)Deliberative eloquence (policy)– Judicial eloquence (law)Judicial eloquence (law)

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People are persuaded by:People are persuaded by:

• Simple pointsSimple points

• HumourHumour

• AnalogyAnalogy

• Appeals to authorityAppeals to authority

• Appeals to emotionAppeals to emotion

• ……

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Why worry about rhetoric?Why worry about rhetoric?

• Rhetoric dominates over logicRhetoric dominates over logic

• Perception dominates over realityPerception dominates over reality

• Image dominates over substanceImage dominates over substance

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Mainstream economic Mainstream economic theorytheory

• Based on: Based on: – Rational individualsRational individuals– Exogenous preferencesExogenous preferences

• Relevant where rhetoric is Relevant where rhetoric is important?important?

• Also, rhetoric in economics!!!Also, rhetoric in economics!!!– McCloskey, KlamerMcCloskey, Klamer

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Three types of error:Three types of error:

C

A Empirical Analysis

Real world

TheoryB

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Types of error, assume:Types of error, assume:

• Type A, theory applies to real worldType A, theory applies to real world

• Type B, data and functional forms OKType B, data and functional forms OK

• Type C, policy implications from statisticsType C, policy implications from statistics– ““Fallacy of the transposed conditional”Fallacy of the transposed conditional”– Policy evaluation questionsPolicy evaluation questions

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Type A:Type A:

• Greenspan – “Greenspan – “an ideology is a conceptual an ideology is a conceptual framework” framework”

• Harrod, 1938, when applied: Harrod, 1938, when applied: “ “From being one of the most exact, albeit From being one of the most exact, albeit

narrowly circumscribed, sciences, economics narrowly circumscribed, sciences, economics of necessity becomes one of the most of necessity becomes one of the most conjectural.conjectural.””

• Theory as analogy / metaphor / frameTheory as analogy / metaphor / frame