Let me take you back to the autumn of 2008, when the global financial system almost collapsed. Back in March, Bear Stearns had gone bankrupt, but people weren’t really sure then whether that was a one-off event, or whether it was foretelling something worse. Then in July, IndyMac, a huge mortgage bank, went under, and markets started to get nervous.
By the middle of September, they were in full panic. On September 15th, Lehman Brothers collapsed. The very next day, AIG had to be bailed out for 85 billion dollars. Then on September 29th, the Dow fell 778 points. And so began a multiyear global depression that we’re only now getting out of. It sure is a good thing we have 15,000 economists in the United States. You might have thought they could have let us know this was coming. You might have thought they could have given us some policies for when it did arrive. But they didn’t.
Before the crisis, the greatest economists in the world didn’t see it. When the crisis came, they bickered about what to do. Today, years later, they’re still debating the fundamental causes. No wonder we don’t have good policies in place for avoiding the next crisis. This represents a great failure of social science. The social sciences are not working. Sociology, economics, political science, history; we need good answers from these disciplines.
Imagine what we could accomplish if we were actually good at social science. Imagine the crises we could avoid. Imagine the lives we could save. Today I want to talk to you about some new ideas for fixing the foundations of social science, for rebuilding them from the ground up. At the heart of this talk is one simple point: There’s a certain kind of question that we’re not really asking in the social sciences, something that we’re largely overlooking. It’s what I’ll call a “What is it?” question. These are questions we rarely ask, and when we do bother to ask them, we tend to get the answers wrong. The reason is the social sciences are largely in the Dark Ages, they’re relying on old assumptions and dogmas that we need to overturn.
So let me start by distinguishing two kinds of questions in the sciences: “What is it?” questions and “How does it work?” questions. These questions are fairly familiar in the physical sciences or natural sciences, like physics and chemistry and biology. “What is it?” questions are questions about structure or composition. Like, suppose you have a molecule of DNA. What is the structure of it? What are it’s building blocks? What is it? “How does it work?” questions are questions about mechanisms or processes. Like, imagine that you have a strand of DNA and some enzymes out of which a protein is being built. What’s the process by which that’s happening? What’s the sequence of causes and effects?
Scientists spend some of their time answering the first kind of question and some of their time answering the second kind of question. And importantly, those two questions interact with one another. If you want to do a good job answering “How does it work?” questions, it’s a really good idea to do a good job answering “What is it?” questions as well. The thing about the social sciences is we spend a lot of time on “How does it work?” questions. But “What is it?” questions? We don’t really do that. What is money? What is a company? What is an institution? What’s a social group? What are credit cards, financial instruments, contracts? These are questions we really don’t ask in social sciences.
Here’s an interesting comparison: I had a research associate look at two of the top journals. One in the natural sciences and one in the social sciences, Nature and the American Economic Review. We looked at the 400 or so articles that came out over the last year and coded them in terms of what kind of questions they were addressing. Here are the results: The blue bars represent Nature, and as you can see, about 16 per cent of the articles in Nature are addressing purely “What is it?” questions. Then another 12 per cent are addressing a mix of questions. The American Economic Review is very different. Out of the 242 articles we looked at, only two of them are addressing purely “What is it?” questions. And only 13 were even addressing a mix. These are things we’re not really paying attention to. Why do the natural sciences spend so much time addressing these questions?
Let me tell you a story about what happens if you get your answers to “What is it?” questions wrong. This is a story from biology, from the 1860s. But as you’ll see, the things that were going wrong then are remarkably similar to the things that are going wrong in the social sciences today. Here’s a guy named Rudolf Virchow. Back in the 19th century, he was a very prominent biologist arguing for the cell theory of organisms. Now it may be hard to believe, but at the time, there were a lot of debates about what organisms like us are made of. Some people thought that we’re made of some stuff called protoplasm, whatever that is, some people thought that we’re made of fluids with a vital life force flowing up and down us.
Virchow argued for the cell theory of organisms, and here are a couple of the principles he put forward. One is: All organisms are made exclusively out of cells. A second is: Cells are the functional and structural units of organisms. Cell theory really is very good. It’s much better than life-force fluid theory. But the problem is it’s not quite true. Think about a body. There are lots of cells in the body, but lots of parts of the body are non-cellular as well. Think, for an instance, about the eye. There are lots of cells in the retina or cells in the optic nerve, but most of the eye is non-cellular; the cornea has almost no cells, the lens. Most of the eye, is the vitreous humor and that also has almost no cells. The eye is an amazing structural and functional device, and yet it’s not made out of cells. The same is true for lots of other parts of the body as well. The bones, 15 per cent of the body. The hair, the teeth, all the fluids in the body. Virchow got the answer to the “What is it?” question about the body wrong. It was too simple. It was too uniform.