The Euro, Economics, and Chemistry

We get the International Herald Tribune (international version of the NYTimes) for free at the IFP. This past week, they published in full this article by Paul Krugman about the Euro and the effects of unified currency on the countries facing financial troubles in Europe.

As an unemployed visitor to Europe, I'm pretty free to appreciate the benefits of the Euro without worrying about how it affects the unemployment rate (although I do highly recommend reading it... maybe next blog post can be my responses to his arguments). So the main takeaway for me was a good illustration of the differences in studying economics and studying chemistry/engineering.

Telling someone that I majored in biochemistry generally elicits reactions proving that most people find chemistry and engineering hard to learn. I agree for the most part. The effects of one molecule on another are intricate and very situational, and thus there are countless theories to learn, all expressed in what is essentially a foreign language. Economics, on the other hand, is pretty easy to study. There are a few new terms, but it's all in simple English, and the theories are fairly straightforward. The math isn't even all that bad, in the end.

Once I started a job in chemical engineering research, however, it felt remarkably cut-and-dried. Experiments may not have ended just as planned (especially since I was working in research), but those with experience in the field could generally agree on why or why not. Furthermore, once learned, the language was applicable with high degree of clarity. Economics seems to be the opposite. The language may be easy to learn, but real world events never seem to follow theory and the reasons why are always open to interpretation.

Why? Chemical engineering theory relies on molecules behaving the same way again and again (i.e., the laws of physics), while economic theory supposes people follow the same pattern day in and day out (i.e., rationality).

While human rationality is far more brittle than the laws of physics, the study of economics still creates value (to use an economics term). Just as with the studies of philosophy, religion, politics, and all the other social sciences, it gives us a framework on which to build our society. Furthermore, I believe theoretical economics can have direct real-world applications, provided we are clear about its limitations. Or maybe that's just the bias instilled in a liberal arts school graduate!