You probably know the definition of a Pareto optimum—otherwise you ought to study hard before your end-of-term exam—but did you know that V. Pareto wrote a book on sociology entitled Treatise on General Sociology? In this book, where he develops a systematic method of approaching sociological inquiry, he tries to base the difference between sociology and economics on the distinction between logical and non-logical actions of human beings. To better understand how the gap between sociology and economics has widened over time, one can focus on a turning point in the history of economics: the triumph of marginalism.
At a time when economics was under the process of institutionalization—i.e., the recognition as an academic discipline—the field was a battlefield. There was a need for a clear distinction between sociology and economics.
In 1883, Carl Menger published a book in which he lambasted the method which was used by the German Historical School to study an economy. It led to a “method dispute”—a.k.a. methodenstreit. According to the German Historical School, which was embodied by Gustav Von Schmoller, economists should give up on trying to explain the world like physicians do; individuals are not particles following a given trajectory. Instead, the school argued that economists should consider a historical context in economics. However, the thought was not in vogue as the marginalism was gaining more popularity thanks to Léon Walras, a professor in Lausanne School of economics at that time. As you may already know, the marginalist revolution was a new paradigm in economics; roughly speaking, economists started to maximise utility in order to model consumption.
Yet, some economists went against the flow. For instance, in his article published in 1899 entitled “Why is Economics not an Evolutionary Science?,” T. Veblen aimed changing the relationship between sociology and economics. Crucially, his famous concept of conspicuous consumption was based on sociology. According to Veblen, the social stratification of people is a residue of the feudal period: at the top of the social ladder, a “leisure class” strengthens its domination. To attain higher social status, the middle-class consumes expensive goods in the hope of imitating the “leisure class.” For years, Veblen’s call for more open-mindedness in economics has remained unanswered. But is this lack of recognition still relevant today?
It would be tempting to answer no. The economist Daron Acemoglu from MIT, for example, uses institutional economics in his famous book Why Nations Fail. More generally, economists seem to becoming more receptive to a multidisciplinary approach. For instance, Nobel laureate Daniel Kahneman was first a specialist of cognitive psychology. Nevertheless, still today, some economists do not go through with their ideas when it comes to taking a leaf from sociology in general. Sociologists and economists are both keeping away from each other.
Fortunately, recent research may give incentives to both fields to consider cross-fertilization. In a 2005 issue of the Revue économique, entitled “Economie et sociologie, terrains de confrontation,” Christian Gollier—director of TSE between 2009 and 2015— wrote an article about the concept of risk. According to him, the concept is in the interest of both fields. Arguably, sociology gives a key insight to the concept of risk. For instance, the approach of sociologists Ulrich Beck and Anthony Giddens is made through the notion of “risk society.” At the same time, economists A. Tversky and Daniel Kahneman tackle the issue of risk through behavioural economics studying pessimism or impatience. In the case of risk, it is relevant to debunk the myth of a gap: economics and sociology are both social sciences and give complementary perspectives on a same object.
To quote Schumpeter in his History of Economic Analysis, a categorical separation of the two disciplines is “a state of things that was and is not improved by mutual vituperation.” However, he thinks “it goes without saying that we [economists] cannot afford (…) to neglect the developments of sociology.” As future economists, we ought to follow this piece of advice …