MUSINGS IN ECONOMICS: WHY THE QUARREL WITH CETERIS PARIBUS - C. C NWOBIKE
If the advertisement had come in the wake
of the international year of the disabled persons, the first impression one
would have is that the organization was in sympathy with the programme and
wanted to demonstrate its commitment to the success of the year. But, alas, it
was far from that. Upon reading the
advertisement, it became obvious that the organization was not looking for an
Economist with one of his hands severed from his body. What sort of Economist
was actually needed? The organization in question was tired of the expression
“on the one hand”… and on the other hand” that is very often found in some of
the reports written by Economists in predicting the outcome of a given
decision. What the Economist wanted should then be outright or thorough in
analyzing a situation, but should be forthright in the advice proffered after
the analysis – in short, no ambivalence.
The advertisement referred to above reminds
me of the fun which those outside the discipline of Economics often make of
ceteris paribus. They say that no Economist’s ‘arsenal’ will be adequately
equipped without the phrase ceteris paribus. I regarded the fun as
inconsequential until I became jolted from my complacent position on the issue
by the advertisement wanting a ‘one-handed’ economist whose economic model
building should be sans ceteris paribus. You never can tell.
A definition of the concept ceteris
paribus will be necessary for us to rationalize whether or not an Economist
worthy of the name could do without it. Professor M. P. Todaro, a Development
Economist, in the glossary annexed to his book “Economics For A Developing
World”, stated that ceteris paribus is a Latin expression widely used
in Economics meaning ‘all else being equal’, i.e. all other variables are held
constant.
A discussion of this concept in isolation,
that is, without making clear what the subject matter of Economics is all about
would be some what incomprehensible, although many boast of knowing passable
definition (from among various definitions) The reader is acquainted with, one
crucial and all pervading point to note is the Economics is a social science.
Being a science, it is academically expected that the approach to economic
model building should not differ essentially from the methodology akin to
scientific analysis, with its crucial assumption(s).
Perhaps, an example will illustrate the
point being made here. We all know that the quantity demanded of a normal commodity
or good depends not only on the price of that commodity but also on myriad of
other variables like past and present incomes, government policy, tastes,
prices of close substitutes, population, weather condition (as in demand for
ice cream or a bottle of coke), to mention only a few. Any changes in these
independent variables would certainly affect the behavior of the
dependent variable which in this case, is the quantity demanded. From the
last statement, it can be inferred that the variables are inter-dependent. It
would be patent to everyone that it is extremely difficult to quantify the
specific influence of one independent variable, say price of one commodity in
question on the dependent variable, especially when it is obvious that other
factors are in the background and are changing.
The Economist’s solution is invariably to
accept these important variables within the model, but hold then constant,
while the influence of a variable say, price is being considered. That is
precisely where the use of the device commonly called ceteris paribus comes
in very handy. Without this useful concept, Economists may be faced with a
problem similar to that which a diner has to grapple with if he attempts
to have a bite at two apples simultaneously; when it is customary to have two
bites at an apple. His predicament is better imagined!
But let us be frank. Is the idea of
holding constant other factors (than just the one under consideration) peculiar
to the field of Economics? The answer to this question is emphatic NO; the idea
is universal and prevalent in all disciplines whose adherents to the path of
science. For instance, in Biochemical analysis, the determination of the amount
of chromophore formed from a biochemical reaction presupposes that the path
length of the measuring medium must remain constant for a given set of same
analysis (i.e. A=ECL).
In passing, it should be noted that I have
deliberately decided not to be quantitative in this article. I mused over this
approach, and felt like reaching everybody including my friends who are always
shying at any piece of writing with a bit of mathematics in it. By the way,
this is another source of sarcastic remarks made about modern Economists - the cynics say the growing craze
is to mystify people with advent of Econometrics (humorously nicknamed the
tricks of Economists).
Concluding, I would like to submit that
living as we do in a changing world, not a utopian one(with perhaps, univariate
functions and possibilities) where one-handed Economists thrive, the expression
ceteris paribus presents itself as a sine qua non (indispensable
condition) in building any economic model of worth.
CHRIS C. NWOBIKE retired from the department of Economics and Statistics, University of Benin.
