Ph.D. Octopus

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Depression, Debt Ceilings, and Derivatives

with 2 comments

by David


Just finished reading the latest exchange in the New York Review of Books between Dr. Marcia Angell and her interlocutors on the effectiveness of psychiatric drugs. As Julian previously observed, Angell, a senior lecturer at Harvard Medical School’s Department of Social Medicine and the first woman to edit the New England Journal of Medicine, wrote two provocative book reviews that argue that psychiatric illness is fundamentally misunderstood, that depression and other mental illnesses are overdiagnosed and that medication is over-prescribed and often ineffective. Moreover, she  argues that the pharmaceutical companies are heavily invested in making us believe that these medicines work when in fact tests of their effectiveness are inconclusive at best, that testing results are skewed because of Big Pharma’s influence, and that many psychiatrists are shills for Big Pharma. In sum, Angell thinks that the whole field of psychiatry is a big mess, or perhaps even a big lie.

Several psychiatrists have responded critically, including Dr. Peter Kramer, a clinical professor of psychiatry at Brown, in the New York Times, and Doctors John Oldham (president of the American Psychiatric Association), Daniel Carlat (Associate Clinical Professor of Psychiatry at Tufts University School of Medicine and author Unhinged: The Trouble with Psychiatry–A Doctor’s Revelation of a Profession in Crisis, a book which Angell reviewed favourably in the previous pieces), Richard Friedman (Professor of Clinical Psychiatry at Weill Cornell Medical College) and Andrew Nierenberg (Professor of Psychiatry at Harvard Medical School). They all contend, in the nasty tone for which the NY Review of Books letters section is famous, that psychotropic drugs, including anti-depressants, work. Angell’s response, arguing her case again, is similarly hostile.

Who wins the debate? I have no idea. You see, I’m not a doctor. I’m not a scientist. I’m not even really a social scientist, though the University of Chicago and Stanford might think that I am. I’m a historian. I turn on the TV and have no clue how it works: I’m just happy when I can watch Curb Your Enthusiasm. Similarly, I can read these articles about psychiatric drugs, but I don’t have the time, energy, or expertise to evaluate them. I don’t really know what a dopamine receptor is, so I have to take these doctors at their words. And whose words should I trust?

At best, I can perhaps look at the ways that depression, like race and class and gender, might be something of a social construction. As Kristen brilliantly noted, the definition of clinical depression, itself a relatively modern phenomenon, is fluid and malleable, a product of societal categorization, spearheaded by doctors and other elites in positions of authority. People experiencing everyday sadness; are increasingly diagnosed, or misdiagnosed, with depression because of this ever-expanding category.

Still, this sort of historical analysis doesn’t really tell me whether depression is real or not, and whether these drugs are actually effective in treating it. My academic discipline is letting me down.

I thought about this issue again in context of the recent–and mind-numbing–debate over the debt ceiling, and this incredibly fascinating discussion by leftwing critics of Barack Obama and his apparent capitulation to Tea Party insanity. The conversation, initiated by Brooklyn College and CUNY Graduate Center political theorist Corey Robin, came in response to Glenn Greenwald‘s latest critique of the president. Greenwald contends that Obama’s hand was not forced, that he is not weak or blundering or ineffectual, but that in fact he was never that progressive in the first place and got “what he actually wants” out of this recent deal. The academics and journalists who joined the discussion agreed and disagreed to varying degrees, occasionally attempting to psychologize Obama, to figure out why he did what he did, what ideology, if any, that he subscribes to, and what makes him tick.

In this regard, what interested me most was general consensus that, in Penn political scientist Adolph Reed’s words, Obama “believes that Wall Street types are smarter than the rest of us.” I have no idea whether this is true or not, but I must confess that I have some symapthy for the purported Obama view here. I don’t believe that your run of the mill investment banker or hedge fund worker is a super genius. But I do believe that people at the top of these fields are really incredibly smart. And I believe this primarily because they do math for a living.

And there’s the rub. As a humanities person, I feel perpetually inadequate next to those in the hard sciences, or in quantitive social sciences like economics. I had decent math skills at one time, maybe back in seventh grade. But since then, I stopped caring, and stopped trying, and those skills eroded. I briefly resurrected them for the SAT, and then promptly forgot them again, a fact reflected in my mediocre performances in my science and quantative reasoning requirements in college, and my abysmal math GRE score.

Now I know that economics is not pure math. Nonetheless, when faced with people who do some sort of math for a living, I feel intellectually diminished. Maybe I’m fetishizing the quantitive and putting “science” on a pedestal that it does not belong on. But as we humanities majors all know, if you put a math or science person in one of our classes, even an advanced class, they could get by. They could figure it out. But put us in an advanced math or physics or chemistry or even economics class, and we are lost.

In a previous post, I mentioned the esteem in which I held Paul Krugman (below), as a near “divine” authority on all matters economic. That’s not just because he shares my views. That’s because he shares my views and won a Nobel Prize for the applied math he does for a living. And when I look at those on the very far left, those Marxists who inhabit humanities departments (or sociologists, who are sometimes derisively called economists who don’t like to do math), I think: you guys are like me. You don’t really know anything about the economy, because you can’t (or don’t) do any math.

Of course, the introduction of advanced math into the world of high finance may have been what caused this mess in the first place. As Calvin Trillin wrote in a hilarious and astute New York Times op-ed, “the financial system nearly collapsed because smart guys had started working on Wall Street.”

In the article, Trillin reconstructs a (probably fictional) bar room conversation with an old-time Ivy League Wall Street type, who insisted that Wall Street used to be dominated by jocks who simply wanted a house in Greenwich and had no use for excessive risk. The smartest students at elite schools went into academia, law, journalism. As the market grew, and college became more expensive, these students began entering the corporate financial sector, perhaps with a quick stint in business school. “You started reading about these geniuses from M.I.T. and Caltech who instead of going to graduate school in physics went to Wall Street to calculate arbitrage odds.” And so the conversation reached its climax:

“But you still haven’t told me how that brought on the financial crisis.”

“Did you ever hear the word ‘derivatives’?” he said. “Do you think our guys could have invented, say, credit default swaps? Give me a break! They couldn’t have done the math.”

“Why do I get the feeling that there’s one more step in this scenario?” I said.

“Because there is,” he said. “When the smart guys started this business of securitizing things that didn’t even exist in the first place, who was running the firms they worked for? Our guys! The lower third of the class! Guys who didn’t have the foggiest notion of what a credit default swap was. All our guys knew was that they were getting disgustingly rich, and they had gotten to like that. All of that easy money had eaten away at their sense of enoughness.”

When I try to understand the financial crisis, I feel like those old fashioned Wall Street workers (minus the house in Greenwich). I can’t do the math. I don’t know what a derivative is. Sure, I can read Krugman’s op-eds, I can listen to the This American Life podcast about “The Giant Pool of Money,” but at the end of the day, I’m not qualified to evaluate the evidence, and I am still taking other people’s word for it. So I choose Krugman, because he seems convincing, and because I sympathize with his politics. But without that sympathy, I could just as easily take Tyler Cowen‘s word for it, or some other conservative commentator. It’s pick your expert all over again.

And so the debate over depression is not unlike the debate over the debt ceiling, or economic policy more broadly. I think economists have tremendous hubris in imagining that they can understand how the economy works, or make predictions with any real accuracy. But doctors are supposed to be different. Their science seems more substantial. Psychiatry, however, might be an outlier. And so the question remains: is psychiatry more like economics, or more like math or physics? Once again, I have no good answer.


Written by David Weinfeld

August 5, 2011 at 15:06

2 Responses

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  1. You overstate your helplessness.

    Applied math involves making assumptions, converting them into mathematical language, churning through a mathematical model, and interpreting results. So you’re not capable of doing the math, but you can evaluate the underlying assumptions and the logical progression between the assumptions and the results. In the best models, the mathematical process can be described in simple language, and a thoughtful person can evaluate how sensitive the results are to the assumptions. If you have no idea how robust a model’s results are, you should be suspicious.

    In the Wall Street example, a “lower-third in class” manager should’ve talked to the physics underlings and determined the following: (1) our model for risk assessment depends on the assumption that mortgage defaults are as uncorrelated across regions as they were in the past, (2) our risk assessment measure is really sensitive to that low correlation assumption and (3) our true risk is much higher because there’s a good chance mortgage defaults will have much higher correlation going forward, since everyone is lowering lending standards. The physics guys must truly understand their models well enough to communicate all this information. If they can’t, that’s their shortcoming, not the manager’s.

    Mathematical models are helpful for organizing thinking, and it’s easier to understand them if you know the math, but it shouldn’t be insurmountable if you don’t. Like I was surprised how little anyone in that left-wing discussion seemed to think about the strategic interaction between the President and the Republican Party. It’s the first thing I think about.

    As for macro policy, one side trumpets models where government spending is pure waste while the other side believes it’s infallible. Math won’t necessarily give you a huge advantage in determining which models are a better approximation to today’s reality. It’s just one tool, and even if math people could do well in history classes and not vice versa, math people will still often overspecialize and be just as inadequate in history as history people are in math.


    August 6, 2011 at 04:00

    • DRDR, you’re right that I overstate my helplessness. I can and do make these kinds of evaluations all the time. But I do think they often rest on a flimsy understanding of the issues and/or the data, and I also feel that more often than not I am simply trusting someone who I believe has greater expertise than I do. But such is life, I suppose.

      David Weinfeld

      August 6, 2011 at 07:23

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