Saturday

May 21st, 2022

Insight

Why economics is failing us

Tyler Cowen

By Tyler Cowen Bloomberg View

Published May 28, 2021

Economics is one of the better-funded and more scientific social sciences, but in some critical ways it is failing us. The main problem, as I see it, is standards: They are either too high or too low. In both cases, the result is less daring and creativity.

Consider academic research. In the 1980s, the ideal journal submission was widely thought to be 17 pages, maybe 30 pages for a top journal. The result was a lot of new ideas, albeit with a lower quality of execution. Nowadays it is more common for submissions to top economics journals to be 90 pages, with appendices, robustness checks, multiple methods, numerous co-authors and every possible criticism addressed along the way.

There is little doubt that the current method yields more reliable results. But at what cost? The economists who have changed the world, such as Adam Smith, John Maynard Keynes or Friedrich Hayek, typically had brilliant ideas with highly imperfect execution.

It is now harder for this kind of originality to gain traction. Technique stands supreme and must be mastered at an early age, with some undergraduates pursuing "pre-docs" to get into a top graduate school.

At the same time, the profession is pursuing a kind of "barbells" strategy. On Twitter (and, earlier, blogs), barriers to entry are very low and a Ph.D. is not required. That can be a good thing, but quality checks are extremely weak.

Here's the dirty little secret that few of my fellow economics professors will admit: As those "perfect" research papers have grown longer, they have also become less relevant. Fewer people - including academics - read them carefully or are influenced by them when it comes to policy.

Actual views on politics are more influenced by debates on social media, especially on such hot topics such as the minimum wage or monetary and fiscal policy. The growing role of Twitter doesn't have to be a bad thing. Social media is egalitarian, spurs spirited debate and enables research cooperation across great distances.

Still, an earlier culture of "debate through books" has been replaced by a new culture of "debate through tweets." This is not necessarily progress.

To use a bit of economic terminology, economists haven't fully internalized the lessons of the Laffer Curve. By demanding so much rigor in academic research, they've created an environment in which most of the economics people actually see is less rigorous.

Sign up for the daily JWR update. It's free. Just click here.

There is also a political effect. Twitter is a relatively left-wing social medium, and so the tenor of popular economic discourse has moved to the left.

I have mixed feelings about the evolution of ideology in the economics profession. In earlier times there were schools of thought - Keynesian, Austrian, Institutionalist, the Chicago School and so on - associated with coherent world views. That was unscientific, and it led to people embracing both policy and empirical views that weren't always backed by the evidence.

Explicit schools of thought have since faded - but ideology has not. The new, often unstated dominant ideology is a mix of wokeism and center-left Democratic technocratic policy reasoning.


I am not sure that most economists, who come from many nations and cultures, endorse that approach. They just don't work very hard against it, and so it is the unstated default norm. Furthermore, more economic research these days is done in large teams, rather than solo, so the incentive is "go along to get along."

Not long ago, Harvey Mansfield suggested that Harvard, where he has been on the faculty for almost six decades, has not hired a single openly conservative professor in the last 10 years - in any field, not just economics. It's hard to argue that the political biases so evident on Twitter somehow do not infect the academic side of the profession.

As economics has become more ideological, it has also become less forthcoming about its ideologies. And that has led to less intellectual diversity and fewer radical new ideas. That, in a nutshell, is the main problem with the economics profession. At least our research papers are ever more accurate in their estimates of the coefficients.

(COMMENT, BELOW)

Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "The Complacent Class: The Self-Defeating Quest for the American Dream."

Previously:
04/19/21We need green energy. We don't need green jobs
04/14/21 Libertarianism isn't dead. It's just reinventing itself
04/05/21 What does the world need? More humans
02/10/21 If Biden goes big now, he may have to go small later
01/12/21 Covid improved how the world does science
12/07/20 How to make sure your complaint is heard
10/27/20 It's getting better and worse at the same time
09/14/20 How to be happy during a pandemic
09/04/20 Trump is winning the vaccine debate with public health experts
07/01/20 Why Americans are having an emotional reaction to masks
05/20/20 Covid-19 will expose the ghosts in the U.S. economy
05/07/20 Are aliens visiting us? US military seems to think so
05/06/20 America's reopening will depend on one thing --- trust
04/22/20 How the covid-19 recession is like World War II
04/15/20 America is returning to 1781
04/08/20 Covid-19 is is upending everything for status seekers
03/17/20 The coronavirus will usher in a new era of entertainment
01/28/20 Social Security isn't doomed for younger generations
01/08/20 Why 2020 is harder to predict than 2019 was
12/02/19 Equality is a mediocre goal so aim for progress
11/25/19 Inflation inequality creates winners and losers
11/09/19 OK kids. This boomer has had enough
10/20/19 Would you bet against Trump in 2020?
09/25/19 The right industrial policy for America
09/24/19 Harvard's legacies are nothing to be proud of
09/02/19 Yes, the Fed could still stop a recession
08/20/19 A trade deal with China wouldn't change much
07/29/19 How your personality traits affect your paycheck
07/16/19 Internet 101 should be a required class
05/28/19 How Dems actually are the ANTI-immigrant party
04/23/19 Want to help fight climate change? Have more children
03/22/19 America isn't as divided as it looks
03/12/19 The Twitter takeover of politics: You ain't seen nothing yet
03/04/19 How to tell which Dem dreams won't come true
02/07/19: Now the Dems want to end America's nuclear first strike option. How clueless is that?
01/29/19: The shutdown hit a lot of government workers --- hard. But, ultimately, who is responsible for their unfortunate circumstances?
12/12/18: The West is abusing its legal power to punish people or institutions that do things it doesn't like. It better stop
10/23/18: The US needs Saudi Arabia, and vice versa
10/19/18: The right finds the perfect weapon against the left
07/24/18: The drive for the perfect child gets a little scary
06/04/18: Side effects of the decline of men in labor market
05/14/18: Proving Marx's theories right
05/08/18: Holding up a mirror to intellectuals of the left
05/01/18: Virtual reality will make lives better ... mostly
04/16/18: It's hard to burst your political filter bubbleIt's hard to burst your political filter bubble
04/09/18: The missing key to grasping why American politics seems to have become more polarized, with no apparent end in sight
04/05/18: Two American power centers are about to clash
03/22/18: We fear what we can't control about Uber and Facebook
03/08/18: How to stop the licen$ing insanity
01/10/18: Polarized Congress needs to bring back earmarks
12/27/17: The year when the Internet collides with reality
11/07/17: Would you blame the phone for Russian interference?
10/23/17: North Korea is playing a longer game than the US
10/12/17: Why conservatives should celebrate Thaler's Nobel
08/02/17: Too many of today's innovations are focused on solving problems rather than creating something new

=

Columnists

Toons

Lifestyles