I agree with Noah Smith and with the Economist here: Noah Smith: OK, so The Economist has an ongoing series of articles about the shortcomings of the economics profession
I agree with Noah Smith that a lot of interesting work is being done in academic economics—even in macro. I agree with the Economist that academic economists are more-or-less neutralized at best in the public sphere, with bad actors, bad methodology, and bad ideologues drowning out information. I agree that economics should do a much better job of policing its own internal community and standing within it via what my colleague Alan Auerbach calls “obloquy”. I agree that economics should do a much better job of managing its discursive modes, in both empirical and theoretical work. But I do wish the Economist would turn its microscope on what purports to be economic journalism more: Noah Smith: OK, so The Economist has an ongoing series of articles about the shortcomings of the economics profession: “https://www.economist.com/news/finance-and-economics/21740403-first-series-columns-professions-shortcomings-economists…
…I’m going to go ahead and write about it before it’s finished, so hopefully the later installments will be better than the first three! The Economist’s articles each contain some useful background knowledge about a field of econ, and they are better than the Standard British Econ Critique that gets repeatedly dished out (https://www.bloomberg.com/view/articles/2018-04-25/critics-of-economics-are-dwelling-in-the-past). But that’s about all I can say for them. Let’s take the first one, which is about economic growth (really, development). The thesis is that economists don’t understand the causes of long-run growth. That is true!! Most development and growth economists will cheerfully admit that they don’t know what makes countries go from poor to rich…. Most development economists are agnostic about the Big Question of what makes countries go from poor to rich, and spend their time researching relatively modest interventions that can be used to make countries a little bit less poor.
Nor does the article do justice to many of the theories it does mention.For example, its problem with the Solow model is that we don’t understand what the Solow residual is. If that were the only problem, the Solow model would still be incredibly powerful! Growth accounting is summarily dismissed, again because we don’t know what the residual is. Again, the implication seems to be that if a growth theory isn’t a Theory of Everything, it’s a failure. That explaining some aspects of growth, but not others, is useless…. The whole article assumes a self-assurance on the part of growth and development economists that, with a few exceptions, does not actually exist.
Yes, a few people like John Cochrane make wild promises about the growth effects of certain policies. They are rare.
The second article is about business cycle theory. There’s really not much in this one, besides a short, informal history of Keynesian, New Classical, and New Keynesian models that won’t enlighten anyone who isn’t already acquainted with the subject. Macroeconomics is trying a lot of new things – finance-based models, heterogeneous-agent models, search-based models, behavioral models, and quite a lot more. The article does not mention these. Nor does the article suggest a way forward, other than to briefly name-check Minsky and Kindleberger and saying that macroeconomists must “sort out their disagreements” and “come to grips” with their “epistemological woes”. There is so much about macro to critique that I’m frankly kind of astonished that this article didn’t do much actual critiquing!
The third article, my least favorite of the bunch, is about applied micro. Which the authors seem to think is in a parlous state…. I do appreciate this name-check (though @jamesykwak deserved it more), and it’s good that the article talks about the empirical turn in microeconomics…. I’m also glad that this article, unlike the others, actually takes the time to explain a bit about how the research in question actually works! That’s great! Though the example of Levitt’s abortion-crime study (which turned out to have major problems) isn’t the best.
So why does the article say that applied micro is unreliable? Because of the same general critiques of empirical science that are everywhere nowadays: Publication bias, low power, and replication. These critiques are good and useful… in the academic literature. In the public sphere, though, they are often misused. A general attitude of “Don’t trust empirical research” has taken hold in some quarters that is lazy, anti-intellectual, and just plain wrong. Publication bias is a problem. BUT, any result will be followed up on by other researchers. Most empirical questions have not ONE paper investigating the question, but MANY….
The article then makes one of the most annoying arguments in journalism, which is to find two conflicting results and conclude that the entire literature is full of conflicting results: Studies finding small or no short-term effects of minimum wage on employment vastly outnumber studies finding big effects, but the article does not mention meta-analysis or the relative quality of the methodologies in question. Waving around papers on publication bias and doing he-said-she-said cherry-picking of empirical results is a GREAT way to get the public not to trust whole literatures full of good, valuable, careful, highly informative research. This kind of thing is not good for anyone. It doesn’t help improve the academic literature, and it doesn’t help policymakers or the public extract information from the academic literature….
I guess I’m being too nitpicky about these Economist articles. They really are more informed, and more informative, than the average Econ Critique piece coming out of British newspapers. The real problem here is the need to structure every article about the econ profession as a critique. Is there something in British politics that makes it necessary to bash economists to prove you’re Very Serious these days? Something about Brexit? Or Corbyn?… Enough grumping…