Arnold Kling  

Colander on the Economics Profession

You Don't Have to Raise the Av... In Pursuit of Empirical Macroe...

A commenter points to a post from Pete Boettke a couple months ago, where he quotes testimony from David Colander.

One would think that competition in ideas would lead to the stronger ideas winning out. Unfortunately, because the macroeconomy is so complex, macro theory is, of necessity, highly speculative, and it is almost impossible to tell a priori what the strongest ideas are. The macro economics profession is just too small and too oligopolistic to have workable competition among supporters of a wide variety of ideas and alternative models. Most top researchers are located at a small number of interrelated and inbred schools. This highly oligopolistic nature of the scientific economics profession tends to reinforce one approach rather than foster an environment in which a variety of approaches can flourish.

I have commented before on the issue of "interrelated and inbred." Basically, a handful of macroeconomists from the 1970's had enough Ph.D "children" that their grandchildren now totally dominate macro at the top schools.

Olivier Blanchard will tell you that he and his cohort "passed the market test." To me, it looks more like a mutual back-scratching society than a market test. As Colander points out, the National Science Foundation is a major factor in this. However, his proposals to tweak the NSF process strike me as meager. To me, the larger issues are:

1. The in-breeding in the academic hiring and tenure process.

2. The fact that arrogance is regarded as a positive trait in the academic world.

The almost-inevitable result is to foster the creation of closed-minded cliques. The problem is particularly acute in macro, because the inability to construct controlled experiments means that, in Bayesian terms, one's priors tend to swamp the data.

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COMMENTS (5 to date)
econo writes:

Sharp analysis, and probably even more true in other fields that involve limited reality interaction and a high degree of complexity.

After all, given how incentives are structured, should we really be surprised that social imperatives take the upper hand over empirical ones, especially when it´s hard to test an idea against reality?

agnostic writes:

Like econo said, this is nothing specific to economics. But it's worse than that -- it applies to some fields with a strong reality check as well. Basically any field that the government has gotten into to protect and provide for citizens since... roughly the Progressive era, like health and education.

We know that sugar destroys your health, especially if you're diabetic. Yet the food pyramid (government) and all experts (private) tell you to load up on grains and other glucose bombs. Most diabetic associations even tell diabetics to work table sugar into their diet -- no joke. (As long as they take their insulin afterwards...)

How about improving test scores in school? Well the NAEP shows that white students have basically been as smart (or dumb) as they always have been, at least back through the 1970s. Blacks got a boost at the beginning when they got basic schools instead of shacks, but they haven't closed the gap in the past 30 to 35 years since. That's despite all the various fads in education.

Experimental physics and engineering are the only domains that have a marketplace of ideas feel to them. Even if you get something right in a social science field, who's to say it'll last? They've always got to "move beyond" the status quo, you know "towards a post-X-ian framework."

If you're lucky, when these guys die, the next wave of trendoids will revive your idea -- X-ism gets replaced by Post-X-ism, which in turn gets replaced by Neo-X-ism. Again the trouble is that what replaces what is just based on the wheel of fashion, so bad ideas can be reborn just as easily as good ones.

Rebecca Burlingame writes:

Economics/government/education: almost one and the same at this point. Any new ideas that arise for consideration are not just counter to one of these areas but the entire mindset. No wonder it is difficult for any variation to come from within. Indeed, the whole base may end up redefined before variations are possible.

Chris Koresko writes:

@Arnold, @agnostic: Great post & comments.

One thing I'd like to add: It seems to me that the worst cases come when there's a strong social or political interest in the conclusions being drawn.

So my proposed list of ingredients for a high Noise-to-Signal ratio in some academic discipline are: A limited number of experts in the field; difficulty establishing definitive tests for important hypotheses; and strong interests on the part of the investigators and their supporters / funding agencies in what conclusions they reach.

I'm thinking of the global-warming debate, which I've been following for some time now. Everybody who comments seems to be part of one clique or another, or to have some strong social or political or financial interest in the conclusions. Despite my interest, and a background which makes me better qualified than most to understand the science behind it, I still haven't figured out whether this is really something to be worried about. What chance do our public policy-makers have of getting a reliable answer?

agnostic writes:

They get to kill Israelis AND they get International condemnation of Israel should Israel decide to retaliate.

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