economists

Kindness in the economics profession

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I’m not angry, I’m just disappointed.

Economics Twitter spent some of the past week reacting to a new paper reporting survey results on how economists evaluate peers’ publication lists. Here’s a description of the results from the authors:

highlights

I’m not here to stop anyone from evaluating publication lists however they see fit. There have definitely been some snotty responses on Twitter that of course this is the right way to judge the publications of others, and that wouldn’t it be good if other disciplines did the same. I find that a little tactless and bratty, but fair enough. If you feel like you want a mechanism to sort your peers and you feel like this is the right one, knock yourself out. Maybe be a little more tactful about it, but okay.

Another class of response has been much gentler: not all strands of research pan out or are super groundbreaking, but they may still be worth publishing somewhere rather than being trashed. This is arguing against the attitude in the survey and against the kind of incentives those attitudes might generate. In a similar spirit lots of folks have been making good sport out of pointing out examples of ultra-influential papers outside of the “top” journals.

These seem a lot kinder in spirit than the “yeah, so?”, but they still make me a bit uncomfortable. The problem here isn’t merely that some not-so-brilliant research is buried or that some not-immediately-influential research upends the conclusion. To my ears the problem here is the erasure of vast numbers of hard-working economists.

The majority of professional economists don’t publish regularly or at all in “top” journals. There are countless reasons why some economists may not be willing or able to conduct research that will be accepted there. And being willing and able is in any case not enough to guarantee that it will happen. (For one thing, let’s recall another paper that had Economics Twitter buzzing recently on the importance of social ties in the publication process.)

Are the people who happily brag about their distaste for research outside of “top” journals ignorant or cruel? I take for granted that they do not consider someone a true colleague if they are not “good enough”, but what I do not easily understand is whether they don’t comprehend what they are implying or if they don’t care.

Pages in “top” journals are finite and the number of Ph.D. economists grows. How can you ask for nothing but “top” publications and sustain the industry as it is now? You cannot. If economists whose job requires research output refuse to publish outside of the “top” journals, they will lose their jobs. If instead they continue to publish outside of the “top” journals, then not one of their colleagues should treat them unkindly for it. Naturally there is a role for systems to identify great, broadly interesting research, and naturally such a system tends towards elitism, with all the pros and cons that implies. But it needn’t be toxic.

Once again: I’m not the thought police, and it is your right to look down on others if you want. But my advice, if you want it, is to shut up about it. I’ve argued before that economics is structurally not very good at supporting the average economist, and this is another manifestation of that.

If all economists who were not willing, not able, or not lucky enough to place research in a “top” journal were to leave the profession, what would you have? The graduate students you rely on, the citations you covet, the undergraduate enrollments you are enriched by, and the textbook royalties you enjoy would disappear with them. May you get what you wish for.

It’s called "the ivory tower"

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Here’s a thoughtful antidote to “boo economists!” by Barry Eichengreen at The National Interest. Perhaps the most forceful point is this:

What got us into this mess, in other words, were not the limits of scholarly imagination. It was not the failure or inability of economists to model conflicts of interest, incentives to take excessive risk and information problems that can give rise to bubbles, panics and crises. It was not that economists failed to recognize the role of social and psychological factors in decision making or that they lacked the tools needed to draw out the implications. In fact, these observations and others had been imaginatively elaborated by contributors to the literatures on agency theory, information economics and behavioral finance. Rather, the problem was a partial and blinkered reading of that literature. The consumers of economic theory, not surprisingly, tended to pick and choose those elements of that rich literature that best supported their self-serving actions. Equally reprehensibly, the producers of that theory, benefiting in ways both pecuniary and psychic, showed disturbingly little tendency to object. It is in this light that we must understand how it was that the vast majority of the economics profession remained so blissfully silent and indeed unaware of the risk of financial disaster.

Eichengreen notes that business schools, for example, are part of the production line of financial labor and ideas and so have no inventive to rock the boat; however, he also directs a lot of fire at academic economists for being part of the stitch-up. I accept that the author surely knows better than me the “pecuniary and psychic” benefits to academics from the use of their work, but a counter-hypothesis would be ignorance rather than malice, a sin of omission, not commission. How many in economics departments know what’s going on in industry – or even business schools? Is it enough to claim a quorum of the profession?
There’s probably analog to the hard sciences here. Newspaper science (cf. Bad Science, for example) is to natural science research as financial industry models are to economics research, or something like that. Imagine a house full of economists (reality show idea?) – every so often one wanders out to hand some obscure technical document to someone from the outside world, and something inevitably gets lost in translation. 

The received wisdom of ‘market capitalism’?

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I don’t know what to think of “Economics Does Not Lie” by Guy Sorman in the I-just-learned-it-existed City Journal. It’s reasonable and well-argued, even as it seems to push the buttons of the anti-economics set, and even as it seems to commit many of the same sins as those pesky “principles of economics“. The agenda seems to be a vigorous defense of the capitalist economy – almost too vigorous, with plenty of pro-America, anti-‘western Europe’ digs. Weird? Hold that thought.

In the meaty bit of the article, Sorman begins:

If economics is finally a science, what, exactly, does it teach? With the help of Columbia University economist Pierre-André Chiappori, I have synthesized its findings into ten propositions… The more the public understands and embraces these propositions, the more prosperous the world will become.

OK, so I’m interested; seems like what we have might be an alternative list of what Mankiw calls “principles” (I despair of ever actually getting a proper use of the word in this context). Sorman discusses them at length, but here’s the list:

1. The market economy is the most efficient of all economic systems.
2. Free trade helps economic development.
3. Good institutions help development.
4. The best measure of a good economy is its growth.
5. Creative destruction is the engine of economic growth.
6. Monetary stability, too, is necessary for growth; inflation is always harmful.
7. Unemployment among unskilled workers is largely determined by how much labor costs.
8. While the welfare state is necessary in some form, it isn’t always effective.
9. The creation of complex financial markets has brought about economic progress.
10. Competition is usually desirable.

First of all, I don’t disagree with the assertion that “almost all top economists—those who are recognized as such by their peers and who publish in the leading scientific journals—would endorse” this list, although that’s obviously verging on the tautology of the clique. As a list of the received wisdom, it’s not bad at all, then.

Nevertheless, though this is a relatively less noxious list than Mankiw’s ‘principles’, it can maybe be taken as received wisdom, but certainly not as axioms (not, to be clear, that Sorman makes any such claim). Where it fails, it fails because it suffers from the same diseases. What, for example, am I to make of the first one? Exactly what is the ‘market economy’ most efficient at achieving? Correct me if I’m wrong, but you can’t just be ‘efficient’ in and of itself, right?

Aside from these familiar complaints of mine, there are a couple of other things worth mentioning, most especially this claim:

Now only one economic system exists: market capitalism.

Not only untrue, but completely untrue. Just as no country has ever tried to implement a wholly communist allocation of resources, no country has ever tried to implement a wholly capitalist allocation of resources. The accurate statement would be that the “markets with government” hybrid system is the dominant one in the modern world – as I’ve talked about before. As Jeffrey Tucker at the Mises blog points out in his response to Sorman’s article, Sorman himself isn’t even talking about “market capitalism”, but about the hybrid system, which is further testament to its ubiquity.

Remember that thought we were holding? Here’s the very last line of the article:

His article was translated from the French by Ralph C. Hancock.

Might the agenda simply be a reflection of the precariousness of the ideology of markets in France? Not such an outlandish proposition…

Economics = devil’s advocacy

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There’s some low-key furore over in Chicago over the naming of a new research institute after Milton Friedman: here‘s a little background from the New York Times. The real joy in the story comes from the “protest letter” sent to the powers-that-be by a ton of Chicago faculty, and John Cochrane’s double-barreled destruction of said letter.

Highlights:

As usual, academics need to waste two paragraphs before getting to the point, which starts in the first bullet.

If academic writing stopped wasting ink, I’d eat all my hats. The point of the protest seems to be that the signatories don’t want to be associated with the evils of “the neoliberal global order”, “monetization”, “globalized capital”, etc etc, which are apparently inexorably linked to poor ol’ Friedman, and Chicago. Leaving aside the issue of whether naming a research institute after Friedman would invite some kind of new or extra, real or perceived bias to the actual work of that institute, Cochrane makes a stab at devil’s advocacy:

The content of course is worse. There isn’t even an idea here, a concrete proposition about the human condition that one can disagree with, buttress or question with facts. It just slings a bunch of jargon, most of which has a real meaning opposite to the literal. “Global South,” “neoliberal global order,” “the service of globalized capital,” “substitution of monetization for democratization.”

It’s a familiar problem for all economists. Everything we’re perceived to believe in and stand for – whether or not we do – is simply evil, enemy of the environment, the people, democracy(?), happiness, community, the poor. I mean, I’m super sympathetic to the perception that economics has an agenda; as I’ve argued with tedious regularity, the pollution of the beautifully hopeful positivist method by normative judgment – the very sin positivism tried to prevent – is the great tragedy of the teaching of economics, but, by god, when we have to argue against this kind of jargon with no intellectual content, is it any wonder we end up sounding like the frontline warriors of ‘capitalism’?

Close to the ground

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Hey, it’s John McCain time again! The Free Exchange blog has this (under the nifty headline ‘Tsk-onomics’), on the familiar topic of McCain’s support for the gas tax ‘holiday’. Congress doesn’t like it, economists don’t like it, so far so familiar.

Apparently McCain’s getting slammed for being rubbish at answering questions on this, and other, policies he’s advocating, but let’s leave that to the analysts. There’s a fun exchange quoted from a George Stephanopoulos chat with McCain:

STEPHANOPOULOS: Not a single economist in the country said it’d work.

MCCAIN: Yes. And there’s no economist in the country that knows very well the low-income American who drives the furthest, in the oldest automobile, that sometimes can’t even afford to go to work.

I think it’s neat that presidential candidates get chips by opposing economists, and I don’t mean that as an offended economist; I think it’s interesting. Anyway, is there any merit in that particular McCain quotation? Or, to paraphrase: is economics too far from the ground? Is it too esoteric to properly understand the actual, real implications of its preditions, its recommendations?

The classic case, I think, might be the globalization debate, the protectionism debate: typical economist’s position might be ‘trade good because it allows specialization based on comparative advantage, cheap stuff, more to go around etc’; the counter-argument could run ‘trade bad, erodes localism which we like, hurts those people whose livelihood depends on those things that their country will stop producing when trade makes it cheaper to get those things from other countries’.

Now, sure, the response to the latter is usually ‘yes, yes, we know some people lose out, compensate the losers’, but is that particularly constructive? Are we blind to the real, tangible content of the disagreement with the ‘economist’s answers’? Do we splutter and get indignant with John McCain because he had bad policies, or because we don’t really get the argument?

When we say ‘your gas tax holiday plan sucks, aha!’, we lose friends and alienate people; could we actually make economists a little cuddlier and meet McCain halfway? How can we deal with the problems he’s referring to, that people feel like they’re struggling to get by? We don’t deal with it by ridiculing, that’s for sure. There’s no need to compromise if you think a gas tax holiday isn’t right, so by all means make that case, but every time an economist is painted into a corner as an enemy of the prosperity of the common man, we must argue our way out double-quick, as a matter of principle and credibility.

Economists talk weird

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I was going to rant a bit about “Lessons in Love, by Way of Economics” by Ben Stein from the New York Times, but, and I didn’t even think this was possible, the whole thing is too ridiculous to justify it. Suffice to say it’s more bad PR for the poor econ set.

One of my least favorite things about economists is that we often seem more prone to talking about normal stuff in economics-speak. You’d like an example?

In every long-term romantic situation, returns are greater when there is a monopoly.

Good grief. I mean, who is reading a bunch of aphorisms about ‘love’ translated into economics jargon and thinking ‘awesome article’? Plus, as an added irritant, half the dodgy analogies are to finance, not economics, viz “[t]he returns on your investment should at least equal the cost of the investment” etc etc.

Who knows, maybe there could be something interesting under that title. What I hoped might crop up in an article with such a title might be something about the things people want, the monetizing of economics versus the rich motivations of life. From the tail end of the article:

Ben Franklin summed it up well. In times of stress, the three best things to have are an old dog, an old wife and ready money.

OK. It’s the old “no-one ever died wishing they’d spent more time at the office” bit. Shouldn’t that apply to economists too? Then why are economists so keen to spend all their time at the office by talking about normal stuff in economics jargon? That’s tiresome, not fun.

The arrogance of economics?

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A while ago I mentioned the mysterious science of “welfare analysis”. It tries to evaluate outcomes or predictions of economic analysis or modeling; the idea is to figure out whether x is “better” than y.

That’s not an easy task; we have to figure out how we’re going to measure things if we’re going to compare them. Unfortunately, the only way to answer the question is to take a position on the motivations of the people who’d be affected by your policy. It’s sometimes said that the noxious euphemism “thinking like an economist” means “taking all consequences into account”; leave aside for a moment the obvious point that that’s not “thinking like an economist”, it’s “thinking properly”, but rather let’s figure out what “thinking like an economist” actually requires.

It often seems to require answering that question of “better”, to require taking a position on how you’re going to evaluate policies. It’s more fundamental than assuming something about a utility function, or whatever it takes to perform welfare analysis, but rather seems to require an acceptance of those nefarious so-called “principles” of economics, an agreement with what constitutes a “better” outcome for society.

Then we’re led into a world in which very few people who self-identify as “economists” profess support for any policy or means or resource allocation that lies outside the capitalism-with-some-government model that is the status quo. Is that because once a person has studied economics, it’s obvious to them that this is “best”? Is it because it’s impossible to succeed in the study of economics if you don’t agree that it’s “best”, because you’re turned off or ridiculed?

Economists run the risk of being seen as arrogant if we pretend to understand what a “better” outcome is. In the small this manifests as our faith in the cipher of “welfare analysis”; in the large it manifests as the homogeneity of belief and thought among economists.

Easy money

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Here are some numbers on average starting salary by college major from the Wall Street Journal. If we want to understand what drives people to study economics, part of the reason must be found here.

So, there’s economics, a proud 4th with a not-too-shabby $43,419. First of all, being that I don’t believe economics is vocational, and that I think we don’t place a very high premium on intellectual excellence in the teaching of economics, this is already, to me, a bit weird.

The easy, and I think true, point to make is that if we do some kind of perceived difficulty/scariness of subject times starting salary, economics will win hands down. If all I care about is cash and how hard my degree will be, I doubt I’m choosing math or engineering over economics. It’s easy money.

For once, I’m going to try to use some economics to talk about this. Labor and skills are scarce resources; salaries for graduates in the hard sciences are understandably high, since these skills are valuable and not so very many people study those subjects. But I see exactly zero reason why economics is different, in that light, from management science or history, for example. Does majoring in economics change your abilities in the same way that studying computer science makes you a better code-writer?

Where are the economists going, anyway? From the article:

Scott Bell, who plans to graduate this year from New York University with a degree in East Asian studies, was looking for a job in financial services or consulting. The 21-year-old was unable to land interviews with major investment banks, despite a strong grade-point average and an internship in the Tokyo office of global management consultancy Bain & Co.

East Asian studies would, in this context, seem to be more valuable than economics in preparing someone for a career in financial services or consulting. Economists seem to be facing stiff competition in the labor market for consulting and banking, and of course they are no more qualified for such jobs than anyone else who is literate and numerate, which might itself be contributing to the premium for economists.

I struggle not to fall back on the familiar signaling story for education. I said this a while ago:

Perhaps economics just looks good, perhaps even because it’s confused with finance or business. Perhaps we, the educators, are complicit in the charade because it brings high enrollments and money. There is no incentive to change the program, even if the core is rotten. It’s like an asset bubble – the value of economics as a major, the value of economics to a university, to economics departments, goes up and up and up, but at the bottom there is nothing.

I strongly recommend this short article, “What jobs do economics majors get?”. Listen to this:

Employers are happy to hire students with undergraduate degrees in Economics. They are often looking for good mathematics skills, good writing skills, ability to use a word processing program such as Word and a spreadsheet program such as Excel. Some jobs require skill in using a statistics program – these are appropriate for people who did well in or liked ECON 3254. Computer programming skills are definitely a plus. Almost any programming language will appeal to most employers, although some have a preference for “C” and “Visual Basic.”

OK, so employers want people who can read, write, do math and use a computer. Statistics is good. Computer programming is awesome. This has nothing to do with economics. And lo:

The important thing to understand about finding a job with an economics degree is that employers are less interested in whether you have a specific skill, like being able to find the intersection of the supply and demand curve, than they are in the package of skills that people with economics degrees have. Secret: most of the skills which people use on the job they learn on the job.

Cool, so all the stuff we teach in undergraduate economics is useless to employers (astonishment!), yet people study economics in record numbers. What’s the disconnect here? Is it really just a house of cards, floating on air? What do we teach economics students to do that other students can’t? What do employers think we teach? Back in the original article, this makes more sense:

A breakdown by industry shows that starting salaries for accounting and finance grads rose by a mere 1.9%, while business-administration and management graduates saw increases of less than 1%. The average offer for computer-science majors, on the other hand, rose 7.9%. Engineering graduates saw an average increase of 5.7%.

I’m not down on economics as a field of study. I think it can be interesting and multidisciplinary and philosophical and relevant and topical. However, it seems sometimes to all to be tailored to these numbers: you can earn big bucks by majoring in economics, and economics classes become just a crappy thing you have to do to get there. Everyone’s happy with the status quo.