How Strong is the Economics Guild?

I had two contrasting experiences this week. First, I had a student come to office hours saying it was hard to figure which of all the cacophony of economy ideas put forward in the news to take seriously. I pointed out that unlike climate science, where good journalists usually feel that for a quotation meant to be taken seriously (as plausibly true) they need to quote people who are PhD's in appropriate disciplines and are also usually professors or government employees, they will quote as plausibly true the economic opinion of a much wider set of people, including at least business people and politicians in addition to PhD economists. The picture one gets from the news about the economy and economic policy is much different if one focuses primarily on what the PhD economists are saying.

On Twitter as well, I notice the large number of people who are not pedigreed members of the economics guild who are happy to disagree vigorously with me and with other economics professors there. So my experience has not been one of the economics guild having a monopoly on public discourse about economics.  

The second experience was reading Cameron Murray's blog post about the book Econocracy linked above. Here is Cameron's summary of the books main points: 

  1. Economics is now the default method of analysis in serious social and political debate, undermining the legitimacy of other modes of analysis, making anyone who doesn’t understand economics and its jargon unable to participate in the major political debates of our time.
  2. Despite the great power granted to economists, the discipline has become nothing more than a narrow ideology, with that last defining theoretical battles happening back in the 1970s, and little openness to criticism or new ideas since.
  3. Changes in how economists and their discipline function could benefit democracy. These changes are a) economists training their next generation in a more pluralist way, giving them exposure to many methods of analysis to avoid the ideological indoctrination that is economics education and b) economists being less insular by reaching out to the public to promote a culture of “citizen economists”, who have sufficient understanding and confidence to bring their groups to the table and participate effectively in policy debate.

To take point 3b first, I see a thriving economics blogosphere and Twittersphere effectively reaching out to the public in exactly this way. (I especially admire how George Mason University has supported and encouraged its economists in this kind of public outreach.) And the economics blogosphere/Twittersphere includes quite a few strong heterodox voices, both inside and outside the guild. Let me give as examples my Twitter friends TakingHayekSeriously inside the guild and John L. Davidson outside the guild. 

On point 3a, economic training can often be so narrow that even someone like me, who doesn't think of himself as heterodox at all, but makes some effort to be broad-minded, can count as "training [the] next generation in a more pluralist way." The narrowness I see and lament in subfields of economics can be quite severe—often a limitation to a tiny slice of all possible ways of working in that subfield. But at least the narrowness within subfields of economics periodically shifts from narrowness in one direction to narrowness in another direction. There are often very detailed rules about what one is allowed to do and what one is not allowed to do that shift only when someone with enough prestige within the guild decides to break those rules. (For a particular broadening of the rules, see my post and paper "Cognitive Economics.")

On point 2, it is worth noting that while economics tends to pull people trained in it in what is conventionally thought of as a "conservative direction," the median economist working in the US remains left of center politically relative to the average US citizen. This is evidenced by the deep bench of top guild economists that Democratic administrations have to choose from, and the relatively limited bench of top guild economists that Republican administrations have to choose from. The combination of the bulk of economists being left of center nationally and the important minority of economists who are much more right-wing gives the lie to the idea that economics is a "narrow ideology," unless one considers 90% of the US political spectrum a "narrow ideology." 

On point 1, I for one hunger for new modes of analysis. But I want the other modes of analysis to have clearly articulated, fairly general theories and careful statistical analysis. But clearly articulated general theories and careful statistical analysis are hard to do without the kind of hard-core training that economists get. (One group of scientists who get similar training are the evolutionary theorists. If you ever get the chance to hang out with evolutionary theorists as I have been luck to be able to do, you will notice that they think remarkably like economists.) This is why I wrote that "Economics Needs to Tackle All of the Big Questions in the Social Sciences." Trying to answer a wider range of questions will inevitably lead to an economics that is not just richer in the topics it covers, but methodologically richer. Even Gary Becker, whom I think of as trying to approach a wide range of topics in a relatively traditional, neoclassical way, stretched economic methodology a great deal.

Cameron makes one other key point, less closely connected to his summary of the book. He writes:

Making policy in order to nurture a thing called an economy is bizarre, bordering on meaningless. The slightest scrutiny reveals that the economy is whatever economists assume it to be.

When we think of Gross Domestic Product, probably the main measure of the ethereal thing we call the economy, we are actually thinking of a measure whose definition has changed dozens of times.

I agree that one of the things that sometimes makes economics seem illiberal is our failure so far to develop and establish official (and therefore prestigious) measures of a broader social objective function than GDP. Dan Benjamin, Kristen Cooper, Ori Heffetz and I write about what I believe to be surmountable challenges in creating such a measure in  "Challenges in Constructing a Survey-Based Well-Being Index" (ungated pdf), that should be coming out in the American Economic Review "Papers and Proceedings" issue this year. It matters what we measure and treat as our objective function for policy. (By the way, Gary Becker had an important role in the economics of happiness this effort is based upon. See "My Experiences with Gary Becker.")

But once we have a reasonably comprehensive measure of national well-being, or of the well-being of various groups, the kind of theoretical and empirical analysis needed to advance the objective of increased national well-being will be the kind of excellent theoretical and empirical work that economists already admire. Indeed, my standard joke about the weak point in the overall program of evidence-based government is that we need to "assume the existence of an abundance of brilliant econometricians." If all goes well with our part of the effort, we will be able to provide those hoped-for brilliant econometricians the data they want, or at least all they can reasonably ask for.