With the economics profession, in the aftermath of the financial crisis, being somewhat in disrepute…He also names names. While Sargent, for instance, is a good guy,
Stop! Stop, stop, stop. The economics profession is not in disrepute. Macroeconomics is in disrepute. The micro stuff that people like myself and most of us do has contributed tremendously and continues to contribute. Our thoughts have had enormous influence. It just happens that macroeconomics, firstly, has been done terribly and, secondly, in terms of academic macroeconomics, these guys are absolutely useless, most of them. Ask your brother-in-law. I’m sure he thinks, as do 90% of us, that most of what the macro guys do in academia is just worthless rubbish. Worthless, useless, uninteresting rubbish, catering to a very few people in their own little cliques.
I’m not sure most people in the outside world would make a distinction between macro and microeconomists.
I know. It’s up to us to educate them. I got this line from a friend in architecture the other day. He said exactly the same thing. I went through the same litany, trying to disabuse him of this notion. It’s like pushing a stone up a giant hill. It’s not going to get me very far, I agree. But nonetheless it is the case that most of us, and most of what we do, remains tremendously useful, tremendously relevant, and also fun!
Not all the macro guys who won the Nobel are good. The guy who won it in 2004 was one of the main culprits in the nonsense, Ed Prescott.At the same time, Hamermesh is an optimist, in that he believes the academic market selects, over time, for usefulness:
I do believe in markets. We had some useless macro guys here who just left, thank God, and we’re now looking for replacements. I do think the failure of these people is conditioning how we search for a replacement. I’m quite sure the journals in academe are going to reflect this too. People are interested in being useful in this profession. It doesn’t mean the people who were the bad guys from the last 20 years in macro are going to be doing anything different. They’re incapable of doing anything different! But markets do work and the dead and useless get shoved aside by the young and useful. I’m a tremendous optimist. I do believe markets work and that people run to fill niches. There’s an obvious niche here, and you’re already starting to see it being filled.I think this is interesting: Macroeconomics the last few decades has basically been run by guys that Harmermesh charges with doing mostly “worthless rubbish. Worthless, useless, uninteresting rubbish, catering to a very few people in their own little cliques.” These are the guys who’ve dominated top journals and top economics departments and who have won Nobel Prizes for their macro work. Yet he still sees the academic market as a well-functioning mechanism selecting for usefulness.
There’s a second thing I find interesting about this: The “top economists” that Harmermesh mentions to show that micro (as opposed to macro) is useful, is the same economist that I trot out to show how absurd nonsense is accepted in economics.
Together with Hans Melberg, I recently argued that there is a “market failure” in (at least a large part of) the academic market for economists: If you have a model that is theoretically consistent and in line with “standard theory” (rational choice, equilibrium, etc.), and if the model matches some stylized facts and can reproduce regularities in market data – then you’re more or less given free reign to make causal claims and say that the “theory” can support strong and important claims regarding the welfare effects of actual real world policies.
In this work, Melberg and I looked at the kind of claims made in the literature on rational addiction theory. We argue that this is a literature featuring claims so obviously unsupported (we call them “absurd”), that their acceptance into good journals is a clear indication of a “broken market.”
The funny thing is: The whole literature on rational addiction theory – which we see as a clear example of how the “academic market” in economics allows policy-useless nonsense claims to rise to the top - is based on the work of Gary Becker. This same economist is one of two economists that Hamermesh mentions as examples of good economics that, presumably, show how well-functioning the market is.
There have been some great economists since then, in the last 30 to 40 years. [..] There’s Gary Becker, who in my view is the top economist of the last 50 years. His notions of family bargaining and how families behave are terribly important, and affect how, in the end, we all think.To me, the rise of Gary Becker and his theories does not illustrate the usefulness (in the sense of credible, well-supported insights into the real world and the effects of actual policy choices on real people) of his work, but more that it “opened new markets” for economists: He showed them ways to build theories of the kind they were familiar with within a host of new areas (education, family, crime, addiction), in ways that seamlessly fit the criteria of “rational choice” and standard micro-economic practice. He provided innovative, creative, exciting strategies for economic imperialism. His work allows you to interpret all sorts of things using the universal acid of economic theory. Some of it may be truly useful and correct, some of it is very clearly not, yet all of it has been very successful within the discipline. To me, that makes it unlikely that “usefulness” was the selection criteria involved.
UPDATE: Came across a nice blogpost by Daniel Lemire who also doubts that science is successfully self-regulatory, though he argues from a different angle (he asks: how well does peer-review filter out bad research? To what extent does citation levels reflect quality?). I could also add this post which discusses a recent result that rebuttals don't affect how often a paper is cited, nor how well it is regarded.