The fact is that we need fewer efficient-markets theorists and more people who work on microstructure, limits to arbitrage, and cognitive biases. We need fewer equilibrium business-cycle theorists and more old-fashioned Keynesians and monetarists. We need more monetary historians and historians of economic thought and fewer model-builders.What Brad would like to do, apparently, is to build an economics department filled with clones of himself.
Seriously, DeLong and Summers need to use some basic economics to organize their thinking before attempting to instruct the world in what should be taught to Economics PhD students. Successful departments teach what the marketplace wants. It seems to me that the markets in Old Keynesians, Old Monetarists, monetary historians and, particularly, historians of economic thought, are pretty thin these days. A department filled with people like that would ultimately be unsuccessful, and be shut down like the old Economics Department at Notre Dame.
Of course,market failures never ever occur. Postmodernism is exactly what needs to be taught along with new monetarism.ReplyDelete
Multiple long run equilibria. Profs hire people who think like them and teach students to think like them. If all prof. Like history, all students learn history and all sttudents who want to get hired will have to know history. Once they get hired they become professors who know history.ReplyDelete
Note that equilibrium is highly persistent, since you need a whole new cohort to come of age with different tastes for these to become established.
Science evolves through idiosyncratic shocks in the hiring comittees at important departments. Equilibrium path may become hard to discern during transition when you have competing views. Eventually network externalities kick in and things stabilize around one way to do things.
I would like to believe data plays some role in this process, but would not be able to point to hard evidence.
But the new Department of Economics at Notre Dame is a good one, isn´t it?ReplyDelete
"Successful departments teach what the marketplace wants."ReplyDelete
It looks to me like the market place is the editors of prestigious journals, but what they want could be very different than what's most high utility for society.
RV & Richard: Maybe, but us students aren't complete automatons you know. If I wanted to study heterodox econ, I would have gone somewhere that teaches it.ReplyDelete
"Of course,market failures never ever occur."ReplyDelete
Of course they do. In this case, you have to tell me what they are and how they matter, then convince me that this makes these DeLong/Summers comments make sense.
Of course, that's a pretty cynical view of the whole process. I don't believe it.
Yes, the new Notre Dame department is light years ahead of the old one. In my opinion the University did the right thing.
Again, that's just cynical. This is what people say who can't get their papers published.
Academia is pretty far from most markets (it seems like government-dominated healthcare in how its price increases while technology should be lowering it). Most institutions are non-profits (and as Jeffrey Friedman said, there is no substitute for profit and loss). And who says what's being purchased is truth? The function of academia is prestige.ReplyDelete
No, I think you see market forces working there. I work in a private university, which is a non-profit, and the other places I have worked are public universities supported for the most part with public funding. All those places are driven by competition with other universities (how can we be better than the competitors, how can we acquire top scholars, how can we retain the ones we have, how do we attract better students?) and by internal competition (to which departments should the university allocate resources, how are departments ranked in their fields, which departments are placing their students well, which departments have recognized scholars who are producing high-quality research, which departments are attracting students and which are not?). All of those competitive forces serve to weed out bad ideas and promote good ones. I understand that the "product" of a university is ill-defined, as are "profits," and the goals are ill-defined as well, but there are in fact market forces at work there, and the markets work just as they do in the for-profit sector.ReplyDelete
could you please delete the previous posts?ReplyDelete
I repeat them here:
I agree, it is pretty cynical view. I wouldn't say I believe in it, or, at the very least, I behave as if I did not (otherwise, why bother doing research?). But it is an article of faith really, I don't know of any hard evidence that would push me one way or another. Not even sure such evidence is possible since, in part, what is at stake is the definition of what counts as good evidence.
In any case, you may find this interesting:
Yes, maybe. As you say, it's hard to come up with solid evidence. But, we are all hard-wired to feel unappreciated when we fail, and we tend to blame the bad taste of other people rather than appreciate our own shortcomings. I was once complaining (like we all do) to John Kennan about some editor who had rejected my paper. Kennan said something like: "Oh, suck it up. The paper was only 85% there. Go back and work on it, send it somewhere else, and stop your whining."ReplyDelete
" RV & Richard: Maybe, but us students aren't complete automatons you know. If I wanted to study heterodox econ, I would have gone somewhere that teaches it."
And if academia isn't hiring heterodox econ, then you might have learned a lot, but never have influenced academic economics.
Stephen Williamson said...ReplyDelete
" No, I think you see market forces working there. I work in a private university, which is a non-profit, and the other places I have worked are public universities supported for the most part with public funding. All those places are driven by competition with other universities (how can we be better than the competitors, how can we acquire top scholars, how can we retain the ones we have, how do we attract better students?) and by internal competition (to which departments should the university allocate resources, how are departments ranked in their fields, which departments are placing their students well, which departments have recognized scholars who are producing high-quality research, which departments are attracting students and which are not?). All of those competitive forces serve to weed out bad ideas and promote good ones. I understand that the "product" of a university is ill-defined, as are "profits," and the goals are ill-defined as well, but there are in fact market forces at work there, and the markets work just as they do in the for-profit sector."
What's interesting is that somebody studying art history could say the *exact same thing*. The alleged differentiator in economics is that - again allegedly - the end result of all of this 'market' activity is to produce people and knowledge which has predictive power in the outside world.
And economics at the macro level has failed there.
That's a wild statement. You'll have to explain that one. What kind of predictive power are you looking for? You're not looking for perfect foresight are you?ReplyDelete
You could not be more misguided. He who knows his own generation remains always a child.
Stephen Williamson said...ReplyDelete
" That's a wild statement. You'll have to explain that one. What kind of predictive power are you looking for? You're not looking for perfect foresight are you?"
Of course not. What I'm looking for, and which I think that you know, is the sort of foresight not to blithely Efficient Market our way into a financial collapse. Not to urge the tearing up of hard-earned barriers, only to have disasters happen which could have been foreseen by economists long dead.
Another way to phrase my original comment is that the academic economics being a 'market' is a extremely broad and almost meaningless claim. What matters are the incentives. (Paraphrasing heavily) James Heckman said in a U Chig newsletter last summer that the (academic) economics profession has almost no market incentives. If they're wrong, so what? If the journals publish articles which don't apply to the real world, so what?
Chuckle of the next dayReplyDelete
What is your background exactly? Do you know anything about these things? I'm not sure who you think was "efficient marketing" their way to financial collapse, or which of these journal articles you think don't apply to the "real world" you know so well. Be specific.
Brad doesn't have much of a response apparently. Ad hominem again.
You seem to be talking past Summers and Delong. You are saying the curriculum is taught catering to the desires of the marketplace (nothing wrong with that in a vacuum). Of course a large portion of the market place for Ph.D's is the academy, and Summers and Delong (and previously Rogoff as well) are saying it is unfortunate that the "demand" for subjects taught to Ph.D's largely excludes economic history, history of thought and methodology. Meanwhile, they believe this will ultimately be a disservice to the profession in terms of the usefulness in advancing knowledge and guiding policy. The latter of which Summers can personally say much of the theoretical/empirical work done, which comprises the bulk of some or many programs, was of no usefulness in thinking about the crisis. That is a market place demand, but previous decades curriculum had mis-guided expectations about what would be demanded by/ useful to the "policy making consumers", in much the same way housing construction companies did. I don't think you should be so dismissive of particularly comments since policy is such a relevant marketplace demand, and ultimately what is useful from these practical stand points will guide what is taught by Universities (though likely with a lag due to the resistance present from vested interests or just general "can't teach an old dog new tricks" inertia). With that said I don't think turning just back to previous thought will do the trick, but it can inform progress for innovative new research.ReplyDelete
"The latter of which Summers can personally say much of the theoretical/empirical work done, which comprises the bulk of some or many programs, was of no usefulness in thinking about the crisis."ReplyDelete
That is wrong. Summers has no idea what people are working on in the field, or what people are actually teaching in graduate programs.
I'm not talking past these people, I'm saying their opinions are not worth much, as they are ill-informed. Further, the key question is, if these people think that what is taught in PhD programs is wrong, what do they want to do about? Pass a law that we teach particular things, or what?
Haha, well I think all they intend to do about it is to express their opinion and hope that it garners support with others, ideally those in charge of setting graduate curriculum, and thus increases the demand from programs and ultimately supply of teachers/researchers in those areas, or at least familiar with them.ReplyDelete
The anecdote from Summers in the video was that he received a great number of papers professing to illuminate the crisis. To say he has "no idea what people are working on in the field" seems again a bit unjustly dismissive. Of course, almost no one likely has a representative understanding of what exactly is being researched/taught in the widely differing programs, but I don't think you are disagreeing that those areas are in fact commonly absent from graduate teaching so that does not seem like a point of contention. If you were arguing that Summer's misjudges what was useful from a policy making perspective that would be another thing (which I don't think you have said), but again his opinion here is likely "worth" something and at least mildly "informed" from practice.
Let me remind you what Summers has been doing lately. He has had no direct contact with the classroom or with academic research since 1991, and has since held administrative positions at the World Bank, in the Clinton Administration, as President of Harvard, and then back to government again. Before that, he worked primarily in public finance and labor, though of course even then that did not stop him from sounding off about macroeconomics. How do you think someone with so little day-to-day contact with graduate PhD teaching, current macroeconomic thought and research, could tell us anything useful about the state of instruction and research in macroeconomics? Give me a break.ReplyDelete
Shorter Stephen Williamson:ReplyDelete
Whereas I have perfect knowledge of the "market" in economic thought and can attest that it is in equilibrium and thus the best of all possible markets in economic thought, annoying interlopers only pretend to have any knowledge of this market, and their profession of disagreement with prevailing norms belies what can only be a totalitarian urge to legislate what I must think.