1/Alright, here's a thread about econ writing and econ theory.
Kevin Bryan asks: Why don't econ writers highlight new and interesting theory results?
It's a good question, and one I am in a position to answer!
Kevin Bryan asks: Why don't econ writers highlight new and interesting theory results?
It's a good question, and one I am in a position to answer!
2/First of all, the particulars of econ theory will not be understood by almost any reader. You can't put equations on a page and expect people to understand.
What you *can* do is explain the intuition behind theories, their basic results, and their implications.
What you *can* do is explain the intuition behind theories, their basic results, and their implications.
3/You see science writers do this a lot, for example with string theory:
scientificamerican.com/article/string…
scientificamerican.com/article/string…
4/Econ writers rarely do this. Why?
One reason is the lack of gee-whiz factor.
A universe made of tiny strings, budding off other universes? Cool!!
Cooperative games under incomplete information? YAWN
One reason is the lack of gee-whiz factor.
A universe made of tiny strings, budding off other universes? Cool!!
Cooperative games under incomplete information? YAWN
5/But OK, lots of econ theory is at least sort of interesting.
How do exchange rate changes affect import prices?
How should monetary policy change if people are short-sighted?
What happens to growth when population starts shrinking?
These are fairly interesting questions.
How do exchange rate changes affect import prices?
How should monetary policy change if people are short-sighted?
What happens to growth when population starts shrinking?
These are fairly interesting questions.
6/But people are interested in econ questions for different reasons.
Econ affects people's pocketbooks. What policies get made? Who gets what? Theory affects all these things!
In contrast, the birth of the Universe is interesting only because it's cool and fun to think about.
Econ affects people's pocketbooks. What policies get made? Who gets what? Theory affects all these things!
In contrast, the birth of the Universe is interesting only because it's cool and fun to think about.
7/Given that econ theory really MATTERS, people may not be interested in the pure gee-whiz aspect of it.
In fact, the gee-whiz aspect of econ theory may actively annoy people, because it feels like academics playing with people's lives!
In fact, the gee-whiz aspect of econ theory may actively annoy people, because it feels like academics playing with people's lives!
7/Paul Pfleiderer, a finance prof at Stanford, has written about so-called "chameleon" models - econ theories that pose as fun thought experiments, but which people then actually try to use to make policy!
gsb.stanford.edu/faculty-resear…
gsb.stanford.edu/faculty-resear…
8/If a reader were to hear about the goofy assumptions that go into such models, they might be actively enraged!
Here is a fun Pfleiderer presentation illustrating just how silly a lot of these chameleon models are.
gsb.stanford.edu/sites/gsb/file…
Here is a fun Pfleiderer presentation illustrating just how silly a lot of these chameleon models are.
gsb.stanford.edu/sites/gsb/file…
9/And if I, your friendly neighborhood econ writer, were to ask you, dear reader, to take these silly fun models seriously, as a serious guide to policy, policy that could tax people and put people out of a job...well, you might feel like punching me in the face.
10/And this is connected to the next reason we don't write much about the latest hot theory result: Econ theory has fallen into general disrepute.
Smart people, such as this statistics prof, question whether econ has taught us *anything* about the world:
Smart people, such as this statistics prof, question whether econ has taught us *anything* about the world:
11/Even some economists are asking this question:
12/This is partly a result of the financial crisis and recession, but really it's much deeper than that. It's because most people don't encounter econ models in their careers, being used in practical applications.
13/In fact, this is starting to change! Econ theories are being used for more and more industrial applications. But most people still don't know this.
bloomberg.com/opinion/articl…
bloomberg.com/opinion/articl…
14/Most people seem to think of econ theory as mainly - to put it rather bluntly - some bullshit that professors and think tankers and advisers throw at politicians to convince them to implement (usually conservative) policies.
15/They're not *entirely* wrong about that of course. Econ theory has been used that way at times in the past. And there are still occasionally people who try to use it that way. (If you know who I'm talking about, then you know who I'm talking about.)
16/The econ profession has, in the past, left itself open to these allegations, by having weak evidentiary standards.
In physics, a theory traditionally must yield correct predictions over and over, to desired precision, to be accepted.
Not so in econ...
In physics, a theory traditionally must yield correct predictions over and over, to desired precision, to be accepted.
Not so in econ...
17/In econ, until relatively recently, a theory could get accepted if it:
A) matched a few chosen moments,
B) got a couple of stylized facts right,
C) was easy to solve, or
D) just seemed cool.
A) matched a few chosen moments,
B) got a couple of stylized facts right,
C) was easy to solve, or
D) just seemed cool.
18/This is starting to change (though theories occasionally still get published or even widely used with weak evidence).
But for decades, econ theory could get away with being bullshit. This is one reason - though not the only reason - it got a reputation for being bullshit!
But for decades, econ theory could get away with being bullshit. This is one reason - though not the only reason - it got a reputation for being bullshit!
19/As an aside, people are starting to realize that evidentiary standards have weakened dramatically in some branches of physics, which may hurt physics theory's reputation in the years to come:
blogs.scientificamerican.com/cross-check/wh…
blogs.scientificamerican.com/cross-check/wh…
20/In any case, to sum up, a reader who reads about the latest cool economic theory is not likely to think "gee whiz, that's neat"; she is probably more likely to think "how will this untested bullshit be used as an excuse for Republicans to cut programs for the poor?"...
21/The reason we econ writers focus so much on empirical results and applied micro is (mostly) not that it's easier to understand.
It's to restore the credibility of economics as a scientific discipline that can teach us actual facts about how the real world works.
It's to restore the credibility of economics as a scientific discipline that can teach us actual facts about how the real world works.
22/And this brings us to the issue of diversity within the economics profession.
Kevin's claim was that econ writers focus too much on racism and sexism in the profession, instead of theory.
Kevin's claim was that econ writers focus too much on racism and sexism in the profession, instead of theory.
23/Well, suppose you were someone who was inclined to think that economic theorists are conservative shills. Would you be more or less likely to abandon that opinion upon observing that the profession is chock full of old white guys?
24/Improving diversity and inclusion is not just the right thing to do; it is important for the econ profession to regain its credibility with the public.
Writing about it is important to bring change, but also to publicize the efforts toward change.
Writing about it is important to bring change, but also to publicize the efforts toward change.
25/Econ writers like econ. We like learning about it. We like talking about it. And we definitely don't want people to ignore it or discount it.
But it's going to be a long, hard road back to the place where readers care about the latest hot econ theory.
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But it's going to be a long, hard road back to the place where readers care about the latest hot econ theory.
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