Thread by @Noahpinion

1/OK, so The Economist has an ongoing series of articles about the shortcomings of the economics profession: economist.com/news/finance-a…

I'm going to go ahead and write about it before it's finished, so hopefully the later installments will be better than the first three!

2/The Economist's articles each contain some useful background knowledge about a field of econ, and they are better than the Standard British Econ Critique that gets repeatedly dished out (bloomberg.com/view/articles/…)

But that's about all I can say for them...

3/Let's take the first one, which is about economic growth (really, development).

economist.com/news/finance-a…

The thesis is that economists don't understand the causes of long-run growth.

That is true!!

BUT...

4/Most development and growth economists will cheerfully admit that they don't know what makes countries go from poor to rich.

Some "hedgehogs", like Acemoglu and Robinson (not mentioned in the article), or Joel Mokyr, do think they've found The Answer.

But few believe them!

5/Most development economists are agnostic about the Big Question of what makes countries go from poor to rich, and spend their time researching relatively modest interventions that can be used to make countries a little bit less poor.

The article doesn't mention this work.

6/Nor does the article do justice to many of the theories it does mention.

For example, its problem with the Solow model is that we don't understand what the Solow residual is.

If that were the only problem, the Solow model would still be incredibly powerful!

7/Growth accounting is summarily dismissed, again because we don't know what the residual is.

Again, the implication seems to be that if a growth theory isn't a Theory of Everything, it's a failure. That explaining some aspects of growth, but not others, is useless.

8/The Acemoglu approach is briefly described and called "the most promising" (though weirdly, the people behind it aren't named!), but the article goes on to essentially dismiss this approach because it (supposedly) ignores political economy.

9/The whole article assumes a self-assurance on the part of growth and development economists that, with a few exceptions, does not actually exist.

Yes, a few people like John Cochrane make wild promises about the growth effects of certain policies. They are rare.

10/The second article is about business cycle theory. There's really not much in this one, besides a short, informal history of Keynesian, New Classical, and New Keynesian models that won't enlighten anyone who isn't already acquainted with the subject.

media.economist.com/news/finance-a…

11/Macroeconomics is trying a lot of new things - finance-based models, heterogeneous-agent models, search-based models, behavioral models, and quite a lot more. The article does not mention these.

12/Nor does the article suggest a way forward, other than to briefly name-check Minsky and Kindleberger and saying that macroeconomists must "sort out their disagreements" and "come to grips" with their "epistemological woes".

13/There is so much about macro to critique that I'm frankly kind of astonished that this article didn't do much actual critiquing!

Anyway, onward...

14/The third article, my least favorite of the bunch, is about applied micro. Which the authors seem to think is in a parlous state.

Applied micro "is no less fraught than the study of the world economy", the article boldly declares.

economist.com/news/finance-a…

15/I do appreciate this name-check (though @jamesykwak deserved it more), and it's good that the article talks about the empirical turn in microeconomics.

16/I'm also glad that this article, unlike the others, actually takes the time to explain a bit about how the research in question actually *works*! That's great!

Though the example of Levitt's abortion-crime study (which turned out to have major problems) isn't the best...

17/So why does the article say that applied micro is unreliable?

Because of the same general critiques of empirical science that are everywhere nowadays: Publication bias, low power, and replication.

18/These critiques are good and useful...in the academic literature.

In the public sphere, though, they are often misused. A general attitude of "Don't trust empirical research" has taken hold in some quarters that is lazy, anti-intellectual, and just plain wrong.

19/Publication bias is a problem. BUT, any result will be followed up on by other researchers. Most empirical questions have not ONE paper investigating the question, but MANY.

Eventually, they converge on the truth.

20/I should note that the article also seems to make a minor error, when it talks about a replication study of economic experiments. These were *lab* experiments, not the *natural experiments* the rest of the article is talking about.

21/The article then makes one of the most annoying arguments in journalism, which is to find two conflicting results and conclude that the entire literature is full of conflicting results:

22/Studies finding small or no short-term effects of minimum wage on employment vastly outnumber studies finding big effects, but the article does not mention meta-analysis (econbrowser.com/archives/2014/…) or the relative quality of the methodologies in question.

23/Waving around papers on publication bias and doing he-said-she-said cherry-picking of empirical results is a GREAT way to get the public not to trust whole literatures full of good, valuable, careful, highly informative research.

24/This kind of thing is not good for anyone. It doesn't help improve the academic literature, and it doesn't help policymakers or the public extract information from the academic literature.

25/The article says: "Being alert to the shortcomings of published research need not lead to nihilism." But it offers no guide to how to identify the shortcomings of an individual paper.

Anyone who knows how to critically evaluate a paper doesn't need to be reminded to do it.

26/Yes, it's good not to instantly believe that one paper you hear about that confirms your priors, and wave it around while ignoring every other paper.

But people do this because of *politics*, not because of complacency about p-values or whatever!

27/The reasons this third article frustrates me more than the others are that A) it actually has some good stuff in it, but B) instead of elaborating on the good stuff, it reinforces the kind of anti-empiricism that I'm seeing too much of going around.

28/I guess I'm being too nitpicky about these Economist articles. They really are more informed, and more informative, than the average Econ Critique piece coming out of British newspapers.

But they could have been a lot better!

29/The real problem here is the need to structure every article about the econ profession as a critique.

Is there something in British politics that makes it necessary to bash economists to prove you're Very Serious these days? Something about Brexit? Or Corbyn?

30/Anyway this thread is running on way too long, so I should probably pack it in. Enough grumping for one day...

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