Patricia Cowen recently wrote a piece for the New York Times: “Ivory Tower Unswayed by Crashing Economy”
The article contains precisely what you might expect from a title like that. This snippet gives you the idea:
The financial crash happened very quickly while “things in academia change very, very slowly,” said David Card, a leading labor economist at the University of California, Berkeley. During the 1960s, he recalled, nearly all economists believed in what was known as the Phillips curve, which posited that unemployment and inflation were like the two ends of a seesaw: as one went up, the other went down. Then in the 1970s stagflation — high unemployment and high inflation — hit. But it took 10 years before academia let go of the Phillips curve.
James K. Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs at the University of Texas, who has frequently been at odds with free marketers, said, “I don’t detect any change at all.” Academic economists are “like an ostrich with its head in the sand.”
“It’s business as usual,” he said. “I’m not conscious that there is a fundamental re-examination going on in journals.”
Unquestioning loyalty to a particular idea is what Robert J. Shiller, an economist at Yale, says is the reason the profession failed to foresee the financial collapse. He blames “groupthink,” the tendency to agree with the consensus. People don’t deviate from the conventional wisdom for fear they won’t be taken seriously, Mr. Shiller maintains. Wander too far and you find yourself on the fringe. The pattern is self-replicating. Graduate students who stray too far from the dominant theory and methods seriously reduce their chances of getting an academic job.
My reaction is to say “Yes. And No.” Here, for example, is a small list of prominent economists thinking about economics (the position is that author’s ranking according to ideas.repec.org):
- November 2006. George Akerlof (Berkeley, 64th): The Missing Motivation in Macroeconomics (Presidential Address to the American Economic Association)
- August 2008. Oliver Blanchard (MIT, 7th): The State of Macro [Note: This was most unfortunately timed. Professor Blanchard released this just after the crisis started, so he will have written it just before it started. One wonders if he regrets any elements of it now.]
- January 2009. Daron Acemoglu (MIT, 12th): The Crisis of 2008: Structural Lessons for and from Economics
- February 2009. David Colander (Middlebury College, 906th, famously heterodox) and others: The Financial Crisis and the Systemic Failure of Academic Economics
- March 2009. Willem Buiter (LSE, 107th, ex-member of the Bank of England’s Monetary Policy Committee): The unfortunate uselessness of most ’state of the art’ academic monetary economics
- March 2009. Mark Thoma (Uni. of Oregan): “The unfortunate uselessness of most ‘state of the art’ academic monetary economics” (The first bit is a copy-and-paste of the Buiter piece. Scroll down for Thoma’s thoughts)
- March 2009. Justin Wolfers (Uni. of Pennsylvania, 713th): More navel gazing from academic economists
- March 2009. Dani Rodrik (Harvard, 59th): The sorry state of (macro)economics
There are plenty more. The point is that there is internal reflection occurring in economics, it’s just not at the level of the journals. That’s for a simple enough reason – there is an average two-year lead time for getting an article in a journal. You can pretty safely bet a dollar that the American Economic Review is planning a special on questioning the direction and methodology of economics. Since it takes so long to get anything into journals, the discussion, where it is being made public at all, is occurring on the internet. This is a reason to love blogs.
Another important point is that we are mostly talking about macroeconomics. As I’ve mentioned previously, I pretty firmly believe that if you were to stop an average person on the street – hell, even an educated and well-read person – to ask them what economics is, they’d supply a list of topics that encompass Macroeconomics and Finance.
The swathes of stuff on microeconomics – contract theory, auction theory, all the stuff on game theory, behavioural economics – and all the stuff in development (90% of development economics for the last 10 years has been applied micro), not to mention the work in econometrics; none of that would get a mention. The closest that the person on the street might get to recognising it would be to remember hearing about (or possibly reading) Freakonomics a couple of years ago.