Training Economists

1. Training Economists Dave Colander Middlebury College

2. My niche: Looking at Economics through an economist’s lens • An economic approach to the field of economics • To understand what economists do, you have to understand their incentives, and interpret their actions and theories through those incentives. • The question is: Is there an incentive compatibility problem, so that the profession isn’t as close to what society would like it to do as it could be. • Lack of a market test for economist’s output • I concentrate on graduate education because • graduate students have less human capital to protect • Graduate school is the reproduction process—it captures the replicator dynamics of the system.

3. What Does Society Want Economists to do? • Provide insight on the workings of the economy--Advance our scientific understanding of the economy • Teach those insights to students and society. • Solve particular economic problems. • Provide advice on solving broader public policy questions.

4. Are we doing a good job? • Yes and no. • We are successful in scientific and technical applications. Hands off, and technical hands on economics • Enormous advances in optimization models and empirical work. Revolutionized business practices. Still doing so. Google’s economic team. • Less successful in messy hands-off applied economics. Knowing when to use what model. Sophisticatedly using the models. Matching economic understanding that students can use with what we teach them. • Example: Recent financial crisis—not only was it not warned about; the standard DSGE model did not even allow for it. We hadn’t developed methods to deal with those problems because our model didn’t allow that those problems could exist. • A lack of applying economic reasoning sophisticatedly to problems.

5. What is Economists’ Output? • Research, • Teaching, • Service, • Difficulties of measuring teaching and service outputs had led to focus on “measured research” which has come to mean quality-weighted publications in appropriate economic journals

6. Objections to journal article rankings as primary metric • It misses other aspects—service and teaching, and thus creates incentives to skimp on these. • A ranking is not needed within fields. Steve Levitt • Paper journal articles are obsolete. Need new evaluation system • Misses multiple dimensions of rankings • Discriminates against messy “hands-on” research.

7. Cost of information in a journal • 15 articles • 200 hours per article; 10 hours reviewing • $100 per hour • Administrative and distribution expenses • $1000 per article • Full cost of journal with 15 articles--$320,000 • The question is: Does society value the information that highly?. • Publication and distribution has to be subsidized.

8. The Lack of a Market Test for Research • Educational system designed to train academic economists who in turn train academic economists. • Will economic research pass the market test? Would society be willing to pay what it cost to produce? • No market test. • Technology has changed the nature of research.

9. Is the value of the research worth the costs?—No market test. • Q Could you compare economists to other scientists? • Shaikh Compared to lab scientists, the cutoff point for being useless is much higher for an economist than it would be for a lab scientist. Even a bad lab scientist will contribute much more to society that a half-decent academic economist. • Q Why is that? • Shaikh It is because of the nature of economics. The structure of what gets published and listened to means that what is considered good economics doesn’t always constitute good economics. In my view good economics has to have some sort of policy implication. That is incredibly difficult, and good applications require top quality economists. In the physical sciences, good applications do not necessarily require top quality scientists. • Q What percentage of the work is useless? • Shaikh In a top journal like the Quarterly Journal of Economics I’d say at least half are useless. Probably 20% are useful and the rest are unclear. • Q Would you both agree? • John Ideas that don’t have any ready policy implications could have policy implications later. • Shaikh I take that into account. I am including all future policy implications when I say that 50% are useless. Fifty percent will never be cited or read again. • Q Do you agree? • Nino Yes. • John I don’t know enough to say, except for maybe in my area. • Q Well, how about in your area? • John I haven’t read enough yet in my area to be sure about my answer. If pushed I would say less than 50% is junk, but that the junk is still a sizable amount. • Shaikh My 50% is complete junk.

10. A bias in the training away from hands-on non-techincal or messy applied work • Consumers of advanced theory • Producers of advanced theory • Consumers of technical empirical research. • Producers of technical empirical research. For messy applied work, and for creative we need economists with a consumer’s understanding, knowledge of institutions, and broad knowledge of other fields

11. Are we getting enough breadth taught in graduate school? Student Reactions to Elinor Ostrom and Oliver Williamson being awarded the 2009 Nobel Prize in Economics on the “Economics Job Market Rumors” blog • Nobel BULLSHIT!!!! Who the **** are these idiots? Never heard of them ... ever. What kind • of bullshit is this? This year is the worst. • Seriously! Are you putting these two on par with Hansen, Fama, Tirole, etc.? I don't • understand this year's pick. Really bad. I agree • Well, they had to give it to a woman at some point. Why not just throw a dart at a board. • I never saw their work on any reading list during PhD. • A stupid Nobel pick to accompany a stupid job market this year. Our field is falling apart. • Never heard of Ostrom in my life. Lame. • This girl seems to be a political scientist. I don’t think she has published original research • in any major economics journal. • Multidisciplinary?? Other disciplines are all rubbish. Why let them contaminate our purity? • Economics is superior. Don't let political science contaminate us! • She has an EJ, two JEPs, two JEBOs and a couple more of that sort. Enough for tenure • between the top 100 and 200. There are scores of women with much better records and • much better known contributions to economics. Of course, polsci doesn't have its own • award, so perhaps she merits the Nobel for her contributions there.

12. Nobody can be a great economist who is only an economist--and I am tempted to add that an economist who is only an economist is likely to become a nuisance if not a positive danger.--Hayek

13. Creating working dogs not show dogs