The problem with economics

This may be a little harsh, but, having just read this Colander interview, I figure I may as well put in my two cents — with the caveat that it may well reflect my own experience (at a tier 2 school) rather than the general state of affairs throughout the profession.

The problem with PhD programs in economics:

The professors think that they are smart.
They think that they know how to do research in economics.
They don’t know the difference between what they know and what they don’t know.

Newsflash:  If economics professors were smart, they would not have allowed the profession to devolve into the state it’s in today.

The economics profession is divided into fiefdoms each pursuing a profoundly flawed methodology and populated by economists who have declared allegiance to that methodology.  The rules of the game are this:  within any given fiefdom the fiefdom’s methodology is accepted as state of the art.  The methodology may be expanded and improved but there are always certain underlying assumptions that may not be challenged.  Appropriate reviewers for papers using the methodology in question come from within the fiefdom.  Economists from outside the fiefdom are not qualified to evaluate research using that methodology.

When talking to students, professors will critique — and ridicule — the methodologies of other fiefdoms, but public criticism is usually constrained in the interests of keeping the peace within the overall kingdom.  (There may even be some recognition that, since all the houses are made of glass, a true civil war in economics would leave very little standing.)

Every graduate student in economics is asked to choose a fiefdom and declare allegiance to that fiefdom’s methodology. Graduate students who are resistant to this state of affairs — that is, those who have their own ideas about how research should be done in economics — face huge obstacles to success.  This means that those with fresh ideas and a clear, critical view of the logical flaws of existing methodologies are generally not encouraged to teach their professors how to do research.  The profession, in its hubris, throws away its greatest assets.

What we are left with is an economics profession that is composed of a series of echo chambers designed to preserve the illusions of their inhabitants.  A profession that is almost completely hollow — and doesn’t know how to develop the tools necessary to understand the how and why of the economy.

Update: The one sentence version of this post.  Professor to grad student:  If you want to be a member of the club, you have to duplicate my errors.

Update:  I should note that economic historians are more open to mixed methodologies and original approaches than most of the other fiefdoms.  The error of the historians is that they have allowed themselves to be marginalized, instead of challenging the theorists on their own ground.

Update:  I should also note that I do have reason to believe that some schools actually do manage to facilitate communication across fiefdoms and that I received significant help from people who came from more constructive environments.

Neither of the last two comments changes the fact that graduate students are often “strongly encouraged” to work with deeply flawed research methodologies or that this process undermines the quality of economic research in the profession overall.

Update:  In economics the professors are not in command of their tools, they are subjugated by their tools.


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