baby, it's cold outside ...
I was at the economics annual meeting (#ASSA2017) this past weekend in Chicago ... where it hit a high of 10 degrees on Friday. brrrr. Reading some coverage of the meeting, such as by Noah Smith, Justin Fox, Josh Zumbrun, and Justin Wolfers it would appear that the chill outside seeped in the conference. Economists in a state of a disbelief, searching for relevance, wondering why people don't like them ... hmm? I wouldn't dismiss these pieces outright, some valid points, but it's not the only story to tell.
As an economist, I am used to people not liking what I have to say ... pointing out opportunity costs, endogeneity, and intransitive preferences are not cool kids' party tricks. But hey, economists sometimes don't even like economists, recent examples from Paul Romer and George Borjas. More importantly, I don't recall a hallowed time when economists ruled the roost of economic decision making. Economists may run a tight ship internally, but out in the world, including policy shops, we largely study behavior and run numbers on other people's ideas. Telling policymakers, business leaders, and households that their big plans won't work (and only sometimes being listened to) has a long, proud tradition in economics.
So what are the other stories I would tell from this year's annual meeting?
1. MOAR data, more learning. Well before this election season, household behavior perplexed many economists who study it. Check out the number of empirical violations to our workhorse model of consumption. I admit that sometimes I throw up both my economist-hands at willful disobedience to budget constraints. On other dark days, I wonder if our models are even falsifiable ... results that economists love are hard to kill. But I, and a lot of other economists, know the best way to attack a puzzle is with more data and more careful study. At the annual meeting on the topic of consumption, I saw research using various household surveys (here and here), transactions data from financial apps and bank accounts, scanner data, macro aggregates, and even vignettes hand drawn by study participants. This is not about letting a thousand data-flowers bloom, it's about us trying to answer economic questions. Newsflash, the questions are hard and interpreting the answers we get can be even harder. Perfect data doesn't exist, our theories are incomplete, and no one empirical method is best. Concerns about recent events aside, I saw a lot of economists working hard to understand the world. Always needed. And at the end of the day, even a chilly one for us, that's economists' value added.
2. Details matter and good ideas don't always work. One theme that came up in economic policy discussions was the importance of details. Esther Duflo's Ely Lecture: "The Economists as Plumber: Large-Scale Experiments to Inform the Details of Policy" was an excellent example of this theme. Duflo drew heavily on her research in developing countries, but as Beatrice Cherrier documents our attempts to define what economists do has a long history. That the effectiveness of an economic policy depends on how it is implemented and that seemingly irrelevant details can end up being crucial should not be news to any economist who has ever evaluated a policy. Duflo also argued that "good ideas don't always work" ... which I think is a little harder (but just as important) for policy-oriented economists to accept. Ideas loom large in economics, so the tendency to double down and defend them can be hard to resist. As she noted, sometimes fixing one problem ends up exacerbating another (maybe even worse) problem. It's very hard to anticipate all the interconnections, so we have to carefully watch the outcomes. We have to be able to admit when a good idea didn't work and then try to figure out why. Humility without futility. Duflo gave several 'didn't work' examples from pollution monitoring to active choice organ donations. Her comments also reminded of Jennifer Doleac's and Benjamin Hansen's finding that "ban the box" (a policy which removes questions about criminal record from job applications) reduced the hiring of young, low-skilled African American and Hispanic men. I don't know this research well enough to say whether its specific findings will stand up to scrutiny, but I believe that fighting discrimination is very hard and well-intentioned policies can have unexpected, negative consequences. We can often do better, economists can help. Duflo argued well that we should.
3. Economists live in well-built, glass houses too. I was impressed with Duflo's lecture ... despite the fact that I find the "economists as ... engineers, dentists, plumbers, physicist-lovers, etc." debates tiresome. How hard is it to accept that economists contribute in many ways and we should value those many contributions? Ok, fine, it's hard ... as I was reminded, repeatedly, in sessions with research on the economics profession (gender, ethics, and merit). To those top economists complaining that their ideas and expertise are suddenly being ignored, part of me wants to say "join the club, buddy." Other people are supposed to "deal with it" when the rules of the game change, why not us? Our models tell laid-off manufacturing workers to retrain, show that those living in depressed areas should move, and finely tease apart taste-based versus statistical discrimination (which suck equally on the receiving end). I see no reason why economists should get special treatment. Even so, I am NOT writing another hit job on economists. I am an economist because I believe we can do good in the world. Economists, as a group, did not cause the problems in the economy ... we did not create scarcity or discrimination or recessions. And we do have ideas, methodological approaches, and data that can help. It's less pressing than many of the economic issues we study but the economics profession itself is a microcosm of biases, misperception, and, inertia. Not to pick on cherries, but it's absurd that wide swathes of membership in the American Economics Association, such as faculty at liberal arts or teaching colleges, never serve in its leadership roles. Now our meritocracy is fairly efficient, much less infighting than other professions, which is good ... but too much efficiency and too rigid a metric for contributions have costs too. Just like outside economics, it can be hard for an individual who doesn't fit the mold and loss to the profession ... Heather Sarsons' research on the co-authoring penalty for female economists is one example I saw at the meetings. Breaking down biases, implicit or explicit, being open to new ideas, and upholding ethical standards is hard for economists, for anyone. I am not trying to draw false equivalences, but economists have no reason to be bored or idle or haughty, not now, not ever. Much work for us to do.
**Opinions here are mine and should not to be attributed to anyone with whom I work.**