On Friday we covered Paul Krugman's New York Times Magazine article
on the economics profession, and how it differed from previous takes on the profession's flaws. Over the weekend, economists had a chance to respond to their colleague's criticism. Most took a pass, leaving it to the business bloggers and economics columnists to raise objections. A few, however, chimed in once the ball was rolling. Here's where the online opinion world agreed and disagreed with Krugman's criticism of his own field:
- We're On Vacation The gods of the economics blogosphere were curiously silent. Harvard professor Greg Mankiw offered merely a link to Krugman's "very nice essay," fellow economist Tyler Cowen following suit (choosing instead to discuss monkey music and theories of female beauty). The New York Times' popular Freakonomics blog, meanwhile, covered video games.
- More About Sociology Than Economics UC Berkeley economist Barry Eichengreen argued in April that, while many economists do not start out as efficient market hypothesis advocates, their close ties to business school graduates pulls them away from the original tenets of their economics Ph.D. programs. Matthew Yglesias of Think Progress found this a more interesting and important point than Krugman's "economist-explaining-economics" analysis.
- A Word of Caution The New Republic's Noam Scheiber thought Krugman too optimistic about behavioral economics' potential to right the wrongs of the field:
There are a number of behavioralists who've done and are doing important, fundamental work … But, if there's been one problem with the sub-field over the years … it's that at times it's fallen into a trap Krugman rightly criticizes the Chicago-school, rational-expectations maniacs for falling into: fetishizing the cleverness of an insight even if its real-world utility is next to nil.
- Economic Partisanship Mark Sunshine attacked Paul Krugman on his blog, The Sunshine Report. "Instead of trying to figure out what is wrong with the training and reward system for economists," Sunshine argued, "Mr. Krugman uses the New York Times article as a chance to implicitly disparage his critics while proposing a solution to the problem which, coincidentally, is to become a believer in his view of economic theory and public policy."
- Economists Are Okay, Really Time Magazine's economics columnist, Justin Fox, had two problems with the Krugman piece. First, he wished he'd been credited. Second, "while economists certainly got lots of things wrong before the crisis," he wrote, "many members of the profession have acquitted themselves pretty well since things turned really ugly last year."
- Don't Trash Beauty Discover Magazine's Cosmic Variance blog found Krugman's argument that economists had fallen for a beautiful, wrong model "a little too pat. Sometimes," wrote Sean, "the beauty/ugly distinction between theoretical conceptions is more a matter of how well we understand them, and less about their intrinsic qualities." As a "counter-hypothesis," he suggested the following: "it wasn't beauty that was the problem, it was complacency."
- We Don't Have a Lab "I'm not sure if complacency is the right word," economist Mark Thoma responded, apparently one of the few of his field not to take an extra-long weekend. "There is great credit in the profession for finding anomalies within the existing framework. The problem is," he continued, "that it's almost always possible to tweak the existing model in some way that rationalizes any new regularity discovered in the data that is at odds with an existing theory." Economic models can't be tested in the lab, he pointed out, and it's crises like these that give "the kind of information we need."
- Krugman Responds On Saturday, Krugman said he had to get to bed early, but would respond to a few criticisms before hitting the hay:
- Regarding Justin Fox's first complaint: "Yes, I was helped by reading many sources (especially Justin Fox), but it's a magazine article, not a book with room for an acknowledgements page."
- Regarding Justin Fox's second point: "On whether the pretty good response of policy-oriented economists in the crisis undercuts the current thesis--I don't think so."
- Regarding Thoma's and Cosmic Variance's truth/beauty discussion: "won't we eventually have a true theory that's as beautiful as the full neoclassical version?" Right now, no, said Krugman. And "my guess is that even in the long run it won't be that neat." Economics isn't like Newtonian physics or general relativity, he wrote, in response to Sean at Cosmic Variance. It's meteorology.
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