How do blogs differ from the economics profession?

by on June 24, 2013 at 4:22 am in Economics, Uncategorized, Weblogs | Permalink

Ari Timonen asks me:

Just as a reader request I would like to suggest a post about the intellectual disagreements or differences of economic opinions of econosphere and academic economics. That is what kind of biases does a person generate by reading econosphere. I’m not talking about basic economics which you can learn from a textbook but the intellectual discourse on some more nuanced subjects. An example would be maybe macroeconomics of current financial mess but anything goes. The more contrast the better.

It is hard to know where to start with this one.  Focusing on macroeconomics, here are just a few points of many:

1. The blogosphere is more likely to believe that activist monetary policy can lower the rate of unemployment like turning a faucet or flipping a switch.

2. The blogosphere is more likely to accept a hand-waving approach to labor markets and nominal wage stickiness, whereas the broader profession is more interested in matching models, the microfoundations of unemployment, and whether activist policy will make as much of a difference as Econ 101 models might suggest.

3. The blogosphere is more likely to criticize DSGE models, whereas the profession is more likely to see such models of as providing discipline for any business cycle explanation, Keynesian included.

4. The blogopshere is more interested in morally judging macroeconomic policy and macroeconomic policymakers, and for that matter judging other bloggers and writers.

On all of these questions my views are closer to those of the specialists in the economics profession.  That said, I don’t mean to favor the profession outright.  On any specific question, the profession likely will look better than the blogosphere, if we dig deeply enough into the accumulated stock of research (and if we dig with the talents of a blogger).  Where the profession fails is its excess specialization and also its inability to make speedy, direct, and publicly observable progress on important debates of the day, and on these questions I would give the economics blogosphere relatively high marks.  There are very large numbers of quite smart and accomplished economists who a) don’t really read blogs, and b) don’t have much of a clue as to what is going on.  That is changing, funeral by funeral.

Fizaa Khan June 24, 2013 at 5:10 am

Yes !! I agree with all points.

Michael G Heller June 24, 2013 at 5:17 am

Hey, this is why I drop by MR regularly – more regularly than funerals.

Rahul June 24, 2013 at 5:19 am

Blogsphere seems less moderate, more polarized, both to the left and right. It would be hard to get readership by being ambivalent. MR might be somewhat an outlier.

Specialist literature seem more open to accepting nuanced explanations or hazy pictures; bloggers prefer more simplistic, direct, solutions; attributing an ill to a single cause. Most Blogs also seem centered around a motif or to push a pet cause.

Claudia June 24, 2013 at 6:48 am

many good points, Rahul … however the last one applies to both types: “seem centered around a motif or to push a pet cause.” I think that reflects the need to be viewed as an expert, even the super smarties can’t credibly be expert in all.

dearieme June 24, 2013 at 6:02 am

“How do blogs differ from the economics profession?” Bloggers don’t try to pass off the counterfeit Nobel Prize as the real thing.

Josh June 24, 2013 at 9:49 am

People love criticizing the economics “Nobel Prize”. Why does it matter that it’s not given by the same people or that it wasn’t originally created by Nobel? Is the committee that gives it less able to judge good work than the committee that gives the other Nobels? The fact is that it is the top prize (along with the John Bates Clark medal) in economics. Is the point of these criticisms that the top economist is lesser than the top chemist because they are awarded prizes by different committees?

john personna June 24, 2013 at 10:25 am
Cdn Expat June 25, 2013 at 11:43 am

They have the Fields medal.

PK June 24, 2013 at 6:17 am

First of all, economics profession and academic economics is not the same thing. Not all of professional economists are academics.

As to #3, academics seem to love DSGE models as it is an important job generator. If there were no DSGE, academics would have to invent some other mind teaser to keep themselves busy.

Claudia June 24, 2013 at 6:31 am

“That is changing, funeral by funeral.”

And is that a good thing? You praise the general thinking, speed, public engagement of blogs, but those are nothing new among economists (and not without their tradeoffs). Economists who work off the top-tier tenure clock … have long had a more applied, question of the day focus. And aren’t today’s blog posts akin to the WSJ and NYT op-eds of yesterday. Economists have long sought a public platform, for better or worse, blogs change the form more than the substance.

I use blogs and academic research together even when doing my current analysis. Blogs are a good starting point, but almost never a stopping point in the process. Good bloggers back up their thinking with related literature or data, instead of views on their opponent’s family. Blogs can also create a pseudo online community of divergent thinkers attacking the same or related questions … that would be hard to cobble together from journals and there’s no economist lunch table with that range. I do worry that blogs put too much emphasis on their close cousins in academic research, to the peril of more slow moving, basic research projects. Blogs seem less concerned about the profession’s seed corn than who is in the spotlight now.

Finally it is my experience that a lot of economists who say they don’t read blogs, actually ‘have heard’ a lot the latest debates. I don’t think these two communities are so distinct.

Ashok Rao June 24, 2013 at 7:02 am

The first important difference is that all academic economists have PhDs and a very good number of prominent econbloggers have nothing more than a bachelors (and a handful even less). Matt Yglesias and, say, Megan McArdle have no problem “fitting into” blog talk. If I recall, neither of them even have econ degrees. They’re smart enough to sound approximately as well-informed as you are *in this medium*. However, they would (I imagine) be well out of their depth if actually writing a paper to be published in AER.

That’s the first thing blogging does. It obscures credentials and expertise. That can be a good thing or bad thing.

On the other hand, one’s “stature” in the blogosphere comes from the stature of those who view him to be a worthwhile blogger. That is, Eigenvector centrality (like page rank).

So the problem is the people “granting” you as a good blogger may or may not have credentials themselves. This has probably not been a bad thing *yet* but is specifically what lends itself to the lack of rigor that you mention.

The important distinction – and perhaps this can have another post in the future – is not the distinction between the profession and blogosphere, but that between the profession and professionals *in* the blogosphere (Krugman, yourself, DeLong etc)

Ashok Rao June 24, 2013 at 7:20 am

A good place to start noting the difference between bloggers and economists might be NGDP targeting, which has almost utter support from the former and a bland acknowledgement from the latter.

By the way, one important difference between the professional economists who blog and bloggers overall seems to be the former has a comparative advantage in link aggregation plus writing longer, but on average deeper and more incisive, pieces with complete expertise. The latter is much more “plugged” into the debate of the day.

Michael G Heller June 24, 2013 at 7:24 am

Good point.

Norman Pfyster June 24, 2013 at 9:27 am

McArdle does have an MBA from the U of C.

Ashok Rao June 24, 2013 at 9:59 am

Fair enough. But the ease of blogging, for wont of a better term, still allows non-PhDs (like myself) to sound *somewhat* educated. Put it this way, the Krugman’s blog is probably a lot more interesting and intuitive than mine. But the difference to a random educated lay reader is a LOT less (though obviously not zero…) than if we had both written an academic paper or review article.

It is obviously not that Krugman sounds relatively dumber on a blog, so the only alternative is I sound relatively smarter (compared to myself in academic format). How much of this is real? And how much of this is the ease of sounding smarter than you actually are?

Josh June 24, 2013 at 9:55 am

The involvement of top academics in the blogosphere is important because it prevents the blogosphere from falling prey to uneducated people supporting other uneducated people. As long as Krugman, Delong, Mankiw, etc. are around, people interested in learning the truth will always have help determining which blogs to look at and which to ignore.

Pseudonymous June 24, 2013 at 10:56 am

If you think that doesn’t still happen, then you’re VERY optimistic.

mpowell June 24, 2013 at 1:53 pm

All he said was that they’ll have help. It definitely helps.

RC June 24, 2013 at 7:25 am

I suspect that most economics PhDs who consider themselves in the “economics profession” are neither academics nor bloggers. There’s a silent majority of us out there who use our knowledge to steer private firms, where silence in the public setting is more or less a necessity. At least in my specialty area, the reported consensus views of economists often differ drastically from my sense of what the people placing bets actually believe.

Rahul June 24, 2013 at 7:31 am

What is your specialty area? Is it true that the sort of topics private sector economists typically deal with are broadly less controversial than what bloggers focus on (essentially macro or policy)?

Would be interesting to know what domains private sector economists dabble in.

Turkey Vulture June 24, 2013 at 9:36 am

There are a good number of economists employed in litigation-related work, such as antitrust. I’d say there is a lot of controversy there, but then, it’s litigation.

Claudia June 24, 2013 at 7:41 am

RC, I agree that academics and bloggers are special snowflakes in the flurry of economists, but it seems economists of many kinds will increasingly be focused on the communication of ideas and information. This has been a hot topic in money/macro lately as forward guidance, communication policy, and expectations are being used as a policy lever. Do you recall being taught in econ grad school how to shape market expectations? I am not a fan of silence in economics (to the dismay of some) as I think it lets bad ideas outstay their welcome, but being out in the open is not always desirable either. Here I think it’s crucial for ‘professional economists’ to enlist the help of people who know how to communicate with a wide audience (market makers, normal people, etc.). I am constantly amazed at what I hear, say from an economist presser, and what economic journalists or even academic economists hear. Audience matters, no one size fits all here.

Barkley Rosser June 24, 2013 at 9:23 am

Interesting how Tyler carefully worded his remark on DSGE models that he say is his view (and supposedly that of “academic economists”), that they “provide discipline” for maccro modeling They may do that, but there has been lots of criticism from many people, not just bloggers, but policymakers as well. There has been much discussion at the Fed (and some other central banks as well) about a disconnect between the policymaking “front room” and the research “back room,” with much of this centering on the domination of the back room by DSGE models, that the front room policmakers find pretty useless. This criiticism has come from some who came out of the back room and have themselves worked on DSGE models, such as MInneapolis Fed prez, Kotcherlakota, St. Louis Fed prez, Jim Bullard, and PhillyFed prez Charles Plosser.

However, despite the criticisms, it seems that those favoring DSGE models continue to control editing at top journals and schools, despite the push for some alternatives, such as agent-based modeling. I am personally more inclined to the latter camp, while recognizing that it may be useful to look at DSGE models somewhat. But then, I blog, even if I am also an academio. So, there you have it.

David R. Henderson June 24, 2013 at 9:43 am

@Barkley Rosser,
Nice comment, Barkley.

Bill June 24, 2013 at 11:57 am

Agree with you comment re agent based modeling, particularly when you add an irrational component to programming micro agents and add debilitating and irrational FEAR.

Euripides June 24, 2013 at 12:57 pm

Barkeley, if agent-based models were superior, they would have won the day by now. Having been on a hiring committee for macro faculty in a large state school recently, let me tell you how many fresh PhDs were doing ABMs in their dissertation: zero.

mpowell June 24, 2013 at 2:06 pm

There are some deadly assumptions bundled into this comment. What do you mean by superior? Superior in advancing your career as an academic? Sure. But superior in predicting the behavior of actual economies? The difficulty with macro is that there are no real experimental opportunities for validation. The best you can do is a data set with a few dozen data points and even more variables. So how do papers and models get evaluated? It’s going to be based on the preferences of the people reviewing papers. Economists like DSGE models because you can build macro from friendly micro assumptions. But as an analytical tool they have major issues. Highly sensitive to parameter choice, questionable assumptions of linearity, these are things that would ordinarily doom DSGE like models in a field with other options. But macro decided to be a math-based field, so DSGE it has to be. But these are the reasons that informed (but not academic economist) bloggers don’t pay much attention to DSGE models.

Lee A. Arnold June 24, 2013 at 1:26 pm

“provide discipline…” People tend to forget that about ten years ago, economists who blogged were regularly reporting the results from mathematical and graphical models (of all sorts) as if they applied to reality, as if they were some sort of covering laws that apply everywhere, as do some laws in physics. Thus for example, we would read that we must always consider the deadweight loss from taxation, in some policy matter. This, without mentioning that things are dynamic, that it’s a complex system and cannot be predicted, that individual preferences can always change, that Duhem-Quine and other metascience observations about verifiability are even more important in the social sciences, etc. etc. By around five years ago, we started to read that, well okay, maybe mathematical models don’t always really apply, but at least they are necessary to “sharpen your thinking skills”. Even then, economists did not predict the crash, afterward it took them two years to figure out vaguely what went wrong, and now, they are still arguing over the best policy response. Economics seems to be, not so much a science, but a type of medieval scholasticism that observed that money is denumerated, then jumped to the falsehood that things are quantifiable, or at least are ordinally mathematicizable (or at least, that we can impress individual preferences into BELIEVING that it is so.)

B Pfeifer June 24, 2013 at 2:06 pm

Missing the crash, came down to missing the quiet exit of rule of law, accountability and ethical behavior across global trading rooms.

Claude Emer June 25, 2013 at 6:32 am

Indeed, the field of economics belongs much more in the social sciences than in the hard sciences. People are more likely to buy insurance from a talking duck than from a rational analysis of how a policy would benefit them. People buy sneakers because an athlete told them to. How do you put that in an equation?
To Tyler’s point, is MR part of the blogosphere? If there’s such a disconnect between blogs’ and academics’ understanding of economics, why do academics write blogs?

ThomasH June 24, 2013 at 9:37 am

It seems that only #3 is interesting as regards the economics blogosphere. The others seen more generic to blogging vs academic communication.

jayackroyd June 24, 2013 at 9:47 am

There is a big problem with the Profession, separate from the problme that the microfoundations have to be revised (that is, Arrow-Debreu turns out to be fundamentally wrong and a theory of the firm that conforms with reality consists of rent pursuit).

We’ve seen the Real Business Cycle/New Classicists proven to be wrong. Endogenous variables drive the business cycle. Very occasionally there is an exogenous shock to factor prices, that is best dealt with by accepting that they are out of whack, and intervention will just make things worse. But in normal science/economic policy, growth is endogenous. It’s taken an extreme situation–hitting the zero lower bound–to demonstrate this. But it HAS been demonstrated. And, yet, the RBC people persist in ignoring this evidence. For academics, or for policy advisers, this is a really big problem–the equivalent of retaining cold fusion advocates in physics departments or the department of energy.

Bill June 24, 2013 at 10:05 am

Re MR blogosphere:

Extremely silent on European austerity.

The Dog that did not bark.

meegs June 24, 2013 at 4:14 pm

Outsourced to Scott Sumner.

JVM June 24, 2013 at 11:57 am

Referring to level targeting as “activist” monetary policy is sure to make Sumner’s blood boil… I think his whole point is that it’s the *least* activist system. :-)

RR June 24, 2013 at 11:58 am

Funeral by Funeral similar to Kuhn’s thesis : “a new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

Donald Pretari June 24, 2013 at 12:39 pm

If there’s One Fallacy that’s been front and center in the last five years, it’s the Argument from Authority.

zach June 24, 2013 at 12:58 pm

JVM good point. With regard to item 1 I would go further and suggest that the blogosphere regards the entire concept of “activist monetary policy” as completely meaningless verbiage. There are monetary policies that succeed or fail to hit appropriate targets to varying degrees, but there is no sense in which a given policy is more or less “activist” than others except the relative mix of discretion-vs.-rules. The idea has never been for the Fed to “do more,” but rather to “do better.” They are never in a state of “doing a little” or “doing a lot” – as Karl Smith might say they have to pick a number. Yglesias, Sumner, et. al. believe the Fed has been picking too low numbers for several years now, does the profession disagree with them? If so, why?

Philo June 24, 2013 at 1:15 pm

You write: “The blogosphere is more likely to believe that activist monetary policy can lower the rate of unemployment . . . .” Why do you reject this view of the blogosphere—or do you, after all, *accept* it? Then you add: “. . . like turning a faucet or flipping a switch.” You seem to be objecting to something about the blogosphere’s view of the *mechanism* by which expanding the money supply is supposed to lower the rate of unemployment. But what is that something? Your *faucet/switch* reference is very unspecific.

Go Kings, Go June 24, 2013 at 1:32 pm

There are very large numbers of quite smart and accomplished economists who a) don’t really read blogs, and b) don’t have much of a clue as to what is going on.

I am reminded of one of Galileo’s bitter letters to Kepler:

My deal Kepler, what would you say of the learned here who, replete with the pertinacity of the asp, have steadfastly refused to cast a glance through the telescope? What shall we make of all this? Shall we laugh or shall we cry?

By way of background, Galileo and Kepler expected the newly-invented telescope to convince Aristotelian academics that the Earth indeed moved, but their lifelong opponents– the established professors in Germany, Padua, Pisa, Bologna– continued raining derision (“men of no intellect”) on them and their telescope (“optical reed”) and connived manifold reasons why the telescope changed nothing (my favorite: if the telescope was so useful, the ancients would have invented it). As often happens, the royal palaces of Florence and street-scum artists and poets propelled science past the counter-revolutionary bulwarks erected by the retrograde professorariat.

This is exactly like that.

Ryan June 24, 2013 at 3:43 pm

The problem with blogs has long been that they give readers (and bloggers) the false impression that economics, and macroeconomics in particular, is easy. Blog readers reward those who have strong opinions that are quickly formed in response to the day’s events, not those who require time and thought to digest data and often can’t draw strong conclusions in any case. Indications of intellectual uncertainty are rare despite few bloggers having done the work required to eliminate such uncertainty. Careful exploration of assumptions is also rare. There are a few exceptions, such as MR most of the time, but many of the popular bloggers have contributed to a general overconfidence in economic diagnosis and policy prescription that is unwarranted by the subject. In this respect, much of the econ blogosphere is just a mirror of mainstream political dialogue with a few more charts and extra jargon.

We could use more heeding of Tyler’s advice: “I say, focus ruthlessly on substance and do your best to explore and present the limits and drawbacks of your own ideas and recommendations. Years down the road–or sooner–one will end up wiser and better informed.” (from this post).

Jacob A. Geller June 25, 2013 at 5:50 pm

The profession likes to prove things that aren’t really true; the blogosphere likes to assert unproven things that may or may not be true. So there is confusion and great opportunities for deception all around.

…that is the pessimistic view anyway. Here is my more optimistic view, which I think mirrors Tyler’s “funeral by funeral” comment: http://jacobageller.com/2012/11/in-defense-of-less-than-useless-economics/

ohwilleke June 25, 2013 at 5:56 pm

Econ bloggers, collectively, are less likely to miss the forest for the trees. They are more descriptive and rely on richer data sets, and a greater awareness of the important ways in which business reality and economic reality differs from economic models. Bloggers place much less faith in analytic equation based models, and are a bit shocked at the failure of academics to have meaningful empirical and historical testing of their models. Econ bloggers place greater emphasis on moments of clarity either in statistics or anecdote that make a bigger point that show that something is either right, or is wrong. In contrast, academic and professional economists are much more comfortable with mushy conclusions that don’t have clear policy implications for government or institutions and aren’t as concerned about telling a compelling story.

The original post understates significantly, I think, just how the deep skepticism is on blogs that professional and academic macroeconomists are offering any meaningfully accurate counsel at all. For example, consider these two quotes sourced at an econ blog in September 2009:

“Macroeconomics is the triumph of hope over experience, and has been no more successful than sociology. . . .Macroeconomists are demonstrably not helpful to those institutions that could use economic expertise. Macroeconomists know a lot of stuff, just not anything useful.- Dr. Eric Falkenstein (via Angry Bear).”

“At least when physics looks for GUTs, they know when they haven’t found one.- Angry Bear”

Blogs also refocus on recurring policy issues (e.g. eternal policy debates over the size of government) rather than deep theoretical economics principles.

Ari June 26, 2013 at 7:03 pm

Thanks for the post Tyler.

I think very interesting point RC brought above is that the people with money and economic degrees bet differently from the academics. This would be very interesting research topic!

Jacob A. Geller June 28, 2013 at 11:55 pm

Scott Sumner wrote the following on his blog this morning (here http://www.themoneyillusion.com/?p=22081):

“Just as Canadians know much more about the US, than Americans know about Canada, bloggers know much more about academia than academics know about the blogosphere. And with all due respect to the academics (I used to be one) I feel the blogosphere is a decade ahead on policy issues. Academics talk like central banks are out of ammo, while bloggers discuss the unconventional actions that are driving markets in countries like Japan. The real world. Blanchard and Leigh would have gotten massacred in the blogosphere presenting the sloppy argument in their intro.”

The Blanchard and Leigh paper he’s referring to can be found here: http://www.imf.org/external/pubs/ft/wp/2013/wp1301.pdf

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