MIT’s rise to prominence in economics

by on May 20, 2014 at 6:24 am in Economics, Education, History, Uncategorized | Permalink

There is a new paper (pdf) by Andrej Svorenčík on this topic:

The core question of MIT Economics Department’s history – why has MIT economics risen to prominence so quickly – requires an approach to history of economics that focuses on the role of the networks within which economists operate, their ideas diffuse, and gain scientific credit. By reconstructing the network of MIT economics Ph.Ds. and their advisors, this paper furnishes not just evidence of how MIT rose to prominence as documented by the numerous ties of Nobel Laureates, Clark Medalists, elected officials of the AEA or the Council of Economic Advisors to the MIT network. The MIT Economics Department is also revealed as a community of self-replicating economists who are to a large extent trained by a few key advisers who were mostly trained at MIT as well. MIT exhibits a large share of graduates who remain in American academia that is disproportionate to the number of graduates it has produced. It is hypothesized that this has been an important factor in MIT’s rise to prominence. On a methodological level this paper introduces prosopography or collective biography, a well-established historiographic method, to the field of history of economics.

When I was at Harvard in the 1980s, we typically thought of the MIT students as:

1. Smarter and harder working than we were

2. Better focused and better trained, and benefiting from a more collegial environment

3. More narrow

4. Somewhat less…um…modest, and thus you might prefer to have a Harvard student setting your economic policy.

Fortunately we all have moved on to broader and less prejudicial judgments.

The pointer is from @UdadisiSuperior.

MG May 20, 2014 at 6:41 am

Arnold Kling’s “one-factor model” suggests that, for an explanation, you look no much further than…Stanley Fischer, aka as the Genghis Khan of macroeconomics. arnoldkling.com/essays/papers/macromemoir.pdf

Steve Sailer May 20, 2014 at 3:29 pm

Stanley Fischer is the kindest, bravest, warmest, most wonderful human being I’ve ever known.

dearieme May 20, 2014 at 6:54 am

It all sounds terribly parochial, even conspiratorial. Still, it’s only Economics.

On the other hand, they are presumably all phenomenally rich from having anticipated the affairs of 2008-09.

Andrew' May 20, 2014 at 8:22 am

Maybe if they ever got over their “current price is correct value” fetish they could make predictions. But then again, maybe that’s not what economics is for.

a Michael May 20, 2014 at 10:14 am

Economics is not for making predictions. Predicting the future is hard.

Vivian Darkbloom May 20, 2014 at 11:50 am

Aside from the history of economics (more history really than “economics”) name one single problem economics attempts to solve that is *not* about predicting the future. Even the study of the history of economics is in service of predicting the future. And, yes, predicting the future is hard.

JWatts May 20, 2014 at 5:57 pm

Does “The Traveling Salesman problem” count? {ducks}

Vivian Darkbloom May 21, 2014 at 3:54 am

“Does the Travelling Salesman Problem count”?

Why would I be interested in what the most efficient route Willy Loman could have taken? Because it might be useful to predict how future salespersons might efficiently travel.

JWatts May 21, 2014 at 10:22 am

“Because it might be useful to predict how future salespersons might efficiently travel.”

That’s a pretty broad definition of predicting the future. So broad that solving any problem would fit under it.

And anyway, the problem has effectively been solved, just not by economists. Instead a bunch of mathematicians and computer geeks apparently predicted the future routes of traveling salesmen.

Vivian Darkbloom May 21, 2014 at 1:08 pm

“That’s a pretty broad definition of predicting the future. So broad that solving any problem would fit under it.

The definition is broad but it is not too “broad”; it is precisely accurate. And, thanks for confirming what I stated at the start—solving any (economic) problem would fit under it.

Economics is *all* about predicting the future and this ranges from the consequences of raising or lowering the minimum wage, increasing or lowering taxes, interest rates, the money supply, etc., etc. If you can’t or are not willing to predict the future consequences of these types of actions that you are proposing, then one should have the humility to say “I don’t know” or just get out of the game altogether. Simply saying “economics is not about making predictions” strikes me as not only completely inaccurate, but probably also cowardly, too.

carlospln May 20, 2014 at 10:27 pm

Comment of the Day!

Bill May 20, 2014 at 7:25 am

Only when the prejudice is in favor of MIT does one end with the statement: “Fortunately we have all moved on to broader and less prejudicial judgments.”

Bill May 20, 2014 at 7:33 am

Or, perhaps it was the decline of the Harvard economics department in the early 80′s and not prejudice:

“The impact the [Harvard} University once exerted over economic policy, especially in the Kennedy and Johnson years, has all but disappeared,” an article in this week’s “Business Week” magazine says.

The article, entitled “Harvard Fades in Economics,” attributes this alleged loss of national influence to unsatisfactory faculty appointments, insensitivity of faculty towards graduate students and economics as a field, and the rise of economics departments at other prominent universities, especially the Massachusetts Institute of Technology (MIT).

Carpetbaggers

Otto Eckstein, Warburg Professor of Economics, said ‘yesterday, “No doubt MIT has a more appealing graduate program, but Harvard’s is on the road to reconstruction.”

This is from an article, of all places, the Harvard Crimson. http://www.thecrimson.com/article/1979/4/9/business-week-charges-economics-dept-declining/

chuck martel May 20, 2014 at 9:56 am

The head of the CEA during the Kennedy and Johnson years was Walter Heller, a Keynesian from Wisconsin-Madison and on the faculty of the University of Minnesota.

Ted Craig May 20, 2014 at 10:17 am

Getting on the road to reconstruction started with naming an MIT grad as chair of the econ department,

Andrew' May 20, 2014 at 8:13 am

Is it harder to gain or keep a reputation in such an endeavor? Or, in economics jargon, which is more costly? It seems you are destined to go through cycles of buildup followed by free-riding, decline, and reformation.

ummm May 20, 2014 at 8:30 am

they are smarter, duh

The Other Jim May 20, 2014 at 8:35 am

I love the idea that you want Harvard students setting economics policy because they are so modest. Love.

Bill May 20, 2014 at 8:38 am

+1 They, evidently, had reason to be modest. But, Larry Summers is probably their example of modesty under the Harvard standard.

Andrew' May 20, 2014 at 8:48 am

They can’t save the world. Evidently not even a comment section.

Finch May 20, 2014 at 9:41 am

That part was hilarious. Only a Harvard student could think that.

I would have thought MIT had built in mechanisms for keeping the economics department egos in check. Course 14 (along with 15 in a sort of similar position) is a second-class citizen behind the technical majors. While they are certainly wrong on an absolute scale, most of the people around you think you’re dumb, as if you’d majored in physical education at a normal school. It’s a funny vibe, and it’s not super strong because after all you need to be pretty clever even in those departments, but it’s definitely there.

Colin May 20, 2014 at 11:37 am

Your choice of terminology assumes anyone cares about the undergrads when discussing the strength of econ departments.

Finch May 20, 2014 at 11:53 am

The undergraduates determine how you’re perceived within the school, which is the point I was making. The grad students are an obvious step down in brainpower at MIT.(*) FWIW, I’ve been both.

(*) The people who go on to PhD programs are the second tier of the undergrads. They need to be good to get into PhD programs, but not so good that there are fabulous opportunities already available to them. The set of future stars is sufficiently small as to be immaterial and even they mostly go into industry, particularly in technical fields.

brad May 20, 2014 at 12:02 pm

I’m sure that’s true in engineering and perhaps econ as well, but what about math and physics?

Finch May 20, 2014 at 12:04 pm

Yeah, I think physics is probably the major exception. I don’t think math is an exception.

Finch May 20, 2014 at 12:03 pm

Also, I’m not really sure what terminology choice gave it away. MIT doesn’t use the term “major” a lot, but does so for both graduate programs and undergraduate programs.

Finch May 20, 2014 at 12:49 pm

I’m overdoing this, but I’ll put it another way to make it clearer. People in other economics departments think MIT econ grad students are really smart. I think that now, as a more experienced person. People in other MIT departments, graduate and undergraduate, generally don’t think that. So if you are an MIT econ grad student, you live your life surrounded by people who maybe don’t think that much of you academically. I don’t get the feeling that happens at Harvard.

I’m going to attempt to check out of this now. I really didn’t mean to start a fight.

Colin May 20, 2014 at 1:14 pm

Fair enough, I just meant that the impressions of undergrads (as indicated by Course 14, since that terminology isn’t explicitly use for grads) are, by and large, irrelevant for widespread graduate opinions. Not a disagreement, per se, just that undergrads aren’t the right sample.

Colin May 20, 2014 at 1:18 pm

Also, anecdotally, what you’re describing about the best students having better private sector opportunities is not true for the upper cohort of undergraduate economics (or wasn’t at my school).

I went into the private sector, but I wouldn’t say those who did were systematically better students than those who took the same classes and went into PhD programs. The opposite, if anything. You don’t have to be that smart to get a consulting or banking gig, modulo being an economics majors at a reasonably selective universities. The selection criteria at top grad programs are harder in a strictly academic sense than the selection criteria at top private jobs.

Finch May 20, 2014 at 1:29 pm

Course 14 is used to describe the graduate program all the time, and I don’t agree with you about private sector opportunities. The best econ undergrads I know have generally been drawn into tech, or at least things that can be loosely defined as tech.

Colin May 20, 2014 at 1:50 pm

Fair enough, all I can say is that wasn’t my experience. Not a single one of the top 10 or 15 econ majors in my class at a roughly top 25 place went to work in tech.

Rich Berger May 20, 2014 at 9:11 am

I am guessing that the ascendancy of MIT in economics has been associated with the greater use of mathematics and more sophisticated econometric models. If so, what have been the great achievements of MIT economists? Has there been an improvement in economic understanding or better forecasting?

Michael Abrahams May 20, 2014 at 10:51 am

Your question is tantamount to asking whether there has been an improvement in economic understanding over the past 60 years. Only an ideologue would assert that there hasn’t been any.

I will refer you to the major methodological developments coming out of MIT right now. Every area of empirical applied microeconomics is being upended by these new standards of rigor. http://ftp.iza.org/dp4800.pdf (Josh Angrist advises most PhD students in labor economics and many in econometrics.)

Rich Berger May 20, 2014 at 5:13 pm

I looked at the paper you referenced and I am not impressed. If the MIT economists have made some significant advances, I hope a simple synopsis could be produced.

“Only an ideologue would assert that there hasn’t been any.” Thanks for dismissing a question that I didn’t ask.

dearieme May 20, 2014 at 5:50 pm

“new standards of rigour”: rigour is a property of mathematics, not of an empirical science. Nor even of economics.

Trimegistus May 20, 2014 at 9:19 am

So . . . do they do a better job? Are MIT economists better economists than, say, University of Chicago economists?

Or do they just do a better job of leveraging their institution’s Smart People reputation, keep a tight-knit Old Boy network, and produce conclusions which support the current ideological fashion?

Just Another MR Commentor May 20, 2014 at 9:28 am

Paul Krugman is a case in point here as it’s widely known he recieved his PhD largely due to politica favouratism within the department.

Axa May 20, 2014 at 9:38 am

Please provide the evidence of someone obtaining a Ph D opposing the department. The field? Anyone.

Colin May 20, 2014 at 11:40 am

Seriously? The arguments of the “Krugman is an absolute economics illiterate” trolls have extended to “He shouldn’t even have been granted a degree”?

Joe in Morgantown May 20, 2014 at 2:06 pm

Seriously? From parody poster Just Another MR Commentor?

No.

Andre May 21, 2014 at 2:02 am

Krugman’s 14.02 lectures were packed to the rafters. I still remember when he came in all frumped up from traveling from Asia and explained how the Thai finance minister didn’t understand IS/LM. A financial crisis makes for a good lecture.

His wife taught 14.03 briefly too. Let the hate proceed!

Tom West May 20, 2014 at 9:52 am

Perhaps all the most capable Harvard would-be-economist professors have been sucked into the Investment Banking vortex? When arrayed against a professor’s $100K salary, perhaps a shot at being a $100M Harvard-educated hedge fund manager attracts more capable graduates than the shot at being a $1M MIT-educated quant.

Ted Craig May 20, 2014 at 10:12 am

A few years ago there was an article pointing out that while many Noble laureats in economics (yeah, yeah Riksbank Prize, whatever), had degrees from Harvard, they did their award-winning work and taught at other institutions.

Joe Smith May 20, 2014 at 10:56 am

“why has MIT economics risen to prominence so quickly”

Because nature abhors a vacuum.

prior_approval May 20, 2014 at 11:00 am

‘Fortunately we all have moved on to broader and less prejudicial judgments.’

GMU and the Virginia School are the coming thing – and less prejudicial judgments are a necessary prerequisite for that to vision to be realized. And maybe another 50 million dollars – the first 50 million probably didn’t make the broad impact that was originally intended.

Though in all fairness, at least one member of the GMU Econ Dept has moved over completely to the private sector – handing out funds is so much more rewarding than receiving them, it seems..

JWatts May 20, 2014 at 11:07 am

Go ahead and beat that poor horse a little harder troll. And you left out a direct reference to the Koch brothers by the way. Or was that going to be the follow up comment, about more endowment money?

spencer May 20, 2014 at 11:33 am

Interesting that no one brings up the charges of antisemitism at Harvard.

Barkley Rosser May 20, 2014 at 12:04 pm

Which brings up the really crucial person in all this, the late Paul Samuelson. When Harvard stupidly failed to offer him a job because of his being Jewish (although Schumpeter said it was because they were jealous of his intellect), he famously walked down Mass Ave, and the rest is history.

Ted Craig May 20, 2014 at 12:12 pm

Didn’t bias also sink the UVA econ dept.?

Asher May 20, 2014 at 4:26 pm

Yes this is the story that I always heard. Other departments had an anti-Jewish bias, and MIT became the refuge for a bunch of talented Jewish economists including Samuelson, Solow, and Modigliani.

I heard one story (second hand) that indicates that the basis was not prejudice against Jews per se but rather the threat of “tipping” the department. I.e., department X would have been happy to have two or three Jews but they were afraid that this might not be an equilibrium outcome.

Cannot verify this story. Certainly the tipping scenario sounds plausible.

Grant McDermott May 21, 2014 at 12:30 pm

See this paper: Paul A. Samuelson’s departure from Harvard to MIT, which presents “a picture that is more complex, and does more credit to those involved, than the conventional one”.

Includes some great correspondence, including this recollection of a discussion between MIT dept head Ralph Freeman and Samuelson’s friend and champion, Harold Freeman:

Ralph said, “I know Paul is a good scholar, but is he a cooperator?” Never at a loss, Harold replies, “Is Samuelson a cooperator? Why the man writes joint articles.”

Nixon had it wrong. We are all cooperators now.

tera join May 20, 2014 at 2:41 pm

Harvard University is a prestigious institution I love it.
I’m striving to be able to Harvard.

carlospln May 20, 2014 at 10:32 pm

Suggestion: learn how to write first.

Joshua May 20, 2014 at 3:46 pm

“Somewhat less…um…modest”

If only economists were known for their modesty in general. Most of them seem to think they know how we should spend our money better than we do.

Paul May 21, 2014 at 1:53 am

I personally haven’t the foggiest idea but the investment banking suggestion sure sounds plausible. The timing seems right.

an insider May 21, 2014 at 7:14 pm

A lot of discussion here is out of date. MIT was clearly ahead of Harvard for decades, but Harvard caught up to the point where now their graduate programs are considered roughly evenly matched, and their research output is also roughly evenly matched.

(In recent years MIT has recruited a larger share of the joint funded admits, and has put out more superstars on the job market, but this edge is not overwhelming. Meanwhile, Harvard’s faculty would win easily in a citation contest, but this does not extend to dominance in current research because Harvard’s citation strength is partly due to some big-name older faculty who have basically ceased research – e.g. Larry Summers and Greg Mankiw.)

Tyler’s view that Harvard econ Ph.Ds were more modest than MIT econ Ph.Ds is probably an accurate description of the 80s, but is hilarious from today’s point of view. Now that the programs are more evenly matched, there is no reason for MIT to sustain a superiority complex, which has led traditional patterns to reassert themselves instead – namely, greater arrogance among Harvard students. I think this is pretty widely acknowledged, and there’s a self-selection story behind it: given that the Harvard/MIT choice is reasonably close on the merits, with perhaps a slight edge to MIT on advising quality, the people who insist on going to Harvard tend to be the ones who value the prestige that the Harvard name gives them outside the discipline. People who value such prestige tend to also be arrogant (although the correlation is certainly imperfect).

Note also that there were several phases of MIT’s dominance. The initial phase began with people like Samuelson, Solow, and Modigliani, but (for instance) the preeminence of MIT graduates among middle-aged macroeconomists today is attributable to the influence of Stanley Fischer and Rudi Dornbusch in the 70s and 80s.

an insider May 21, 2014 at 7:30 pm

I should also mention that many of the comments here are absurd from the perspective of anyone with knowledge of academic economics. Namely,

(i) “investment banking” is not a major competitor with academia as a source of employment for economics Ph.Ds. A nontrivial number of economics Ph.Ds end up employed somewhere in the financial industry, but this is still only a fraction of the number employed in academia and quasi-academic other positions (e.g. Feds), especially at the high end, and generally it is rare for the most promising Ph.Ds to head into such careers. (If only because they have been socialized for 5 years to believe that snagging a good academic position is the very definition of career success, and thus strive for such a position if they are capable of getting it.) Plus I don’t see that much heterogeneity on this front among the top schools. There’s no way that it has been a major force shaping academic economics.

(ii) pretty much everything that “Finch” says in the context of discussing MIT rings false. Economics graduate students rarely place such weight on their stature in the eyes of university undergrads or other graduate students that their egos would be hampered by perceived low status within the university (e.g. social sciences being peripheral at a hard science school). Status within the profession is about 100x more important.

The notion that top Ph.D. programs actually recruit the second quality tier of undergraduates, while the first tier goes almost exclusively into non-academic opportunities, also strikes me as absurd. (Though I admit to being biased, since I am an economics Ph.D.) Of course, many of the most talented students do not go into academia, but at least within fields (like economics) where academia offers good career prospects, there certainly isn’t negative selection on undergraduate academic success. If you go from the 90th to the 99th percentile of undergraduate performance, I guarantee that you’ll find many more Ph.D. students – and the same as you move farther out in the tail, from 99th to 99.9th and so on.

My impression is that this is true for many fields, including math, where Finch appears to believe the contrary – indeed, the fact that top math Ph.Ds are a highly selected group of extremely successful math undergraduates is so self-evident to me that I’m amazed to read someone suggesting otherwise. My guess is that Finch is wildly overextrapolating from his idiosyncratic personal perceptions and experience at MIT.

anon May 22, 2014 at 7:17 am

I physically went around to various econ departments in April 1982 (well after the application deadline), knocked on the door, and asked to be admitted to the Phd programs: Harvard, Yale, Princeton, MIT. Everyone except Harvard was willing to consider me and two eventually offered places (the third said they would prefer to accept me the following year but wanted to get me a job in DC for a year). According to memory (this from someone who had not taken an econ class in his life), on my list MIT was top, Princeton and Harvard tied for second, and Yale last. MIT had less funds; a conversation with one of their professors told me their acceptances were supposed to be good enough to bring their own funding with them. So I’d say by 1982 it was common knowledge that MIT was tops, because that was the only knowledge I had.

Estevan May 22, 2014 at 2:41 pm

It is hard to put an exact number on the rating of a school based on purely how well funded they are. As most schools are deemed to operate like a business, MIT earned their prominence in academics. It is true that a well funded program can lead to many more opportunities for students, but it also depends on how the school values the programs on their net return rather than how difficult it is to actually be a part of the program. There are too many intelligent upcoming economists that are unable to get into the best schools simply because of funds, or a simple test score. Although if schools actually rated based on overall capital value and what each student has to offer to the school, MIT would thrive in more areas than one. Harvard is considered the top school for economics by “most” University ratings, but mainly because they are more focused in this specific department over others, excluding most law programs. MIT and Harvard are both high rated because of their prestige and reputation over the years. MIT just had overall more value over the period of years since 1982 than the other top 10 schools.

Comments on this entry are closed.

Previous post:

Next post: