How hard is economics?

Brad DeLong discusses a recent short essay by Kartik Athreya; Matt Yglesias chips in, as does Scott Sumner.

My view is a little different than Brad's.  I would say that economics is really, really, really, really, really, really, really hard.  And that's leaving out a few of the "reallys."

It's so hard that experts don't always do it well.  The experts are constantly prone to correction by non-experts, by practitioners, by people who are self-educated economic experts but not professional economists, and by people who know some economics and a lot about some other field(s).  It is very often that we — at least some of us – are wrong and at least some of those other people are right.  Furthermore those other people are often more meta-rational than a lot of professional economists.

Even very simple problems can be quite hard, such as why nominal wages are sometimes sticky or why particular markets don't always clear, in the absence of legal impediment.  Why doesn't the restaurant charge more on a Saturday night?  You can imagine how hard the hard problems are, such as what level of public expenditure is consistent with an ongoing and workable democratic equilibrium.

Putting aside agreement and ideology, and just focusing on how one understands an issue, I'll take my favorite non-Ph.d. bloggers over most professional economists, six out of seven days a week.  Not to estimate a coefficient, but to judge public policy, thereby integrating and evaluating broad bodies of knowledge?  It's not even close.


Graduate school does not teach, encourage, or emphasize public policy analysis. Why then would PhD economists have a comparative advantage? Moreover, I do not think the two sets (blog discussion of policy and academic research) intersect much. I think PhD economists should focus on (1) their work and (2) debunking obvious fallacies. High-quality bloggers should appreciate PhD economists for this.

The problem with most economists is a lack of real world experience. And Wall Street doesn't count as the real world.
Also, they focus too much on government policy and they give too little credit to the passage of time, just like doctors.

DeLong is a bizarrely hyperpartisan economist, which should and does speak volumes about his opinion. For his purposes, and as far as he actually cares any more, yes, economics is very simple, and needs to be in order to peddle his political agenda to a comparatively ignorant (in economics) audience. His last desire is to "confuse" anyone with context or details when he has a talking point to push. The economics world would be far better off without the likes of the DeLongs of the profession, on either side of the aisle, as their high profile simply makes John and Jane Public mistrustful of the field entirely.

Depends on the economics you are talking about.

Theoretical economics, with fancy theorems, quadruple n form integration over polynomial spaces. That might be hard, but highly irrelevant.

Empirical economics, econometrics, experimental economics, testable behavioural economics. Satisfying and not that hard if you had some good statistics classes.

Consider the following: economics is not hard enough.

Perhaps that may explain all the public bashing the field seems to get. To quote Douglas North "We don't know nothing!" (or at best, have a faint idea of what we don't know).

From your interfluidity link:

"We have intellectual work to do that goes beyond choosing a deficit level. The austerity/stimulus debate is make-work for the chattering classes. It’s conspicuous cogitation that avoids the hard, simple questions. What, precisely, should we do that we are not yet doing? What are the things we do now that we should stop doing? And how can we make those changes without undermining the deep social infrastructure of our society, resources like legitimacy, fairness, and trust?"

What rock has he been living under? Isn't this what every policy argument is already about? No one really proposes cutting everything; they have things they think are less valuable and want to cut them, and things they think are very valuable which they don't. Why is he complaining about people always talking about austerity, instead of critiquing the specific cuts that he thinks are "undermining the deep social infrastructure"? It seems like he's missing the point of his own piece.

sorry about the poor phrasing above. pretty heinous.

You know what is hard. Reading entrails. We've been doing it for thousands of year and we still can't get it right.

Isn't this a big part of the difference between the Austrians and the rest of the economic community? While traditional economists are building models of the economy based on math, Austrians are looking at the economy as a collection of people, incentives, and information.

It's like the difference between a stock picker who relies on technical analysis, calculating thresholds and decision points and creating mathematical models for stock prices, and a stock picker who looks at the actual company - it's people, it's leadership, its infrastructure.

The technical analyst might say, "Buy XYZ corp. Its price just broke through a 12 month resistance level. I have the candlestick charts to prove it!"

The other stock picker would say, "Don't buy XYZ corp, because its CEO has a drinking problem and their corporate culture has built too many levels of hierarchy and fiefdoms, preventing efficient information flow and decision-making. It may do well in the short term, but it's on a long decline until it corrects its structure and gets rid of the drunk at the top."

The technical analyst may be able to plot stock changes based on past history, and maybe even be slightly better than random in picking future stock prices. But ultimately, the price of the stock will depend on whether the company makes things people want and can do so efficiently and inexpensively enough to show a profit.

Economists like Krugman and Delong are like technical analysts - they study the patterns and flows of money and work with mathematical models and treat the economy like a machine with inputs that can be manipulated by clever people to achieve specific outputs. At the highest level, it's actually fairly simple in their minds.

But others including the Austrians and many behavioral economists see the economy as being a hellishly complex series of interactions between people who have their own incentives and make their own choices. Using pure math to describe an economy is like trying to describe a butterfly by creating a chart of its DNA. The genetic map may look fairly simple, and it will tell you many things, but it won't help you really understand what a butterfly is. It won't tell you why it does what it does, what it looks like when the sun shines on its wings, or how it will respond when you interrupt its path.

"Why doesn't the restaurant charge more on a Saturday night?"

Actually, they often do. However, they don't want to make this obvious to customers, so what they do is offer specials on non-Saturday-nights, so that the "regular price" becomes the higher-Saturday-night-price. Many places have specials (drink specials, meal specials, etc) on M-T-W-R nights, and are closed Sunday, meaning that Saturday night has by far the highest prices.

What all of you are overlooking, is that Mr. Athreya has done all of us a favor by pointing so many people to a nice LaTeX formatted document for a change.

I'll take my favorite non-Ph.d. bloggers over most professional economists, six out of seven days a week.

How do we know that this statement isn't an example of preference falsification? What are the incentives Cowen faces in making his choice? TC does not appear to have much interest in publishing in macro. I don't see any working papers on his site. But clearly he enjoys having blogging conversations with someone like Yglesias. Blogging has brought him a modicum amount of fame. Other bloggers, by pointing to his blog posts, help perpetuate that fame and status. Thus it is totally in his interest to take, for example, Yglesias's opinion about macro over a fellow economist.

Sure macro has a lot of problems. But heck even Krugman is reviewing some modern marco (specifically Eggertsson and Woodford) when making his policy analyses. Most blogs just don't even do that, and I don't think that is a good thing.

Economists should read more Clausewitz. While there is much to recommend in his general theorizing about war his most significant observation is "in war even the simplest thing is difficult". The concept of friction in every day life. Orders are lost or misunderstood. General Smith and Colonel Jones have not synchronized their watches. Corporal Brown forgets to tell Supply Sergeant Williams to have the ammunition re-supply delivered at 4pm at the crossroads. I think you get the picture. A lot of times when I read economists my take away is that there's nothing wrong with the models, it's those damned people screwing things up! I understand the desire economists have to get things right, maybe sometimes they should admit that the best they can do is get within hand grenade range and call it a day.

I think the problem is that the real economy must be thought of as some sort of an n-compartment model, and no matter what model you might come up with, you immediately are confronted with n-body calculation issues. Newton thought these were intractable, and so they have remained. In gravitation you pick the most likely influence -- e.g. the sun -- and the nearest few planets to get a rough estimate of the configuration. Then you get a telescope and go look in that general direction. Economists must start in the same way -- focus on only one or two connections out of n, such as debt-to-GDP ratio or interest rates (in the fiscal austerity debate), and suppose that they are functional or salient despite all the other connections, perhaps running computer simulations to get a statistical aggregate of results. The problem here is that we're not planets, we're humans with feelings, and with rationality that has formal limitations and also limitations in attention-time, who are looking at lots of other issues, and the statistical significances may be quite misleading. So the economists are continually re-enacting the crisis in European or Western rationality, a debate which started early in the last century, and was first called by many observers "The Age of Anxiety." It's just going to get worse, due to the increasing network effects of negative externalities that come with social and ecological crowding -- just try to imagine all the ecological and economic network effects of the gulf BP spill, to take a relatively minor example. Answer: you really cannot; and despite the Austrian hope, markets don't do the job well enough by themselves, either. The only answer we have is overlapping institutions, including government ones, which may slow things down, yes, but can also speed them up, and sometimes provide safety-valves. Almost anyone who thinks practically, as long as he or she keeps in mind the rudiments of the science of economics without letting those rudiments overcome other ideas, is going to do better than most ivory-tower types.

Economics is about people, not markets. Once we understand people, we will understand economics. That is why Tyler needed more reallys.

The problem is that the study of economics is the study of a complex algorithm we can never really understand. We are dealing with billions of agents, all of which have their own personal decision making rules. We can figure out how a change can affect some agents, but a model that has serious predictive capabilities is computationally impossible.

Therefore, economics is, in practice, restricted to making predictions that are inaccurate at best, just due to the nature of the problem. In comparison, medicine is easy, since our bodies evolve far slower than our economic structures. We are down to using rules of thumb, that work in certain scenarios, but not in others. Sadly, we see people that take a few of those rules and claim that they are as good as laws of physics, which just leads to a different flavor of failure. It doesn't matter if you are reading Friedman, Smith, Ricardo, Hayek or Keynes.

Is what is hard, economics, politics, power, or will?

What would we think of physicists if they disagreed over whether or not the Earth was going to fall into the Sun?

Where is Hari Seldon when you need him?

"You don't argue with your doctor about medicine..."

Not because he's right, but only because it's pointless to argue with him. He has station and the patients mustn't piss him off. It's unfortunate that he has a monopoly on the prescriptions. In the numerous misdiagnoses I've encountered in my short life, a little argumentation might do the body good. Maybe the same attitude of winning by position is why economics failed so badly.

I think the essayist is right, but didn't go far enough. Professional economists have little to say about the crisis either. I think (though I don't know, not being an economist) you can actually pinpoint actual reasons, Minsky, Fisher for example. I don't know anything about them, but I think I have a pretty good idea where to go looking.

DP Roberts,

"Before reading his rebuttal, I bet myself $1000 that he would refer to Ahtreya's essay as "incoherent.""

What did you do with the money you lost?

"His academic record is sparse, clumsy, and most of his best papers were co-authored by economists who were very much his betters. Like Janet Yellen, his vita is paper thin. All his most recent works have been published in his own journal, Brookings Papers, or were "introductory" pieces for conferences. It's amazing he earned tenure at Cal."

I am beginning to suspect you don't know what you are talking about. Or possibly, you usually do, but you are blinded by some personal hatred or something. Delong is ranked 308th in RePEc citation rankings. That puts him ahead of Hal Varian, Amartya Sen, Kevin Murphy, Daniel Hammermesh, and several other notable economists at top departments. If you don't understand how he got tenure, you don't understand how economics departments work at a very basic level.

I don't think it is proper to cite Brad DeLong's blog in this context. If his only response to a reasoned criticism of his blog is to call it an "attempted but unsuccessful smackdown", it is clear that his plane of discussion is in the first place not the world of ideas but rather the world of power and prestige. It may be that he uses ideas, maybe even interesting ones, to advance these but clearly they are not what his blog is about.
Imagine what we would think of a scientist in any other field who responded to scientific criticism by a colleague as an "attempted smackdown" and would triumphantly trumpet his counterarguments as rendering the "smackdown" unsuccessful. Brad's blog is all about the ad hominem.

Math is hard. Physics is really hard. Chemistry is really, really hard. Biology is really, really, really hard. Psychology is really, really, really, really hard. And economics, sociology, philosophy, art, and literature are really, really, really, really, really hard. Most people get these things backwards.


It was a notional "wager" but not a notional point. You missed it. I new exactly how DeLong was going to attack Athreya even before I read his rebuttal. He would casually dismiss all his arguments as "incoherent" and engage in ad hominem about his relative inexperience.

As for DeLong's vita, have you read it? Do you know which journals are highly ranked and which are not? Are you oblivious to the implications of a tyro co-authoring with giants? Who do you suppose did most of the heavy lifting, Larry Summers or Brad DeWrong?

Here are his most recent pubs:
The Economists' Voice (TEV)(he is editor)
Brooking paper
NBER Macro Annual
American Economic Policy
KC Fed
JEP (Introduction)
JEP (Introduction)
JEP (Introduction)
Rev. Of Austrian Econ
Brookings paper
Brookings paper
JEP (Introduction)
JEP (Introduction)
JEP (wow, a real pub!)
Foreign Affairs
JME (with Summers)
KC Fed (with Summers)
Brookings paper
Journal of Portfolio Mgmnt

That's going back about 15 years and most of these are invited pieces and/or not peer-reviewed! The ones which are peer reviewed were either co-authored or in low tier journals.

His ONLY AER hit was co-authored with Summers who obviously got it through the door for him.

He's been doing a heck of a lot of blogging and not a whole lot of productive research or teaching.

I am certainly no great researcher but I don't pretend to be. I know research well enough to know crap when I see it. I know dead wood when I see it.


You are equivocating on the word "argue."

Yes, people engage in disputes or disagreements with doctors, but FEW people are informed enough to engage in meaningful debate over a diagnosis or treatment. This is not to say physicians are always right, always diligent, or that a patient might not get lucky with Google or WebMD. But really that's not the point I was making. When you argue with a doctor you're doing so from a position of ignorance. You might obtain an expert second opinion and confront a doctor, but be assured unless you went to medical school you are LIKELY not to know what the hell you're talking about.

Indeed, you are more likely to know that something is wrong with yourself when the doctor can find no objective evidence. Now take yourself out of the equation and discuss SOMEONE ELSE'S affliction and now your information advantage is gone.

I go into my doctor's office VERY well informed, but I don't make a habit of telling them they're wrong. If I suspect they're wrong, I find ANOTHER DOCTOR. I don't make the diagnosis myself.

Do you ever watch House? Medicine is NOT EASY.

Being an 'economic sociologist' or 'political economist' I have a great excuse for ignorance or half-bakedness. Even so for years I've been saying (or wanting to say) to family and friends who screw up our personal finances, and to political activists who screw up our economies, that ignorance of economics is little different from ignorance of law viz. the principle of ignorantia juris non excusat. It's a difficult issue, but there are logical (or emotional!) grounds for regarding it as, in effect, a crime, or a prohibition on ignorance. So three things must happen -- (1) replace maths with economics at school and eliminate this dangerous social form of illiteracy, (2) regulate standards in the economics blogosphere, and subsidize it (just kidding!), (3) deal with the resultant inequalities between powerful economics professionals and weak non-professionals by making economists legally liable for their knowledge or lack of in the same way lawyers are (kidding or not?).

josh wrote: "It may be that its (mostly) quackery."

Based on what Tyler said and many of the comments, you could drop the parenthetical. However, it is possible to distinguish between degrees of quackery; I would recommend Massimo Pigliucci's recent "Nonsense on Stilts: How to Tell Science from Bunk" for a primer.

Applying some of his diagnostics, I don't see much evidence of outright fraud in economics, on the level of snake-oil salesmen who know their products don't work but claim otherwise.

However, there do see to be a fair number of economists who don't let facts get in the way of their beautiful theories, which would be analogous to homeopaths - and, like the sellers of homeopathic medicine, the fact that they really think their theories work isn't much consolation to those harmed when those theories guide public policy or private business off a cliff.


I've been thinking much about exactly that lately. It seems like these guys are forgetting the basic idea - unless you can predict something, what good are you?

Is the link dead? I don't see the essay on the google docs.

I think that this comment on Sumner's blog sums it up the best:

28. June 2010 at 03:10

I think the economist “worker bees† in the Fed could have asked to be left alone if they had continued to produce the honey after 2008.


I don't have much use for trolls with phoney monikers who simply make obscene comments without any substancs,
which is certainly the case with you. Are you a refugee from one of those blogs where anonymous wackos
insult each other pointlessly and endlessly?

I confess that combinations of stupidity and hypocrisy annoy hell out of me. If this DP Roberts had not gone
on about his Ph.D., I would not have given a hoot. There are plenty of obnoxious morons who comment here and
elsewhere all the time (hack, cough). But when someone starts bragging about having a Ph.D., even if they are
just ever so humble to admit that they do not have a world shattering research record (indeed, it would appear,
to have a big fat zero one in this case), I expect a bit more knowledge and intelligence than the usual nonsense.

So, ironically in a post about Ph.D.s and blogging, DPR makes error upon error and falls on his face, with
some other clown declaring him to have made the smartest statement in the thread. Tyler really needs to get
back here from Berlin. Too many pastries over there.

Oh, and I checked. DeLong has nine papers forthcoming. Deadwood? This is not even a joke.

I'm glad someone finally wrote and said what needed to be said. Laymen need to have a proper level of respect and deference for those who have thought about the issues MUCH harder and for MUCH longer than they have. If you don't like the way this sounds, that's your problem because it isn't arrogance on my part to say so, but rather arrogance on yours to think that such a statement is debatable.

I'll just leave it there because DP Roberts has done the heavy lifting here and there is no sense in being repetitive; thank you DP Roberts.

Economics builds scientific models to explain why people behave the way they do. And economists use these models, in conjunction with their observations of the world, to analyze and explain why things happen the way they do.

BR: "Krugman (who is an
egomaniac with a problem of not citing people properly)"


"Laymen need to have a proper level of respect and deference for those who have thought about the issues MUCH harder and for MUCH longer than they have. If you don't like the way this sounds, that's your problem because it isn't arrogance on my part to say so,"

But have they? They have certainly thought hard about what their professors and advisors demanded of them. But have they really thought harder about the macro problems we face than for example a Barry Ritholtz who says?

"Too many of the dismal set are still wed to the incorrect idea that we had a housing bubble when the evidence is overwhelming that we had a credit bubble."

Sure, some may have like Reinhart/Rogoff, Shiller, etc. However, look at someone like John Hussman, a practicioner WITH a PhD who left academia because "the stakes are so low." While some are paid to think all day, some are smarter than us, and some leverage the right tools, they still only have 24 hours in their day tot hink about this stuff. Credentials may have some correlation, it may be negative if they have wedded themselves to the wrong toolsets, but they are largely irrelevant. Many are also so concerned with garnering credit they may be unable to seek out all the best sources. Politics may blind some of them. It has nothing to do with respect or deference. To say that respect is demanded simply for who they are, not because they are right certainly is the definition of arrogance.



"OK, so along you come and completely misread and misrepresent what DeLong said (and you did not figure this out,
"Tom"? I shall avoid ad hominem dumping on you.)"

As you should. I actually agreed with Delong in a comment on his site.

As for Roberts, his comments on this site have been quite good on average, better than the average Rosser comment (less paritsan) and much better than the average DeLong post. A google of your name is no more impressive.

Roberts may have been a bit ill tempered, yours was much more childish.


I have explained what ticked me off. I have yet to see any refutation of any of the factual issues I raised with Roberts's comment that you thought was so great.

Regarding googling, well obviously this is a matter of opinion, although I repeat that if you google "D P Roberts economics" you actually get links to five other people before the first one for him pops up, which is this comment on this thread that is so full of garbage. You can google just my last name, and my website is the third hit. I leave it to others to judge what comes up if you actually google my name more fully.


I have a track record of defending people with whom I disagree. When I see someone behaving badly and unfairly to someone else, especially when I smell hypocrisy in it, I get pissed off, and when I get pissed off, I cause trouble. This has happened in this case, and I see no defense by you of Roberts on any factual issues.

I do consider DeLong's deleting and rewriting of posts to be "censorious." Of course he has a right to do it, but people have rights to do all kinds of obnoxious and annoying things that they should not do and for which they should be criticized.

Let me note one case where I have defended very vigorously and publicly someone with whom I disagree when I felt that they were publicly mistreated. I have done so numerous other times.

Ironically, the case I have in mind (sorry, no links, but I bet it can be easily dug up by googling) was on Brad DeLong's blog. It involved Patrick Michaels of the Cato Foundation, one of the most prominent of the "global warming skeptics," who also happens to be a personal friend of mine whom I have known for decades and whose work I am deeply acquainted with. This was a few years ago, and Michaels was publicly taken to task by Krugman for criticizing climatologist James Hansen. Michaels was accused basically of slandering Hansen before a Congressinal committee. DeLong took this up from Krugman and continued the assault. I defended Michaels, and will not recount all the issues involved, as it was very complicated. However, I received massive global condemnation for this, and the battle went on for well over 100 comments, with me duking it out with about a dozen different people from all over. I stood my ground alone because I believed that he had been wronged, and that is exactly how I act when I perceive such things to have happened.

So, Potter-boy, this is not about ideology. It is about some Zero of a self-proclaimed Ph.D. foolishly and inappropriately trashing Brad DeLong's professional and scholarly record. Get over it and grow up.

Professor Rosser,

When I endorsed DP Robert's arguments, surely you would grant me that this sort of thing doesn't mean one agrees with everything that was said, nor with the tone; and, so this issue of Professor DeLong's qualifications doesn't concern me. I think reasonable people would agree that he is more than qualified and respected as an economist. When I approved of what DP Roberts had said, I was being economical -pardon the pun- in my description intentionally since I didn't want to be repetitive, but since it is required now, these are what I thought were good contributions:

"This isn't to say I'm always right. The difference is that when I'm right I usually know I'm right. When I'm wrong, I usually had some good theoretical or empirical basis for being wrong initially and when presented with a cogent argument, I admit error. But few non-economists are so equipped. Knowing what you do not know is a hallmark of education and self-respect†¦
If economics were easy, we wouldn't have as many problems as we do†¦
Not a day goes by on Calculated Risk where several dozen Black Helicopter and UFO spotters comes up with their latest conspiracy theory explanation for every event†¦
†¦You are equivocating on the word "argue."
Yes, people engage in disputes or disagreements with doctors, but FEW people are informed enough to engage in meaningful debate over a diagnosis or treatment. This is not to say physicians are always right, always diligent, or that a patient might not get lucky with Google or WebMD. But really that's not the point I was making. When you argue with a doctor you're doing so from a position of ignorance. You might obtain an expert second opinion and confront a doctor, but be assured unless you went to medical school you are LIKELY not to know what the hell you're talking about.
Indeed, you are more likely to know that something is wrong with yourself when the doctor can find no objective evidence. Now take yourself out of the equation and discuss SOMEONE ELSE'S affliction and now your information advantage is gone.
I go into my doctor's office VERY well informed, but I don't make a habit of telling them they're wrong. If I suspect they're wrong, I find ANOTHER DOCTOR. I don't make the diagnosis myself."

So since my interest isn't in personal attacks, if you disagree with the notion that the experts should have SUPER priority over "cool" reporters or "concerned" citizens, then I'd be interested to hear why you believe this is so. If you agree with the previous statement, but just consider the original writer of the essay and DP Roberts to be hypocrites
then that's another issue that isn't all that important; I say that in a completely non-snarky way.

And now, for a public service announcement:

I'll just say one more thing and this is intended for all who read it. There seems to be the impression among the general masses that when we talk about PhD carrying economists or Phynance PhD's, we are really talking about MBA type idiots who are at the golf club talking about politics. If you think this description is accurate, I invite you to read any article on Econometrica, and further, I would ask you, have you ever had any formal affiliation with a Top 10 Finance or Economics department? If the answer is no, and your information is gathered from "impressions" and "trusted sources" then, with all due respect, LOL...

"You don't argue with your doctor about medicine"

I do. I have declined some medicines my doctors have prescribed after reading up on them on the internet and concluding that the side effects made the cure worse than the disease, and have requested, and gotten, different medicines. The practicing physician cannot know all the details about each and every drug and one can find out more information about it than he knows on the Internet.

Prof. Cowen,

I don't see why saying that economists are constantly subjected to correction from non-experts, practitioners, or the self-educated somehow shows that economics is hard or easy. I also don't see the relevance saying saying that you'd take non-professional bloggers over professional economists for public policy issues any day.

All that shows is that there are a lot of awful professional economists.

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