Who are the most overrated economists?

I was asked that question over lunch while visiting the PPE program at UNC, and my answer was this.

In general the market in ideas and reputations of economists works fairly well, at least in the United States.  Nonetheless at any point in time, the most overrated economists are the most highly rated young empirical economists at the top schools.

Think of it this way.  The half-life of a good empirical result is getting progressively shorter.  Good empirical papers no longer stand as definitive accounts for fifteen years and sometimes not even for fifteen months.  The science is getting better, but the individual economist is becoming less important, as we might expect from a growing division of labor.  That is healthy, but it has implications for the distribution of reputation.

The total amount of repute and renown accorded to individual top young economists does not decline at the same rate that individual contributions become less important.  That total amount of repute and renown at say Harvard, available to be doled out to the latest hot young economist, is fixed in the short run or may even be rising, due to the high returns on the school’s endowment.

So those economists end up individually overrated, even though as a whole they become more impressive over time.

Working backwards, one might be inclined to think old theorists and economists who have invented or fleshed out general methods are the most underrated.

Comments

We know what you really said.

"Basically, everybody but me".

Overrated is different than bad. I've spoken with Dan Airely before and he's a very nice, smart guy, but I don't believe his ideas hold up well enough that he should get the amount of attention that he does. I also don't get why economists love your buddy Caplan. He definitely doesn't deserve his own Wikipedia page.

If Ariely goes too far, where should we stop? (I think irrationality is well documented, and the argument now is about how regular and predictable non-cognitive behavior really is.)

When did I say goes too far? I said some of his ideas are wrong. I mean literally incorrect.

In neither comment were you very forthcoming, which leads me to believe that you want to downgrade Airely without saying anything ... quantifiable.

OK, here's one example. In Predictably Irrational, he uses suggested service plans for cars as an idea to imitate for health care. But people don't follow the suggested service plans. So, his behavioral advice is based on behavior that is about as unrealistic as traditional economics.

Like I said, smart guy. Really nice. Not consistently wrong, just somewhat overrated. That's not a downgrade. I just don't know if he deserves a WSJ column, for example. Although I have to admit, there are people less deserving of WSJ columns, including a certain GMU alum.

I don't know Ariely, but my impression is that he is more flip in prescription than in analysis. And he can throw ideas around just because these are early days. It will be decades before BE is accepted enough to impact a major legislation.

As an example, BE did not even get a toe-hold in the soda size discussions. Foes of behaviorall perspective called the size cap a soda ban (preposterously) and every BE researcher that I saw immediately fled in fear.

"Too soon," they said to discuss actual economic behavior with voters.

jp, the way I see it, Social Security (1935) was major BE legislation, even if only intuitively rather than in its 21st century fleshed out version.

I mean, how old is the idea of 'forced saving'? BE through and through.

Brian, I was thinking more about the sodas example, and I think modern BE folk want actually to never force anything. They want to change the defaults, change the framing, change the choice architecture, but never never "require."

That might actually be a flaw in modern BE. I mean, if you find that the human behavior is sufficiently below par (volunteer savings) then the solution may need to be forced.

I get it. I've read Sunstein and Kahneman. It's good stuff, but I see it operating around the edges. The 'truth in lending' APR requirement and 401(k) design is about as good as it gets, methinks.

Banning 44 oz drinks is officious nanny-stating with more than a whiff of elitism, IMO.

The big BE stuff was tackled a few generations ago. I don't see any revolutions comparable to this coming down the pike.

I suspect is is more about establishing a secure framework, before launching big initiatives, than because they actually think there are no big opportunities. (Canadian alcohol pricing research makes waves abroad, not so much at home)

I actually think the size-cap was a trivial restriction, and that the tremendous and yes irrational response to it was very sad.

Oh, in related news: Each fast food meal bumps up BMI by .03, study says.

RE: Caplan

I would definitely be interested in your criteria for which economists deserve Wikipedia pages.

Other than JBC winners? I dunno. Authors of widely used textbooks?

What about economists before the JBC?

But in general, that seems really extreme... there are plenty of really good economists that haven't won the JBC medal or had a widely used textbook. There would probably be less than 100 pages for living economists!

I don't know if he's the most, but I would like to nominate Jeffrey Sachs.

Beat me to it.

This is nonsense. Basically, because empirical results are more easily subjected to further testing, people with expertise in that area are overrated. People with expertise in pulling vague theories out of their ass are underrated, because these vague theories are hard to subject to useful criticism. Okay.

It is obvious that empirical economists are always going to be overrated because their methodology is deficient but their conclusions are taken seriously far too often. A few equations and an assumption of an equilibrium that does not exist in a complex system like the economy are inadequate to reveal much that is true except by accident.

Overrated by other economists, or overrated by the public? If the latter, an important signal is being interviewed on Charlie Rose.

We could go back a short time to the Fama-Shiller Nobel. That's a funny one because so many of us split on which is overrated.

I personally think Fama made a key error, that the observation of randomness implied a single mechanism .. and that Shiller's more complex explanations are more satisfying.

the bullshit is really flying today

More specific than empirical, I would have to say empirical development, aka RCT. Beyond the innovators, who are rightfully famous, most findings don't seem applicable, even *within* development.

Hayek. At least on the internet he is.

Some of the economists who fleshed out and are fleshing out general methods which are widely used and hugely infuential are the economic statisticians. Methods to estimate and measure the thing you're talking about are part and parcel of scientific enquiry, suge people figure prominently in the Science 'discoveries of the year' and are often the people who are awarded the real Nobel's.

How about all macroeconomists? You know, since they are regurgitating BS...

15 comments in and not even a nod towards the Krug'ster or is he not considered an economist anymore?

Here's the thing about Krugman - he is truly brilliant, but he is overrated by many people. I have friends who act like nobody else has ever won a Nobel Prize.

Agreed, brilliant but highly overrated, in recent times, as an economist.

I'm not trolling, but what's the brilliant part?

I'm by no means an expert, but I believe his biggest hits are his works on balance-of-payments crises, trade policy allowing for monopolistic competition and economies of scale, and his diagnosis of the zero-lower-bound's consequences for Japan's stuttering. More recently, I really liked his debt and deleveraging paper with Eggertsson.

Oh, I can't resist though. As good as his academic career has been, I find his to be one of the shrillest of voices in the back-in-forth sniping found in more widely read print.

Some links,
http://www.macroeconomics.tu-berlin.de/fileadmin/fg124/financial_crises/literature/JMCB_11__1979__Krugman.pdf
http://www.princeton.edu/~pkrugman/scale_econ.pdf
http://www.brookings.edu/~/media/projects/bpea/1998%202/1998b_bpea_krugman_dominquez_rogoff.pdf
http://www.princeton.edu/~pkrugman/debt_deleveraging_ge_pk.pdf

His genius is in his sophistry. Krugman knows his audience through and through and crafts stories they desperately want to hear. But what puts him in the top 1% of fabulists is his ability to set to howling on cue those he has painted as dire wolves in his little morality plays.

Krugman is a great economist, but believes economics must be subjugated to his true calling as a moralist.

Read Krugman pre Bush Derangement Syndrome. Based off the garbage he writes today you wouldn't believe the things he wrote in the 1980's and 1990's - oddly enough the reason he won a Nobel.

Krugman is a fantastic technician, which is the nature of the work that caused him to win the Nobel. But absolutely atrocious at having any sense about how to process the big picture. He's intelligent, but has no wisdom. Brilliant, but totally un-insightful. He'd make a fantastic data cruncher, but an awful CEO. Krguman's the quintessential 21st century intellectual.

?

I think all his published work up to about 1998 (in academic journals) was theoretical in character. I do not have access to EconLit anymore. Has he been publishing empirical work?

How ironic. I would argue that if we want to see something that is overrated we need look no further than the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Good point! He's not an economist anymore. He's a journalist. To his credit he picked the perfect time to become a journalist, and probably makes more from his NYT columns than he does as an academic. #SupplyandDemand

Silly question, because you don't consider the starting point.

Say you have a poor economist, and you rate him "fair", and thus, he/she is overrated.

Let's say you have a very good economist, and you rate him/her "excellent".

Could you fairly say both are overrated, and if you say so, whose advice would you follow.

Greenspan. Self-perpetuated.

Harder question: Who are the most underrated economists?

Marx.

I'd rate Marx highly as a social and political theorist, but economic theory should describe reality, and the labor theory of value flunks the test.

Marx didn't come up with the labor theory of value. John Locke, Ben Franklin, Classical economists like Adam Smith and Ricardo, and others supported the labor theory of value.

Smith and Ricardo reluctantly used it. Both were very unhappy with its implications but could find no better determinant of value.

Yes, but Marx brought it as far as it would go, and its absolutely critical to his work in a way that it is not to his contemporaries.

It's still bunkum though, and inelegant bunkum at that.

Really? You rate Marx highly as a social and political theorist? The man was an irrational lunatic who has been refuted many times. I see nothing about any of his theories that can be said to be underrated.

Is there more Marx should be remembered for than the labor theory of value (which I think most wish we could forget)? I do really like the passages in the Manifesto that anticipate globalization.

Since I asked, I'll put my two cents in. Olivier Blanchard is an economist whose work I greatly admire, but to the extent he is known outside the field it is as the IMF guy who said macro was great right before the world blew up. Among 20th century economists, I wish Hirschman was better represented in undergraduate curricula.

Blanchard is great. He reminds me of Allyn Young, brilliant economist who unfortunately predicted that equities had reached a permanently stable plateau days before 1929. "Increasing Returns and Economic Progress", 1928, is quite brilliant.

Maybe worth crediting Marx for his economic-historical determinism and class theory, which are sometimes useful filters for discussion.

Okay, is this the edgy thread. Answering Marx to this type of question is oh so cool. What a totally different and provocative answer. Can I play too and say Hjalmar Schacht? Too edgy?

Unlike Marx, following Schacht's prescriptions resulted in an economy getting better.

Jesus Christ.

Diogenes of Sinope.

Ra.

Any respectable evolutionary biologist or computer scientist since the year 1980, and some mathematicians.

The whole field of economics is tremendously behind on understanding game theory. There are still well reputed concepts in theory and microeconomics that one can see are blatantly wrong just from knowing what a Nash Equilibrium is, and any dilletante who had the time to wander over would be seen as a revolutionary.

It would be so wonderful and magnamonious if you could enlighten us with an example. Not worth your time to be a revolutionary?

It's a common trope among the hard science types that economics is full of a bunch mush-brained slack-jawed unrigorous idiots. The idea is that if the physicists, mathematicians or computer scientists ever decided to deign themselves by doing economics that their work would immediately revolutionize whatever subject they decided to analyze. They have access to so many tools and skills that are simply beyond the pale of economists that it'd be like a man from the 21st century showing a bunch of Neanderthals basic technology.

Generally these crossover attempts fall under the category of "econophysics." Without a doubt econophysics research constitutes some of the lowest-quality, most disconnect from reality, unnecessarily complicated economics that gets published. Way too often econophysics tries to completely re-invent the wheel, and miserably fails at even researching basic results from conventional economics.

@Doug:

A minor disagreement: Many hard-science types critique economics, but not from the angle that "we can study this better" but more "no one can" or "you are promising too much" perhaps.

About “econophysics" I strongly agree. There's a bunch of mis-fit, megalomaniac physicists who think they have a fascinating insight into fields they have no clue about only on the strength of their logic & math. A classical recent example was this guy who was crowing loud about how he'd make airplane boarding so much faster.

Most mathematical economics is far from reality because it relies on simplifying assumptions that are not real. And contrary to what Friedman argued, the starting premises matter.

Hey. Within measurement error, all published economists' understanding of comparative advantage is unequivocally wrong. The only thing their arguments logically lead to advocating is communist style centralized planning.

Now one does have to back up and complicate things by proposing an actual model, slightly simplified, without too many arbitrary parameters about capital investment costs and externalities and legal regulation, assume, say, that increasing or decreasing competition has monotonic effects. Microeconomics so rarely does that when discussing markets after all.

Consider that a market involves several independent businesses that produce goods and services and sell them for a common currency.

That'll take a while to sink in, because unlike most economic models it's completely unrealistic and not true to the real world, right? A model of trade requires assumptions like bartering of raw goods with no currency involved, no knowledge of any competition, possibilities of failure of communication and complete loss of transaction, like a galleon sinking at sea.

Take the classic narrative of 100 businesses in England and 100 businesses in France, which might produce various goods.

No business, free to act individually, is going to specialize in anything that it does not have an absolute advantage in, and those that don't have any absolute advantage are going to be mostly excluded from trade and selling anything profitably to any consumers. That's the basic game theory.

Any producer of a good will seek to capture as large a share of a market as possible, as that will maximize profit. Why, in principle, would one business engage in fierce competition to unprofitably produce a good instead of switching to another good that it has an absolute advantage in, and hence could meet all demand and undercut any competitors as fast as it could acquire more labor and capital and expand?

It's not a Nash Equilibrium. If all the French business sold widgets they produced at great expense and no absolute advantage and any one English business could defect, produce and sell that good at lower costs while paying employees better and so on, it would and dominate the market.

Unless an authoritarian state mandated the production of goods and services in such an allocation and enforced it, it would not occur. So the idea that free markets lead to higher utility, within societies, between societies, whatever, by encouraging specialization by comparative advantage is false. By game theory free agents will

It's understandable that the theories of historical figures from long ago are outright wrong. They didn't know what DNA or atoms were either. They lived in different times.

It really would take a lot of time to review reams of literature in economics and find all the failures to understand game theory and logic as authors assess utility, competition, trade and so on. Not understanding that the Ultimatum Game has an infinite number of Nash Equilibria and thus it's a pointless philosophical example to argue about in terms of rationality seems like another popular topic though. Any given paper could have typical errors because economists are simply decades behind on game theory, at least below the Nobel Prize level, and a paltry few individuals have not covered for the total volume of their colleagues across all topics.

So there's one lesson. Regardless of other context, if your model of trade does not prescribe a Nash Equilibrium it's completely unattainable in a "free" market by pure theoretical principles. Go check whatever pet theories and published papers you like. Use that to advocate for other political systems and at least you're honest and not incompetent at math.

It is interesting that Susan Sorensen describes a narrative British and French businesses. That, in fact, has already happened: the French lost the glass-making business to the English during the Industrial Revolution.

http://www.uh.edu/engines/epi2263.htm

You do realize that John Nash has a Nobel in Economics?

I am happy there is at least another woman, besides me, reading the comment section of the blog. However you don't seem to grasp in any way shape or form what economist are talking about when we talk about game theory, or Nash equilibriums....

Every aspiring economist goes through a phase in which they believe game theory is going to be the be-all-end-all backbone of economic theory. Then they realize that its rather clunky so they go back to standard macro/micro.

I took a fascinating class on a game theory analyzes of the prisoner's dilemma that showed why individuals cooperate rather than cheat under certain circumstances (standard prisoner's dilemma says that the optimal strategy is to cheat).

The class was pretty much an explanation of these two papers he wrote:

http://www.uni-saarland.de/fak1/fr12/csle/publications/2002-09-10.htm

While we are on this subject, I was wondering who Tyler thinks the most under-rated economists are ...

Spoken like someone who doesn't do empirical research, Tyler. The majority of _good_ empirical papers, particularly ones that you see as job market papers (at least the ones I've seen lately!), aren't considered good because we, say, now know the price elasticity of demand for mangoes in Brazil. They're considered good because they either 1. Bring a new method to bear on an important subject; or 2. Open up access to thinking about a new subject. There's a reason we still teach, say, Berry-Levinsohn-Pakes in grad classes, even though we don't really care much about the 80s auto market.

To be clear, this is in response to the "half-life of a good empirical result."

"No business, free to act individually, is going to specialize in anything that it does not have an absolute advantage in"

Why?

"and those that don’t have any absolute advantage are going to be mostly excluded from trade and selling anything profitably to any consumers."

Why?

"That’s the basic game theory" - ???!!!

Are you really sure you have understood the ideas of gains from trade? Maybe try not to think in terms of aggregates like England and France. Try to think instead of individuals and opportunities to produce and trade.

Most overrated economist: Acemoglu!
Every graduate program makes you grind through his papers, not leaving enough time for older theorist, who are grossly underrated. Stiglitz explains in his very short papers with very simple and intuitive analysis the same model that takes Acemoglu 20 pages of horrendous math. More math does not mean it is more robust, it just makes it harder, for the very same policy people you are trying to influence, to read your paper....

Looking at this question from a media perspective, I would say that the most overrated economist is Krugman while the most underrated economist is von Mises. Krugman is adored by the liberal media while von Mises, a libertarian, is looked at with contempt.

The disparagement of Paul Krugman was predictable, given the ideological orientation I believe to characterize faithful readers of "marginalrevolution.com". Anyone who questions Paul's credentials as a theorist has obviously not read his papers on trade. Most underrated economists? How about Marx, if for no other reason than his emphasis on class interest and his predictions about globalization? [How can anyone presume to explain the distributions of income and wealth without recognizing the importance of class interests? Marx is a great starting point.] Which economists are most overrated? This group surely includes anyone who attempts to use Clark-Wicksteed style marginal productivity theory alone to explain changes in the structures of income and wealth during the past three decades. Another underrated economist? How about John Kenneth Galbraith, for inelegant but cogent theories of the cyclicality of regulations and of bezzle/(changes in GDP)? JKG always deserved more credit than the profession extended in his direction. Galbraith also deserves credit for his theories of countervailing power, and for his discussions of class interest (e.g., the technostructure). More overrated economists? How about all the folks who assert scientific objectivity while advocating policy changes based on the Pareto inferiority of current states while blithely ignoring the distributional consequences of the policies they advocate? How to ameliorate the social and psychological disruption associated with "creative destruction" (or, per Paul Romer, "churn") without losing the advantages of technological progress and freer trade is no more rejectably normative than is advocacy of policy changes based purely on their alleged Pareto superiority.

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