Sunday, December 21, 2008

The market for economics: what should economists study?

The Boston Globe has a story in today's Ideas section about whether academic economists will and should redirect their energies to focus more on events like the current crisis (and less on the "luxury goods" of more academic or more microeconomic topics): Paradigm lost--Economists missed the brewing crisis. Now many are asking: How can we do better?

It's always good for individual economists to think about how they want to direct their efforts. A big crisis like the current one will surely cause some people to redirect their work to the new (and old) questions that it raises, and the new opportunities it presents for studying them.

But I am reminded, at times like these, that science is an incremental business with its own internal agenda. We don't always make the most progress by studying the most important problems directly. We often choose problems to study by some combination of their importance and their tractability. That is, sometimes we choose subjects to study because the tools (or the data) have gotten to the point where we can make progress on them, not because they have grown in importance.

I recall reading similar articles during previous crises. One that sticks with me was by an author who had looked at a recent issue of the American Economic Review, and complained that none of the articles were relevant to the stagflation we were then experiencing. Economists ignored important questions, he complained, and concentrated on small beer. I remember casually thinking of writing a reply along the lines of "I just looked at a recent issue of the Journal of the American Medical Association and noticed that all the articles are about relatively small scale problems, none of them directly addresses how to cure the major problem of medicine, which is Death."

My advice to young economic researchers is to keep your eye on the important questions you would like economics to be able to solve, but don't feel you have to take the steepest path up the mountain, feel free to look for ways to make the ascent step by step.


Rick said...

This reminds me of a talk by Richard Hamming, a mathematician and early computer scientist who worked at Bell Labs. He suggested that researchers should work on the practical problems -- the problems that are solvable and interesting given the state of the art today. But he also suggested allocating some time to thinking "great thoughts" -- time focused on the big issues and really important questions. He says it better than I do:

Anonymous said...

Can't argue with this more. When Einstein started working on relativity, he just wanted to solve the puzzle about the constant speed of light, he didn't do that for solving most important problems in physics (and who knows what was THE important problem at that time?).

I think the idea of invisible hand applies here. When you go deep into a problem, you will be led to address the important problem - at least this is what I believe.