Saturday, March 5, 2011

The state of economic theory

Jeff Ely at Cheap Talk reviews the state of economic theory and lists four positive signs (among them a plug for market design):
  1. Theorists have been recruiting targets for high-profile private sector jobs.  Michael Schwarz and Preston McAfee at Yahoo!, Susan Athey at Microsoft for example.  In addition the research departments in these places are full of theorists-on-leave.
  2. Despite some overall weakness, theory is and always has been well represented at the top of the junior market.  This year Alex Wolitzky, as pure a theorist as there is, is the clear superstar of the market.  Here is the list of invitees to the Review of Economics Studies Tour from previous years.  This is generally considered to be an all-star team of new PhDs in each year.  Two theorists out of seven per year on average.  (No theorist last year though.)
  3. In recent years, two new theory journals, Theoretical Economicsand American Economic Journal:  Microeconomics, have been adopted by the leading Academic Societies in economics.  These journals are already going strong.
  4. Market design is an essentially brand new field and one of the most important contributions of economics in recent years.  It is dominated by theorists.

HT to Eric Budish, who is one of those guys Ely has in mind...

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