Is economics a science?

Blogger Don Luskin takes exception with my description of economics as a type of science. He writes:

Where is the utterly essential ingredient of repeatable experimental verification of falsifiable hypotheses? Without that--and economics surely doesn't have it--there can be no claim to science or the scientific method.

I disagree, for two reasons (either of which is sufficient to refute Don's point):

1. Many sciences do not rely on experiments but, instead, use the data that history provides. Consider an astronomer studying the creation of galaxies or an evolutionary biologist studying the development of species. These disciplines, like economics, are primarily observational rather than experimental, but they are clearly scientific.

2. The field of economics does use experiments. Vernon Smith won a Nobel prize for "for having established laboratory experiments as a tool in empirical economic analysis, especially in the study of alternative market mechanisms." Today, work in experimental economics is growing rapidly. (Several Harvard faculty are involved in this work, most notably Al Roth.)

One could argue that economics is a particularly underdeveloped science, that there is still much we do not know. Here I would agree. But telling today's students that the study of the economy is not a science is like telling a young Nicolaus Copernicus that the study of planetary motion is not a science, or a young Charles Darwin that the study of species is not a science. They will ultimately prove you wrong.

Scientists and Engineers

I have posted a new paper on my Harvard website. Here is how it begins:

The Macroeconomist as Scientist and Engineer

Economists like to strike the pose of a scientist. I know, because I often do it myself. When I teach undergraduates, I very consciously describe the field of economics as a science, so no student would start the course thinking he was embarking on some squishy academic endeavor. Our colleagues in the physics department across campus may find it amusing that we view them as close cousins, but we are quick to remind anyone who will listen that economists formulate theories with mathematical precision, collect huge data sets on individual and aggregate behavior, and exploit the most sophisticated statistical techniques to reach empirical judgments that are free of bias and ideology (or so we like to think).

Having recently spent two years in Washington as an economic adviser at a time when the U.S. economy was struggling to pull out of a recession, I am reminded that the subfield of macroeconomics was born not as a science but more as a type of engineering. God put macroeconomists on earth not to propose and test elegant theories but to solve practical problems. The problems He gave us, moreover, were not modest in dimension. The problem that gave birth to our field—the Great Depression of the 1930s— was an economic downturn of unprecedented scale, including incomes so depressed and unemployment so widespread that it is no exaggeration to say that the viability of the capitalist system was called in question.

This essay offers a brief history of macroeconomics, together with an evaluation of what we have learned. My premise is that the field has evolved through the efforts of two types of macroeconomist—those who understand the field as a type of engineering and those who would like it to be more of a science. Engineers are, first and foremost, problem-solvers. By contrast, the goal of scientists is to understand how the world works. The research emphasis of macroeconomists has varied over time between these two motives. While the early macroeconomists were engineers trying to solve practical problems, the macroeconomists of the past several decades have been more interested in developing analytic tools and establishing theoretical principles. These tools and principles, however, have been slow to find their way into applications. As the field of macroeconomics has evolved, one recurrent theme is the interaction—sometimes productive and sometimes not— between the scientists and the engineers. The substantial disconnect between the science and engineering of macroeconomics should be a humbling fact for all of us working in the field.

To avoid any confusion, I should say at the outset that the story I tell is not one of good guys and bad guys. Neither scientists nor engineers have a claim to greater virtue. The story is also not one of deep thinkers and simple-minded plumbers. Science professors are typically no better at solving engineering problems than engineering professors are at solving scientific problems. In both fields, cutting-edge problems are hard problems, as well as intellectually challenging ones.

Just as the world needs both scientists and engineers, it needs macroeconomists of both mindsets. But I believe that the discipline would advance more smoothly and fruitfully if macroeconomists always kept in mind that their field has a dual role.

Update: Economist Arnold Kling comments on the paper at his blog.

The Sociology of Economics

A reader sends this interesting letter:

Dear Professor Mankiw,

I'm a resident at one of the Harvard hospitals. In the past couple of years I've had the chance to attend a number of inter-disciplinary seminars where you have statisticians, physicians, sociologists, anthropologists, epidemiologists and economists present. I've been impressed with what your discipline has to say: in virtually every seminar the economists are able to say something useful. Without inflating your ego, I've also noticed that the economists present better papers and are less likely to be caught off-guard in a seminar. They are also more likely to discover problems in the work of others. I've been trying to educate myself on the economic way of thinking by reading your blog, Freakonomics, and now, by slowly reading your textbook. But clearly, there's no substitute to being formally trained as one.

My question to you doesn't concern economics, but more its sociology. So feel free to ignore this email. At the seminar that I attend most often, I've noted the following:

1. The economists are the most aggressive people in the room. They have little patience for introductions, motivation, or "being nice". They want to spend the first 10 minutes trying to figure out the -entire- talk. If they're not happy, they tend to disengage. I will note that they're like this with each other also. Why are things this way in economics? There must be pluses and minuses to this way of interacting.

2. The economists are the only social-scientists in the room that are willing to argue with the statisticians. This could be that you are a more argumentative lot in the absence of substance, but also that you know something. I'm not qualified to tell who wins these disputes, but the statisticians seem to regard the economists with a high degree of regard. Why do you think that different disciplines view the importance of statistics differently?

3. There seems to no love lost between the economists and other social-sciences. Some of this has to do with the nature of interferce in the two disciplines: your colleagues are always concerned about confounders. Other disciplines like "to tell a story"; confounders are certainly of concern to them, but the issues of bi-directional causality, and omitted variables seem of second-order importance to them. As a physician, I share your colleagues view of the importance of "selection bias" (nice term, incidentally). Why do you think that different disciplines weight the role of confounders differently?

I posed these questions to one of the economists who regularly attends. His response (that I have permission to send to you) is as follows:

"In general, economists are smarter (we may be better looking too). It's fashionable not to say such things, but I will bet that if you look at the GRE and SAT scores of incoming PhD students at BU, Harvard and MIT, the average economist will sit at a higher percentile than the average (non-economist) social-scientist. Given that all the other disciplines are trying to recruit students with higher scores, I'm not willing to believe the explanation that these disciplines value other attributes that aren't measured in the GRE. Higher salaries in economics will tend to reinforce the "economists are smarter" phenomena. Smart people don't have the time waiting for the less-smart to catch up. If we can finish up the seminar in 10 minutes, then why not do it?

"To this ex ante advantage, add the role of superior and more rigorous training. Economics graduate school is not for slackers. It's like boot-camp in the Army. One example of this is that we are provided a much deeper understanding of statistics than every other social-science. Consequently, economists are able to publish in journals like JASA and the Annals of Statistics. No other social science is able to do this with the same frequency. This superior training, complemented by a generally higher comfort-level with mathematics is the principal reason for why economists will not shy away from statistics. I wish I had concrete evidence for my argument. At present, it's indirect evidence. But this "economics know more stats" argument is another reason for why we are more aggressive; we are able to see the strengths and weaknesses of a study faster than others who're not as fluent in the methods.

"Third, the set of advocates who are economists is quite small (I don't know if this reflects treatment or selection). In general, economists are more likely to make up their minds about whether a particular policy works based on theory or data. They may have priors, but not the the sort of "do-gooder"priors that advocates have. One of the reasons that economists are so aggressive with the non-economists is that we want to expose all the priors immediately. In my view, a lot of non-economics social science is straight advocacy. There is an important role for advocacy. It may influence policy more than science. But the nature of advocacy is to simplify and ignore nuance and confounding. But our (economists) beef with advocacy isn't its lack of nuance. We just get really upset when advocacy masquerades as science.

"Fourth, the economics job-market is just that -- a market. This means that the best people are more likely to be at the best programs. In other disciplines there are more "bad matches" (good people at bad places). What this means is that Harvard and MIT's economics departments are more likely to have the top economists than the Sociology Department is likely to have the top sociologists. This is important because what you're seeing at the Harvard seminars is an exchange between the best economists and not necessarily the best sociologists. The best sociologists may be able to clobber a mediocre economist."

I'm curious if you have some of your own observations to add to the above.

Best regards,
[name withheld]

These are fascinating questions. I see a lot of truth to the observations described in the letter. I have heard many others note, for example, that economists are generally more aggressive in seminars than other academics. I am not sure how to explain this fact.

To the hypotheses in the letter, let me add one additional conjecture, which is less charitable to me and my colleagues: Perhaps the skills that make a good economist are, for some reason, negatively correlated with the attributes associated with being an agreeable human being. That is, economics may attract people with a particular set of personality attributes, and perhaps these attributes are not the same set of attributes you might choose for your next dinner party.

This is not entirely conjecture on my part. For example, this study

"explores the relationship between student's personality types, as measured by the Myers-Briggs Personality Type Indicator, and their performance in introductory economics. We find that students with the personality types ENTP, ESTP, and ENFP do significantly worse in Principles of Macroeconomics than identical students with the personality type ISTJ."

What is this personality type ISTJ that excels in economics class? Check out this description, which say in part:

The ISTJ is not naturally in tune with their own feelings and the feelings of others.

Sounds like any economist you know?

Boys, Girls, and Teachers

The May NBER Digest is out, covering these topics:

• Economic Progress of Immigrants
• Unhappiness After Hurricane Katrina
• Matching Incentives Raise Saving
• Teachers and the Gender Gaps in Student Achievement

The last topic is particularly intriguing and provocative. Here is an excerpt:

In kindergarten, boys and girls do equally as well on tests of reading, general knowledge, and mathematics. By third grade, boys have slightly higher mathematics scores and slightly lower reading scores. As children grow older, these gaps widen....

[Researcher Thomas] Dee finds that gender interactions between teachers and students have significant effects on these important educational outcomes. Assignment to a teacher of the opposite sex lowers student achievement by about 0.04 standard deviations. Other results imply that just "one year with a male English teacher would eliminate nearly a third of the gender gap in reading performance among 13 year olds…and would do so by improving the performance of boys and simultaneously harming that of girls. Similarly, a year with a female teacher would close the gender gap in science achievement among 13 year olds by half and eliminate entirely the smaller achievement gap in mathematics."

Female science teachers appeared to reduce the probability that a girl would be seen as inattentive in science, though this had no discernable effect on girls' science achievement. However, female history teachers significantly raised girls' history achievement. And, boys were more likely to report that they did not look forward to a particular academic subject when it was taught by a female.

Overall, the data suggest that, "a large fraction of boys' dramatic underperformance in reading reflects the classroom dynamics associated with the fact that their reading teachers are overwhelmingly female."

An Epistemological Digression

I have been rereading Robert Pirsig's Zen and the Art of Motorcycle Maintenance. This passage really sticks with me:

After a while he says, "Do you believe in ghosts?"

"No," I say.

"Why not?"

"Because they are un-sci-en-ti-fic."

The way I say this makes John smile. "They contain no matter," I continue, "and have no energy and therefore, according to the laws of science, do not exist except in people’s minds."

The whiskey, the fatigue and the wind in the trees start mixing in my mind. "Of course," I add, "the laws of science contain no matter and have no energy either and therefore do not exist except in people’s minds. It’s best to be completely scientific about the whole thing and refuse to believe in either ghosts or the laws of science. That way you’re safe. That doesn’t leave you very much to believe in, but that’s scientific too."

Advice from Larry Katz

Via Nicholas Kristof:

“A broad liberal arts education is a key pathway to success in the 21st-century economy,” says Lawrence Katz, a labor economist at Harvard. Katz says that the economic return to pure technical skills has flattened, and the highest return now goes to those who combine soft skills — excellence at communicating and working with people — with technical skills.

“So I think a humanities major who also did a lot of computer science, economics, psychology, or other sciences can be quite valuable and have great career flexibility,” Katz said. “But you need both, in my view, to maximize your potential. And an economics major or computer science major or biology or engineering or physics major who takes serious courses in the humanities and history also will be a much more valuable scientist, financial professional, economist, or entrepreneur.”

The Cost of Being PC

Here is a ranking of academic disciplines by political correctness:

The most PC: Psychology, Sociology, English, History, Elementary education

The least PC: Criminal justice, Economics, Marketing, Accounting, Computer science, Biology, Finance, Management information, Mechanical engineering, Electrical engineering

Political correctness is defined here as "the belief that gender gaps in math and science fields are largely due to discrimination; support for affirmative action; and belief that discrimination is a key cause of racial inequities in American society. Generally, members of this cohort see race and gender as fundamental ."

I notice that the non-PC disciplines appear to correlate with the most lucrative college majors. Some might take this fact as even more evidence that life is fundamentally unfair.

Home Runs, Base Hits, and Nobel Prizes

Because this is Nobel season, faculty lunch at Harvard this week turned, naturally, to speculation about possible winners of the economics prize, which is to be announced Monday. (My older colleagues happened to be absent. Otherwise, the topic would have be a bit too awkward to broach.) I won't repeat the speculation about names, but a broader issue came up: What should the criterion be?

There was an apparent consensus that the Nobel committee prefers rewarding people for a few path-breaking works, rather than judging an entire career of contributions. Is this optimal?

If the goal is to provide researchers with the right incentives, it may not be. It is as if a baseball team paid players based only on the number of home runs. We would have too many players swinging for the bleachers and too few base hits. In economics, maybe we get too many of the best people trying to create new paradigms and too few engaged in more routine, applied research.

Update: Tyler Cowen has an interesting take on what the Nobel committee should aim for:

I see the welfare-maximizing use of the Nobel Prize as generating more publicity for economics, attracting more people to study the science, and giving the science greater credibility in the eyes of politicians, the public, and media. That means the committee should give prizes to economists who are articulate, intelligible, scholarly, and work on topics of real world interest. So far they have done a great job; let's hope for another first-rate pick.

The Nobel winners have extraordinary scholarly accomplishments, but compared to the typical top 1000 economist, are they really much more articulate, intelligible, and focused on topics of real world interest? I would like to think so, but I am not sure.

Neuroeconomics

The new issue of the New Yorker has a nice piece on neuroeconomics, the emerging field that tries to bring together economics and brain science. The article features, among others, my Harvard colleague David Laibson:

“Natural science has moved ahead by studying progressively smaller units,” Laibson told me. “Physicists started out studying the stars, then they looked at objects, molecules, atoms, subatomic particles, and so on. My sense is that economics is going to follow the same path. Forty years ago, it was mainly about large-scale phenomena, like inflation and unemployment. More recently, there has been a lot of focus on individual decision-making. I think the time has now come to go beyond the individual and look at the inputs to individual decision-making. That is what we do in neuroeconomics.”

To avoid confusion: Economics is still "about large-scale phenomena, like inflation and unemployment." It is not like we have exactly nailed those problems yet. But maybe Laibson is right that we need to redefine "microfoundations" as starting at the neuron and building up from there.

By the way, Laibson will once again be giving an ec 10 lecture this fall.

Thanks to The Austrian Economists for the pointer.

Posner vs Tilghman

Here is legal scholar Richard Posner, in his blog post from yesterday, on the gender gap:

the mean performance of women in college and university is superior to that of the men, but the variance of male performance is greater and as a result there are more male geniuses. There is no reason why the difference in variance should result in higher average male earnings; that higher average is probably the result of women's spending less time in the work force because of pregnancy and child care. Women's greater proclivity for child care may well have a biological basis, as may the difference in variance that I mentioned. In the "ancestral environment"--the term that anthropologists use to describe the prehistoric period in which human beings reached approximately their current biological state--women who were "steady" would have tended to have the maximum number of children, while natural selection might favor variance in male abilities because variance would produce some outstanding men who would tend to reproduce more than other men (including the "steadies") in the polygamous conditions of prehistoric society. If the explanation based on evolutionary biology is correct, women will continue to be "underrepresented" in high-achievement positions in many fields; why anyone should care is beyond me.

And here, from today's Wall Street Journal, is Princeton University President Shirley Tilghman:

There are 25 years of good social science that demonstrate the many cultural practices that act collectively to discourage women from entering and continuing careers in science and engineering. The research is overwhelming, and it is there for anybody to see. On the other hand, the data that would suggest there are innate differences in the abilities of men and women to succeed in the natural sciences are nonexistent.

I think it might be a good idea to get these two together for a debate.

The Optimal Use of Economists' Time

I received this email over the weekend:

Hi Professor Mankiw,

I am from Ireland and have an economics degree. We had to study your economics books 'Principles of Economics' and the intermediate level 'Macroeconomics' throughout the course, and I found them not only very insightful, but also incredibly well written. I have been reading your blog a lot as well, and find it equally well written.

At the moment I think that there is a dearth of 'popular' economics books, the exception being Tim Harford's 'Undercover Economist'. Popular books are endlessly written on science (which has entire sections of bookshops devoted to it) politics, philosophy etc, but almost none on popular economics. This is, in my opinion, a serious problem as there is a considerable degree of economic illiteracy among non-economics graduates. I put the question 'why is ireland rich and africa poor?' to many of my friends recently, who study law, science and even business (but not economics), and their response was depressing. The main answer was that Africa was 'dominated by western multinational companies', with variations on it being that ireland stole goods from the third world or conducted 'unfair' trading practices, to the alarming 'ireland is rich because it has a minimum wage'.

In light of this I think that you should write a popular economics textbook. The first lesson in opportunity cost I had was from Ben Bernanke's own 'Principles of Economics' where he asked the question (p 50) 'should Greg Mankiw mow his own lawn?'. He pointed out that even though you could mow the lawn quicker than someone you might hire to do so, that it still did not pay to do it, as in that time you could be writing an economics textbook and making millions. I think you should apply that logic to writing a popular economics book - you could make millions. Also, as an economist, you can exploit a 'gap' in the market, and as Tim Harford has shown, there is demand for it.

Think about it, in the time it has taken to read this email (if you have, of course) you could be writing a popular economics book, each extra minute costs you money. What are you waiting for? You would not only make a lot of money, but you would do the world a favour. The positive externalities resulting from its publication, showing people how the world really works, or, as Harford puts it showing 'why poor countries are poor' would be enormous. Write write write!

Sincerely,
[name withheld]

PS If you do write it, try and organise it to be dropped on France, for free, and in large quantities. You would be doing Europe, and in particular my own country (whom France is repeatedly trying to bring into line with the nightmare 'European Social Model' through the EU, regarding us as a neoliberal trojan horse), a favour.

The email alludes to a pervasive phenomenon: A relatively small percentage of professional economists' time is devoted to educating the broad public. (I am not counting educating students in the classroom or through textbooks). Occassionally, there are some big hits, such as Freakonomics, but they are few and far between, and even Freakonomics emphasized off-beat facts rather than economic fundamentals.

Most top economists spend most of their time writing for each other rather than for non-specialists. Having spent much of my time writing for those obscure scholarly journals, I won't be too hard on the activity. However, I have often wondered whether our profession has misallocated resources, given the pervasiveness of economic ignorance.

I am always delighted when good young economists (such as Alan Krueger, Tyler Cowen, and Austan Goolsbee) venture outside the Ivory Tower to write for broader audiences. They are following in the footsteps of some great economists before them: Paul Samuelson and Milton Friedman, for example, wrote for Newsweek for many years. I remember reading those columns when I was a student. They certainly helped inspire me to enter the field.

I tried my hand as a columnist for Fortune magazine some years ago. You can find my old columns here. Maybe I will try a book for the general public at some point. Right now, this blog is scratching that itch.

Why don't we see more economists writing for broad audiences? The answer is that economists, like other people, respond to incentives. The email writer is wrong: Economists writing this kind of thing don't "make millions." Freakonomics may be the only exception in my lifetime. Moreover, writing for the general public is not rewarded very much by university deans and hiring committees, who are more interested in articles in scholarly journals than in op-eds in the Wall Street Journal or books on the New York Times bestsellers list.

Perhaps it would be good if the economics profession rewarded this kind of activity more highly. As Oliver Wendell Holmes once said, “It seems to me that at this time we need education in the obvious more than the investigation of the obscure.”

Econ Jargon Watch

A friend of mine who is an editor read the Solow piece I posted yesterday and emailed me this comment:

I was particularly interested to read the following sentence:

"But this is not a bad FIRST APPROXIMATION in many cases."

I don't think I have edited one econ manuscript that has not used the phrase "first approximation" many, many times. When econ PhDs are given out, are you all required to sign a secret agreement that says you must use this phrase in anything you write?

Note that I have not found a similar phrase in the other disciplines for which I've edited several books (chemistry, biology, anatomy, physiology, genetics, physics, political science, and history).

Must or Should?

One of the things we teach in introductory economics is the distinction between positive and normative statements. It is useful when reading (or writing) op-eds to keep the distinction in mind.

For example, in today's NY Times, Cornell economics professor Robert Frank writes:

Top earners have captured the big share of all income and wealth gains during the last three decades. They’re where the money is. If we’re to pay for public services they and others want, they must carry a disproportionate share of the tax burden.

The first two sentences are correct statements of fact. The third sentence appears to draw a positive inference from them. Interpreted as such, the sentence is just wrong. Is there any reason to think it is impossible for the government to raise adequate revenue with a proportional tax? Not that I know of, and the article gives no indication of why Frank might think otherwise.

Maybe Frank meant to write "should" rather than "must." In that case, the sentence would have conveyed a personal political opinion, rather than suggesting (incorrectly) a conclusion of economic science. It would have been more clearly labeled as a normative statement.

Not So Fast

Washington Post columnist Robert Samuelson argues "It’s time we tear up our economics textbooks and start over." He uses my book as a prime example. Perhaps not surprisingly, I disagree. My summary of Samuelson's article: Economics textbooks should be more like economics journalism, says an economics journalist.

Mr. Samuelson fails to fully appreciate the difference between journalism and textbook writing. Journalists are always looking for things that are new, for how the world has changed. That's why we call it the news. The editor of the science section of a newspaper would not be interested in a article explaining that Isaac Newton figured out the workings of gravity. Not newsworthy, the editor would say.

Textbook writers, on the other hand, emphasize those things that are true, important, and unknown to the typical reader (an 18 year old college freshman). Newness has little relevance. The lessons of Adam Smith do not apply only to the 18th century, the lessons of David Ricardo do not apply only to the 19th century, and the lessons of John Maynard Keynes do not apply only to the 20th century. They are timeless ideas that may not make good news stories but should be central to introductory economics. Just as Newtonian mechanics should remain central to introductory physics.

Yes, textbooks need to evolve as we learn more and as the world changes. New examples also show students how to apply the classic ideas to the issue of today. (The 9th edition of my principles text, available in about six months, includes a feature discussing social media like Facebook as a common resource.) But it would be a mistake for teachers of introductory economics to focus excessively on today's hot topics at the exclusion of timeless truths.

I had a 6th grade teacher who used to refer to newspapers as a "perishable commodity." That seems right, given their relentless focus on newness. Good textbooks, however, are more like durable goods. They do not go out of date nearly as quickly.

Teaching amidst a Crisis

A teacher emails me an excellent question:

I teach basic economics to seniors at a private high school in New York. I am a big fan of your blog and have been lobbying for your textbooks at my school. I have a question about teaching economics during the current financial climate.

Here it is:

Do you ever have the feeling that teaching the fundamentals to your students is somewhat difficult these days? I struggle most with the bail-outs and trying to explain how this kind of government intervention impacts the "free" market as well as areas such as supply and demand, prices, and inflation among others. Overall, I look at certain topics I am charged with teaching very impressionable high school seniors and I get an almost sinking feeling that what I am teaching flies in the face of what is going on; in that right now, ceteris paribus is clearly not the rule.

If you understand what I mean or am trying to say and could offer any advice I would greatly appreciate your insight and experience or any suggestions you maybe able to extend.

I think I understand the sense of unease this instructor feels. Introductory economics classes start with such topics as supply, demand, elasticity, comparative advantage, deadweight loss, externalities, etc., while the newspaper is filled with talk of banking crises and bailouts. In traditional econ classes, it is easy for students to feel that we econ profs are off on some irrelevant tangent.

I don't believe we are, however. Here is an analogy: Suppose that an 18-year-old student comes into a science classroom and says, "My grandmother is ill with a serious, rare, and hard-to-diagnose disease. I want to become a doctor to help figure out a cure." What should the student study? Probably not this specific disease, at least at first. The place to start is with basic biology, chemistry, and so on. Only after these fundamentals have been mastered can the student go to medical school, become a doctor, and be in a position to study the illness that motivated him in the first place. Much the same is true with the study of economics.

At Harvard, we have not instituted any radical reforms in the introductory economics curriculum in response to recent events. We have had some guest speakers, such as John Campbell and Andrei Shleifer, give excellent and well received lectures about the current crisis to assure students that, despite all the uncertainties, economists really are on the case and that the tools of economics are useful in trying to figure out what is going on. But nothing in the current situation makes the basic lessons of economics irrelevant. And the basic lessons are where education needs to begin.

In other words, whether you want to help an ailing grandmother or an ailing economy, you need start by mastering some first principles, which do not change in response to current events.

Readings for the Pigou Club

• Jeff Sachs in Scientific American.
• From Fortune.
• Science writer Ronald Bailey.

On Academic Success

A student emails me from Greece to ask:

I wish to follow an academic career and I would like to teach at famous universities (like Harvard, MIT, Stanford and so forth). Do you think that this is possible?

Yes, absolutely. Academia is very much a meritocracy. Success at getting goods academic jobs is determined by research productivity, measured by such things as publications in top academic journals (such as the AER, JPE, and QJE) and citations by others in academic journals (recorded in the Social Science Citation Index and Google Scholar). One can argue with that too much emphasis is put on research relative to teaching and public service, and one can argue that some research in academic journals is excessively arcane and pedantic. I believe that myself. But there is little doubt that a person who achieves research success as conventionally judged will be rewarded with job offers at top universities.

The main value of being trained at a top university is that it gives you access to faculty who have achieved such research success. They can bring you up to date on the latest research, give you advice about your work, and get you involved in their own research projects. But so much information is now available over the Internet that it should be easier today than in the past for someone at a lower-ranked school to reach and contribute to the research frontier if he or she is equipped with intelligence and a work ethic.

This Year's First-Year Seminar

In recent years, I have been teaching a seminar to a small group of Harvard freshmen. I described the seminar in this essay in the NY Times. 

The assigned readings change a bit from year to year. In case any of my blog readers are interested, here are the books I chose for this year:

• The Worldly Philosophers, by Robert Heilbroner
• Capitalism and Freedom, by Milton Friedman
• Equality and Efficiency: The Big Tradeoff, by Arthur Okun
• We’ve Got You Covered: Rebooting American Health Care, by Liran Einav and Amy Finkelstein
• Open Borders: The Science and Ethics of Immigration, by Bryan Caplan and Zach Weinersmith
• The Two-Parent Privilege: How Americans Stopped Getting Married and Started Falling Behind, by Melissa Kearney

Reflections on Graduate Education

I thought my blog readers might enjoy reading my observations about PhD programs in economics, which are included in some discussant comments I gave at the ASSA meeting earlier this month.  Here they are.

Comments on “Completion Rates and Time-to-Degree in Economics PhD Programs” by Wendy A Stock, John J. Siegfried, and T. Aldrich Finegan

This paper is a contribution to an important line of work. As economists, we often remind policymakers that their decisions should be based on objective, empirical research rather than uninformed supposition. Yet when we are the decision makers, as we are when we run our own educational programs, we often have little data-driven analysis on which to base on our judgments. This kind of research should, over time, lead to a better educational system.

I would like to take note of two facts highlighted in this study and to tentatively discuss what they might mean. The first fact is that it is taking longer for students to earn their PhDs in economics. The second fact is that a sizeable percentage of students who start PhD programs do not finish.

It is tempting to interpret these facts as a sign of educational failure. After all, students enter these graduate programs to earn a PhD. If the successful ones are taking longer to finish, and many others are not getting their degrees at all, then it might seem that we are doing something wrong.

But it is far from obvious that these facts are symptoms of a problem. Perhaps longer times to completion and some amount of dropping out are optimal.

Consider time to completion. There is no doubt that economics is still a young science and there is much we do not know. But there is also no doubt that research is continually adding to our stock of knowledge. Perhaps students are taking longer to earn PhDs because there is more for them to learn. It may well be optimal to spend six rather than five years in graduate school before our profession releases students into the world with our highest level of certification.

Another relevant fact is that most students, when they get their first academic jobs, end up at colleges and universities with lower ranked departments than where they earned their PhDs. Why hurry the process of moving to a less vibrant intellectual environment? It may well be better for the professional development of the candidate to spend an extra year or so in graduate school.

Consider now the fact that many students drop out of graduate school without a PhD in hand. While many of these students are disappointed by this outcome, it is likely that in many cases their choice to drop out is optimal. They entered graduate school without fully knowing what it was like and whether it was a good match for them. After a couple of years, they decided it wasn’t. In light of the inherent uncertainty when choosing a path in life, a bit of experimentation is desirable.

My own life is a case in point. When I left college, I was unsure what career path I wanted to take. I therefore enrolled in two graduate programs—the PhD program in economics at MIT and the law program at Harvard Law School—thinking I might finish both. In the end, however, I dropped out of law school after three semesters. Looking back, the decisions to enter and drop out of law school were the right choices. I started because I thought a legal career might be best path for me, and I stopped when I learned it wasn’t.

The question we face as designers of educational programs is how to structure them in light of the longer times that PhDs take and the fact that some students who start these programs may rationally choose not to complete them. The answer may be to divide current PhD programs into two chunks. The first chunk would be a two-year master’s degree focused on taking advanced courses. The second chunk—appropriate for only a subset of master’s students—would be a research degree culminating in the PhD.

Many programs in effect already do that. But the master’s degree is too often viewed as a consolation prize for a PhD dropout. Perhaps we should instead encourage people to view the master’s degree in economics as a fully respectable terminal degree. Moreover, having finished a master’s degree, PhD candidates would be treated as professionals—more like the most junior faculty and less like the most senior students.

Many students leave college wanting to learn a bit more economics. But a PhD may be more than they want or need for their careers. An expansion of master’s programs in U.S. economics departments may offer many students the stepping stone they need.

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The most lucrative college majors:

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