What Critics of Economics Get Wrong

Economics comes in for plenty of criticism: Economists assume people are unvaryingly selfish; economics is all complicated mathematics and ignores the real world; economists only care about money and profit, not about truly valuable things like the environment. These are familiar accusations, occasionally given a new edge by current events such as the 2008 financial crisis or the United Kingdom’s Brexit vote.

The unchanging critique is deeply frustrating to many of us in the profession: It sets up straw men and ignores the deep-seated problems that do, in fact, present significant challenges to the field. Economics has changed a lot in recent decades, and it needs to change a lot in future. But the critique needs to move on as well, to address the issues that need attention today.

One of the most familiar complaints is that economics fetishizes mathematical models, cultivating an unearned aura of empirical authority. Certainly, some economists abuse mathematical formalism; Paul Romer was right to warn, in 2015, that readers who have been “disappointed too often by mathiness that wastes their time” will eventually “stop taking seriously any paper that contains mathematical symbols.” But there’s a chasm between “mathiness” and “real mathematical theory,” in Romer’s terms, and “tight connections between theoretical and empirical claims” are essential in achieving the latter.

Furthermore, to the critique of modeling, every discipline uses “models” in a sense: they distill complexity to a small number of representative elements. “The causes of the first world war” is a model, just as much as Gary Becker’s 1965 theory of time allocation.

Another common criticism is that economics ignores history, including its own. Many of us would love economic history to return to its former place as a standard part of the curriculum — and indeed, that trend is already underway. Likewise, scholars are increasingly attentive to the links between historical events, the history of economic ideas, and policy choices. Economic history is expanding greatly within the field of economics, albeit from a small base.

The field’s critics also tend to focus on a small corner of the field: macroeconomics. Macroeconomic forecasting is exceptionally difficult (far harder than weather forecasting), and most economists do applied microeconomic research, where data sets, econometric techniques, computer power, and a lively methodological debate about causal inference has led to a revolution in knowledge and practice since the 1980s.

Other critics paint economics as overly theoretical. But this is to ignore the discipline’s dramatic evolution over the past 30 years. As Joshua Angrist and his colleagues have shown, there has been a substantial turn away from theory to empirical work.

In addition, certain critics advocate pluralism in approaches to economics and challenge the discipline’s grasp on its subject of study. “Economics Is Too Important to Be Left to Economists,” argued Robert B. Reich in these pages in 2015, calling for political scientists to play a greater role. A 2016 book by Joe Earle, Cahal Moran, and Zach Ward-Perkins (subtitled: “The perils of leaving economics to the experts”) calls for everyday citizens to have a greater voice in shaping the debate.

But these arguments downplay economists’ success. If we had not learned lessons from the experience of the 1930s, the consequences of the 2008-9 financial crisis would have been far more severe, and governments would not have introduced furlough schemes during the coronavirus lockdowns. If we had not created and learned from market design (defining the rules that make markets work well), far fewer of the apps on our phones would work.

Gordon Studer for The Chronicle

Other critics take issue with economists’ willingness to put monetary values on intrinsically good things like nature or human life. The economists’ answer is that there are implicit valuations made whenever people make choices about where to build roads or what safety features to require of new products, so is it not better to be explicit about those judgments? These are healthy debates, generally with constructive mutual engagement among the participants. Indeed, some leading economists have begun to argue for a closer dialogue between economics and ethics, to identify the importance of identity to our economic decision-making, and to highlight to role of narratives in how we understand things like financial crashes. This engagement with social issues and humanistic values is necessary and welcome.

A number of scholars have also noted what they characterize as economists’ unmerited “superiority” — the idea that economists are overconfident that their approach is best when it comes to answering questions or addressing policy problems. That mind-set is slowly changing, albeit with further to go. Over the last few decades, researchers in the social science have become more willing to cite scholarship from disciplines outside their own. Although economics is still cited more by the other disciplines than vice versa, this trend towards cross-fertilization has helped reduce economists’ insularity.

Another welcome change in recent years is the gathering pace of curriculum reform. Effective student protests in countries ranging from Chile to Britain highlighted their economics courses’ inadequate attention to real-world issues, and professors have taken up the issue. I have been part of the global coalition of economists devising and making freely available a curriculum that uses theory as a lens through which to understand real-world issues with an eye on the role of politics, power, and institutions — a significant departure from the Economics 101 norm. Over 250 universities have adopted the new framework.

My frustration with these straw-man arguments stems from the fact that they have allowed economists to ignore real, glaring problems within the discipline: The blind spots and missed opportunities that result from a field dominated by white men. Diversity of experience matters in any social science because the questions researchers think to ask are shaped by their own experience: You don’t know what you don’t know, and most of us are not able to imagine the shape of that unknown territory. Economics is one of academe’s least diverse disciplines, even as it wields great influence over government policies that affect everyone in society.

Economics departments generally skew male by a significant margin: According to a survey of departments with doctoral programs in 2019, just 21.2 percent of tenure-track economists were female — and just 14.5 percent of full professors. It’s cold comfort that the latter figure has doubled since 1994. The pipeline shrinks at each career stage, with fewer female professors than graduate students, and fewer female graduate students than undergraduates.. In 2016, just 20 percent of the United Kingdom’s academic economics work force was female. These numbers are unacceptable.

Women who do make it onto the tenure track continue to operate at a disadvantage. On average, we publish less than male economists. Female-authored papers at some elite journals are subjected to extended review times, according to a 2017 paper by Erin Hengel. More recent research suggests that referees at leading journals “hold female authors to a higher bar, perhaps because of stereotype biases.” Women also work on average with smaller networks of co-authors, which tends to result in fewer publications. The evidence for cumulative career disadvantage is powerful.

Economics also suffers from a lack of ethnic and cultural diversity. One U.S. study found that just 15.6 percent of economics degrees (undergraduate and graduate) were awarded to Black, Latino, or Indigenous students in 2015-16. A more recent study in the United Kingdom found that less than 12 percent of academic economists were of minority group ethnicity; absent later data, personal experience suggests little subsequent change.

This lack of diversity matters for several reasons. One consequence is that academic economics has a more macho culture than most other disciplines — reinforcing the gender bias in the profession. Anyone who has attended an economics seminar will have experienced the phenomenon of audience members aggressively interrupting presenters who have barely begun to speak. Such behavior makes it difficult for presenters to convey their work and start a constructive discussion, and it drowns out commentary from more measured voices. According to a 2021 NBER paper, women presenters in seminars are asked more questions, and more that are perceived as patronizing or hostile, than are men.

This alpha male culture spills over into digital spaces, too: Alice H. Wu made global headlines with her study of the website Economics Job Market Rumors — ostensibly a forum for professional scholarly discussion — in which she found the forum words with the strongest predictive power for female gender were “hotter,” “hot,” and “attractive.” Other female economists and economists of color have widely reported experiences of exclusion, harassment, and abuse.

The male domination of economics shapes the intellectual character of the discipline in ways that are unhealthy, given our influence on policy and society. Economists’ life experiences inform their ideas about which research questions are important and interesting; those questions shape our collective body of knowledge, which in turn informs the government policies that affect people’s lives and choices. Yet women and people of color will generally have different experiences, challenges, and priorities than affluent white men.

More subtly, economists’ values seem to diverge from those of the population as a whole. Surveys show wide gaps between economists’ views and public opinion on a range of policy questions, including politically contentious ones. Economists have been found to be more individualist and even to be less pro-social than their peers, with some debate as to whether these types of people self-select into economics or whether learning the subject makes them this way. Either way, this lack of diversity in personality type could lead the field to overly focus on certain questions while neglecting others.

The #MeToo and #BlackLivesMatter movements have had an impact in economics, as elsewhere. The American Economic Association and the Royal Economic Society have planned campaigns to attract students from a wider range of backgrounds, developed new mentoring programs, and written codes of conduct that take a hard line on harassment and abuse. How far these initiatives reach inside the discipline is another matter: Changing social norms takes time, and powerful elites are adept at self-perpetuation.

Our problems, in short, are real. To address them, the discipline must reorient its debates, jettisoning straw-man arguments and outdated concerns. The present offers more than enough challenges for our field, and meaningful change is not guaranteed — especially if we are distracted with rehearsals of arguments gone by.

This essay is adapted from Cogs and Monsters: What Economics Is, and What It Should Be (Princeton University Press).