I'm talking, of course, about Econ Job Market Rumors, the anonymous forum. Of course you don't have to be an econ grad student to post at EJMR, but it's hard to imagine that many other people would be interested in the economics job market. If you've ever read EJMR, you'll know that no punches are pulled.
So here's a pretty well-known thread in which the EJMR folks dish their opinions about macro. (The title, "macro no giod p", is an inside-joke meme; I'll let you figure out the meaning for yourself.) A large fraction of the commenters are very critical of the macro field in general, for example:
It's interesting that the fact that their models don't fit does not bother macro economists that much. Whenever a "good" model fails empirically, they just call that a paradox and write hundreds of papers about it.
I feel depressed explaining to my friends what I learned in PhD macro . I'm sure most lay people interested in macro would be reallllyyyy disappointed by what is taught and published. But don't fret! You can shrug it off. Just like the students who turn away from macro, lay people too can be dismissed as not sophisticated enough to truly understand the insights of RBCs.
[T]he best explanation you [macroeconomists] can come up for business cycles is either 'people are lazy' or a 'negative technology shock'.
Macro = ideological crap and everything which challenges that view (like ABM) are told that they do not have 'microfoundations' and that's why they are crap.
Of course, as long as macroeconomists do make the correct predictions they can claim they have the correct explanations, because assumptions do not matter. Oh wait, you even fail on this part.
To sum it up: Macroeconomists don't know anything about human behavior, how markets work or something about the economy.
The biggest puzzle is actually that macroeconomists are so proud about their 'microfoundations' yet they do not understand them at all.
I can't wait for the day where econ departments split and leave macro behind, much like physical anthropologists sometimes leave cultural anthropologists behind in their own little circle jerk departments.
macro too corrupt
too much black-box
not enough predictive success
too wrong too often
macro = ideological bulls**t, should be removed from economics.
Oh quit your bellyaching...Nobody likes macroeconomics unless they're a macreconomist. You still have to take it. It's the rite of passage. Just pass your prelim and never look back like the rest of us did.
A small handful of people in the thread show up to defend macro, but their defenses tend to be very circumspect:
In real life though I find the people who usually make macro no good comments have little to no exposure to modern macro yet have a pretty strong opinion. Its one thing to critique a subject with an understanding of it, then there is a room for intelligent debate. It is anotherthing to dismiss the subject
Even if you don't like the approach in current macro, macro has difficult questions that are worth asking and answering. Being stupid enough to voice allowed an opinion that macro shouldn't be studied at all means you aren't fit to be an economist. It shames me that some of you are Ph.D's or Ph.D candidates.
It seems that some of you haven't ever intelligently thought about why the lay person seems to barely realize that there are other fields in economics other than macroeconomics. It is the economics they see as most relevant to them. They do not care about novelty/usefulness of an approach. They care about whether what you have to say is relevant to their understanding of the world, and if it impacts them or those around them. Macroeconomics of fields has the most visible impact on ordinary people and which is why it is a field worth studying.
Now you probably learned nothing in substance in a conventional macro-course. You worked through a few seminal papers most of which were written in the 80s and mid 90s (King, Rebelo, Kydland Prescott, gali 1999). You might have looked at Solow 1956 for good measure and some other growth papers from 1970s. The point of that curriculum is to learn the existing approach to dynamic economics. Something you spend little to know time in studying in your mathematics economics courses or first year micro-theory courses. That approach in general can go a long way to explain phenomena around us, even the current crisis.
You can criticize the approach, but one needs to understand that simply stating the approach is no good isn't any sort of substantive critique. Its unfortunate that few outside of the field have been able to give a real substantive critique, beyond that calibration is wonky and you don't like exogenous shocks. I think most of us realize calibration is wonky, except maybe Prescott. The point of the modern approach is to endogenize as many variables as possible, as that was even more prevalent in the past. (This is really why we ought to teach IS-LM, in grad classes.)
And then a number of people seem to accept that macro field has severe limitations, but still insist that the field is worth studying:
When macro is the subfield with the highest demand for economists, second only to metics? What are you going to do then? Micro theory?
What you guys don't realize is that in the eyes of the public macro IS economics (and vice versa). Let go of macro and just see enrolment fade and your salaries plummet.
Yes. Perhaps that precisely is the problem. The public wants us to do things we aren't very confident with. I must admit, I don't think I would have started in econ if macro wasn't a part of it.
I admit macro is no good, but maybe that is why macro is precisely the best subfield for us, since so many questions still lie ahead. What more can we really do in econometrics?
I am a macroeconomist too. I decided to work in this area partly because I am interested in the questions, and partly because it is clearly a field where the social marginal product is potentially very high.
no one thinks macroeconomics we are doing is that robust. There wouldn't be disagreement in the first place. Its because we lack tools to do good causal inference in the first place. Its nice you can use cross-sectional data or panel data and come-up with an identification strategy as outlined in mostly harmless econometrics.
We on the other hand have about 4 business cycles worth of auto-correlated time-series data to do most of our inference on. What ever empirical tools are only fit to answer a narrow range of questions. That is why the a toybox economy like DSGE model can catch on in the first place.
(These last two probably best sum up my own views on the topic. Macro has very poor data to work with, and this means we should lower our expectations for the field to some degree; at the same time, the lack of real progress in the field leaves it wide open for innovative thinkers to make a big difference.)
Anyway, I was somewhat surprised at the depth of animosity towards macro among the grad student community. Not only were the anti-macro posts far more numerous, but they received far more likes than dislikes. The same pattern seems to hold elsewhere on EJMR. Non-macro students tend to be very disparaging of macro, and macro students tend to express deep misgivings and reservations about their chosen field. There are, of course, exceptions. But despite a couple retorts of "micro no giod p", there doesn't seem to be nearly the same amount of skepticism directed toward the various micro fields.
I'm not sure what conclusions we can generalize from these anonymous forum posts, or whether EJMR is an accurate barometer of econ grad student sentiment. But the criticism of macro nevertheless was eye-opening, even to a macro-skeptic blogger like myself.
Update: A commenter points me to this thread, where EJMR denizens debate the value of structural estimation. Not really related, but also fun.
Update: A commenter points me to this thread, where EJMR denizens debate the value of structural estimation. Not really related, but also fun.
"macro too corruptReplyDelete
too much black-box
not enough predictive success
too wrong too often"
is so clearly a missed opportunity for a Haiku. Let's make a few small adjustments:
"Macro: Too corrupt,
predictive success absent,
Too wrong, too often."
There, I fixed it.
The anti-macro sentiment mostly comes from microeconomists. There's this rivalry see.ReplyDelete
"Hello ...", "Hello ...", sharp rapping of knuckles on the skulls of the econ grad students who want to be fed pre-digested and approved "truths".ReplyDelete
Wake up and smell the opportunity. Grad students, you are studying a field deeply riven by conflicting theories and suffering a serious credibility crisis because none of the theories really work. And yet we can be reasonably sure that there are things that can be usefully said about macro-economics and we know that there is an audience for models that are useful. The whole field of macro economics is in play. To the person who is able to put together a new synthesis (or even just a few useful insights) will come fame, modest fortune, tenure, political influence and a Nobel prize. The person who really makes some progress will have schools of economic thought named after him or her fifty years from now.
To quote my favorite contemporary philosopher:ReplyDelete
"It's not supposed to be easy"
- Leroy Jethro Gibbs
I witnessed many people who entered grad school intending to focus on macro. Upon learning how it's done, many became very disillusioned and switched to a different sub-discipline. In our department, all the Americans abandoned it. Only the foreign-born ones stuck with it, and most of them don't follow the actual economy at all. Ask them about Kocherlakota's recent statements and they don't know who or what you're talking. But they love the math! They can talk about indeterminacy, state-dependent pricing, sunspots, calibration, etc. til the cows come home.ReplyDelete
Here we are; gotta have the obligatory moronic Luddite anti-math&/science post. ZOMG ECONOMICS IZ MORAL PHILO MATH BEGONE GRRRR CALCULUSDelete
Get a life. If you can't handle basic quantitative modeling, you should not be an economist, you should be a humanities professor.
Yeah, I never really understood what was so complicated about the math in macro. And the examples you give.. state-dependent pricing? Calibration? I conclude that you have no idea what you are talking about.Delete
Anonymous 4:56 PM.Delete
What has your calculus added to macro economics? I understand that failed Physicists like Noah and a host of others enjoy going down to the minor league that is Economics because its math is so much easier but what has the increased mathematization of economics accomplished for the field? Other than provide more employment opportunities for the more math literate?
Wow. You stoop to the level of quoting EJMR in order to keep the "macro wars" alive. Guess it's because your coverage of this "war" is what first got people paying attention to your blog.ReplyDelete
Anyone who thinks Noah has any sort of discernible career having anything to do with the actual science of economics is hilariously mistaken.Delete
It seems to me and apparently just about everyone who is actually in econ, that Noah sees macroeconomics as merely an episode of Gossip Girl that he somehow managed to score a spot as an extra on. If there weren't a tiny little entirely-ginned-up sideshow (by his covertly-antipositivist political icons, P.K. and J.B.DeL.) controversy about some mundane methodological issues in macroeconomics, Noah would still be sitting in some dank lab underneath the Physics building wearing a Dorito-stained t-shirt and penciling lab results down all day.
In my defense, Doritos are delishDelete
noah no goodReplyDelete
An even better thread about the death of economic theory.ReplyDelete
"EJMR is an accurate barometer of econ grad student sentiment"ReplyDelete
I can tell you, as a European, that it is not an accurate barometer of European grad student sentiment.
Here is the thing, I think there are many great published papers on macroeconomics, I think these don't appear much if at all in the macro courses, which is a shame. OTOH, learning the models & the maths will likely make it easier for you to understand the better literature that is out there.
I disagree with Anonymous. :)ReplyDelete
Noah - I think you have a fine academic career ahead of you so long as you do not let your blogging and popular writing interfere too much with your research.
Hell, Noah. Microeconomist's hubris is what this is about. The one-eyed leading the blind. Oh god, we're doomed... or maybe these grad students will get wiser with age. Who knows?ReplyDelete
Haters gonna hate...ReplyDelete
Truer words were never spoken.Delete
bear in mind the consensus on emjr about the other approaches to macro, such as the various post keynesian / austrian / newspaper op ed/ etc approaches is even more damningReplyDelete
That's a really good point...do you have any good links to EJMR threads discussing those things?Delete
What is said about Macro can be said about any social science.ReplyDelete
If macro is worthless so is the rest social science. I think not.
I don't think that's necessarily true. A macroeconomy is way different from other social phenomena. It might be a lot harder to study scientifically.Delete
Political science is harder. Waaaaay harder. They've got a few results, I guess, but it's hard to make generalizations about something which as as big as the nature of power.Delete
To understand modern macro and the future of macro, one must understand the history of macro.ReplyDelete
He who controls the past, controls the future /Delete
He who controls the present, controls the past!
"[...] there doesn't seem to be nearly the same amount of skepticism directed toward the various micro fields."ReplyDelete
Unless you talk to Psychologists, anyway.
I think there are three reasons that microeconomists seem more unified:Delete
1) Microeconomists sort into subfields according to ideology. In my field, international trade, we're all pro free trade. Micro-data labor economists, who identify and care about all the unemployed manufacturing workers are not as uniformly pro free trade.
We can typically ignore the other subfields. I think general equilibrium theory is pure nonsense, but it's not my field, so I leave them alone.
2) Microeconomics doesn't matter as much as macro, let's be honest (I'm a microeconomist), and is therefore not as high on the policy agenda. No need to argue about allocation theorems in cooperative game theory unless they win a Nobel prize.
2b) ... when a microeconomic subfield becomes a heated policy question, like health economics, economists split up according to ideology lines [citation needed, I don't follow the academic debate, but I think Krugman wrote this].
and 3) "Unless you talk to psychologists", indeed!
"In my field, international trade, we're all pro free trade"Delete
"I think general equilibrium theory is pure nonsense, but it's not my field, so I leave them alone."
Isn't trade theory just general equilibrium applied to countries?
they're just jealous of our sweet blogsReplyDelete
That website is a wonderful source of qualitative data, someone with the potential intention of studying history of economic thought should make sure to save the whole thing.ReplyDelete
Going a bit meta on the macro wars: What do such disputes signal about the state of a science?ReplyDelete
What has happened in other sciences? Are disputes necessarily a bad sign, or could they ? I'm trying to come up with some anecdotical evidence, but can't really find any. My hunch is, though, that disputes and crises often leads to a maturing science. (I guess you'd have to argue/show that Kuhnian paradigm shift is an improvement for my hunch to be right).
Since we're on the subject of financial innovation and macroeconomic progress, I have a friend who recently started a new company through US Bank here in the midwest. They offered him a credit card that he can expense everything he buys to the company, and the bonus points through the card are very generous. Now every time he buys ANYTHING in life he's making money.ReplyDelete
That sounds like some financial innovation we can all believe in!
I entered Grad econ from the business school, expecting to learn things from my macro courses that I could actually use one day - maybe some interest rate and macroeconomic forecasting models - Then I opened up Lundquist and Sargent's "Recursive Macroeconomic Theory" and my expectations fell to the floor.ReplyDelete
Maybe it's just because econjobmarket rumors has a selection bias towards easy to make critical comments (criticising a method I think is just generally easier than coherently explaining how it can be used as a framework of analysis). I suspect econjobmarket rumors generally attracts some of the worst, arbitrary intellectual spam (and some of the actual job related threads are really aweful, including occasionally completely horrible jokes at the expense of other candidates). I always thought of it more as trash entertainment for the occasional fun the same way other people I knew might enjoy watching wrestling, and I sometimes enjoy silly MTV shows like rock of love. I suspect the vast majority of grad students think of it the same way, just watching from the sidelines without posting. In short, not a good sample for a serious study of grad student opinions.Delete
Fortunately most macroeconomists realize early in their careers that forecasting the future is a futile endeavour, especially when you have trouble to even understand the past.Delete
Keynesianism no giod p.ReplyDelete
Damn you Ludwig, back in your cage!! Shoo! Shoo!Delete
the question to ask is why is DSGE macro, the ONLY form of macro that exists. why, despite all its drawbacks, this is the ONLY macro that is taught, practiced and presented in all forums of academic economics. Also, note that none of those business economists who study this economy for a living have ANY idea of modern macro.ReplyDelete
100 percent of all research in academia is geared towards journal publications. Since the 1970s Lucas, Prescott and their students have systematically captured each and every macro journal. At the same time Tobin, Brainard and their students promoted disequilibrium macro--ideas and papers that were summarily rejected, careers that were dismissed from the realm of economics. As a result, all that has remained is this. And it is not over yet.
There is a deliberate attempt to move all theory in whatever field in this direction. Therefore, all those doing trade, public economics, labor, finance will soon find that their papers are only accepted in journals if they adhere to the DSGE macro framework.
Anon: One could say that the problem with modern macro is the worship of modern micro....Delete
What's the rest of economics ? I read "micro theory" and "mostly harmless econometrics." These are very different. It's true that micro theory is mentioned only by a defender of the relative merits of macroeconomics, but it is odd. Micro theory does not have a great record of confirmed predictions either (consider experimental game theory). My sense is that macro went wrong when macro-economists decided micro foundations were necessary and that it was infected by the unreality of micro theory. On the other hand the theory behind mostly harmless econometrics is common sense with the additional advantage of being true.
I consider micro theory and natural experiment/good instrument micro econometrics to be polar opposites. One of Macro's many problems is that macro theory is not considered a reputable field of mathematics by itself without regard to correspondence to the data. Micro theorists can leave empirical micro economists alone as they are considered different fields.
The second observation is that the defenses of macro contain amusing typos of the Yglesias type -- correctly spelled wrong word. Odd to me as I can't type or spell and I am an extreme skeptic.
My sense is that macro went wrong when macro-economists decided micro foundations were necessary and that it was infected by the unreality of micro theory.Delete
Yes, I agree (see here).
But "micro theory" has a million approaches, not all of which fit together in a coherent framework. I like this. Macro theory tends to pick a couple of the (least realistic, simplest) approaches from micro theory and apply them to a problem that is much more complex than any studied by micro theorists. This, I don't really like.
Micro theory has had plenty of victories. In experimental settings, basic micro theory actually does a pretty good job of predicting human behavior when uncertainty is not involved - see this survey by David Levine and Jie Zheng. It's only once you start introducing risk and uncertainty that existing micro theories start not to work very well.
And then there are all the successful examples of applications of micro.
"Macro theory tends to pick a couple of the (least realistic, simplest) approaches from micro theory and apply them to a problem that is much more complex than any studied by micro theorists."Delete
Wrong. Revealed your ignorance there, I'm afraid.
Wrong. Revealed your ignorance there, I'm afraid.Delete
Oh, OK. Now I see my mistake...How could I have been so wrong?
Seriously, writers are interesting, and successful, when they write what they know. Pandering to an audience of grumblers isn't a recipe for success.Delete
Steve, I think that at least once, you should try to publish a comment in the AER that consists of nothing but the sentence "No, you're wrong." If nothing else, the referee comments would be fun to read.Delete
Your "successful applications of micro" link goes to "Page Not Found", which is kind of funny.Delete
"In experimental settings, basic micro theory actually does a pretty good job of predicting human behavior when uncertainty is not involved"
Since there is no such circumstance in the real world, how useful *is* that? Really?
At the moment, the corporate crime rates mean that a major uncertainty in any deal is "Is the other guy trying to cheat me?" But this uncertainty is *always* present.
There are particular micro approaches which are working very well for limited areas, but I wouldn't call them "basic micro"; they've arisen out of experimental economics, game theory, marketing, political theory, etc.
None of these have much of anything to do with traditional "rational money-maximizer" micro. The very defensive paper by Levine and Zheng does not make a convincing case that "rational money-maximizer" micro works for anything. In particular, the theory of the firm is poorly developed; firms simply don't behave the way traditional micro predicts they will.
If you wanted to get a grip on recent progress in Physics, would you ask a random sample of people on the street? If you wanted to find out what is going on in macroeconomics, would you read EJMR?ReplyDelete
What is that whole "macro wars thing" anyway? I don't see any particular war going on within the economics profession, other than the usual grumbling and shouting. This is actually a peaceful time in the history of economic thought, if you compare it to what happened when economists started doing more math, or the revolution in macro in the 1970s. Any wars are in the minds of people who don't actually do macroeconomics, or who once did it (maybe they sort of did it) and now want to blog about how it should be done.ReplyDelete
That said, there are many ways to skin a cat (apologies to cats). All of economics, including macro, is in flux, and people are hungry for new ideas. That's the nature of the business. You can't advance macroeconomics by whining about it in the EJMR or in Noah's comments section.
In the 1970s there was a group of people who were not members of the economics establishment. In fact, several of them were kicked out of the Ivy League, and the rest were not given places there when they got out of graduate school. Those people worked at what were, at the time, obscure institutions in which to practice economics - Carnegie Mellon, Rochester, Minnesota. But those people kicked the butts of the economics establishment, started their own journals, and revolutionized economics. Ed Prescott, who was kicked out of Penn, has become enormously influential, in part through a lot of hard work in supervising a very large number of excellent and influential students. Tom Sargent was also kicked out of Penn, with much the same results. Bob Lucas wrote a watershed paper in 1972 that the AER would not publish - it came out in JET, at that time barely off the ground. All three of those people now have Nobel prizes.
Bottom line: Quit whining. The obstacles are all in your minds.
Several of the people you refer to who got Nobels got them for writing stuff which is just empirically wrong. The "revolutions" in macro in the 1970s appear to have changed it from a fledging scientific field to a pile of junk.Delete
There really is a "macro war", but I think it's part of the usual political war between Veblen's "leisure class" and everyone else. Which side are you on?
Well, I only have a business school economics master's but I gotta say that from the start of my study of economics the good old IS-LM model just really seemed to make sense in an economy like we have now. And, given Paul Krugman et al's, deliciously devastating demonstration that indeed that model is the way to go in times like these one can only conclude that political reactions are what are throwing a monkey wrench in the whole thing.ReplyDelete
Let's be blunt and admit that neo-liberal macro is in its paradigmatic death throes. Not only did it utterly fail to see the biggest financial tsunami in history coming right at it, but four years later it is still wandering in the desert for lack of a way out. It has failed every predictive test on bond yields, interest rates, inflation, austerity, the confidence fairy (thank you PK), the eurozone and sovereign default.ReplyDelete
Because this shlock continues to be taught despite its uselessness, macro students rightly feel macro is a waste of time. Because in its current form it is.
"Let's be blunt and admit that neo-liberal macro is in its paradigmatic death throes"Delete
Wow, you are so knowledgable! Can you please refer me to the "neo-liberal macro" papers you have in mind? Can you also refer me to the non-neo-liberal macro papers/models that forecasted the "financial tsunami"? I will be eternaly grateful!
Wow, you are so knowledgable! Can you please refer me to the "neo-liberal macro" papers you have in mind?Delete
Anything by Ed Prescott, most work by Milton Friedman, Lucas, etc...
"Can you also refer me to the non-neo-liberal macro papers/models that forecasted the "financial tsunami"?"
Marx, Veblen, Keynes, Hicks, Minsky,...
Fascinating reading, again, Noah, if a bit over my head in spots. I especially liked that last thread you recommended, although as an ecologist married to a statistician, I did sometimes feel like a physicist listening to a vigorous dispute between two schools of astrology. Not that there's anything wrong with that.ReplyDelete
How do we estimate macro-data? We use the framework of the national accounts, of course, and use it to classify and add billions of micro data. Those are the real micro-foundations of economics! These accounts enable at the very least an apt description of the recent past - as well as of the more distant past. And they enable analysis of the present and the future, one might try to read Dean Baker. What makes this macro? The accounting identities, of course, i.e. quadruple and even eightfold accounting. The national accounts are a consistent (in the sense that sectors add to all kind of totals which are consistent which each other as well as with the 'accoutning identities') as well as coherent, in the sense that concepts and definitions are carefully crafted to enable apt measurement of reality as well as to fit in the system. Read the SNA. The what? The SNA, the System of National Accounting (http://en.wikipedia.org/wiki/United_Nations_System_of_National_Accounts) which spells this out in bewildering boring but consistent and coherent detail. Much ideas of what Ph. D. students perceive to be macro, like Ricardian equivalence and intertemporal optimization, are in fact clever tricks to circumvent the accounting identities which, as the accounting identities are inherent to any economic system based upon an unit of account serving in an (not necessarily: market) exchange system with property rules, are however doomed to fail. The national accounts are the system used to map as well as to measure the modern macro economy, economics is a strange science in the sense that Ph. D. candidates do not know about how the very subject they are supposed to analyse is measured and do not know how to use this measurement framework in an analytical way (Hans-Werner Sinn is a case in point, when he analysed the Target 2 balances while abstracting from the capital and financial account, using only the current account).ReplyDelete
I think the distinction between micro and macro amongst graduate students might be due to the ready application of macroeconomic models to how the economy works whereas we are told at the beginning of micro to assume a rational agent which feels like operating in the world of the abstract. Therefore in micro it seems that we can only learn lessons that may or may not apply to reality. However in macroeconomics we are challenged with the task of readily applying the models to macroeconomic phenomena. Although the assumptions in macro models are now meant to be "microfounded" it seems like in macro we are more confused between abstraction and reality.ReplyDelete
One of Simon Wren Lewis' graduate students
Micro's "rational agents" are the biggest piece of flim-flam in all of economics. We know people aren't rational, and worse, we know that macro's definition of "rational" isn't even rational. (Consider, for a first and key point, the marginal utility of money.)Delete
Micro is *rotten*. Macro wasn't rotten until people started trying to build it on "microfoundations", which are foundations of sand.
Ugh, one of you people...Delete
"Rational" in economics means agents act deliberately. They have preferences over outcomes, and these prefernces are at least partially ordered, so you can tell me you prefer A to B, or B to A, or they can't be compared. Add completeness, so all options are comparable, and continuity, so that your preferences between A and B don't switch if I change A and B a little, and you have standard microeconomics.
If you don't agree with any of that, there's only a million people working on generalizations to uncertainty, ambiguity, social preferences, and so on.
What you want is to make claims without being confronted with a framework in which they must be consistent, which is not what micro is about.
If you don't agree with any of that, there's only a million people working on generalizations to uncertainty, ambiguity, social preferences, and so on.Delete