Friday, June 20, 2014

Kartik Athreya responds to my review

Kartik Athreya, via email, responds to my review of his book, which is gratifying given the time I spent on it! Here is his response:


HI Noah,

Thanks for the detailed and consistently interesting review of my book. I think you did a nice job in capturing many of the points I wanted to cover.  First, you may well be right in that some prior exposure to economics will make the book an easier read. In the preface of the book, I say as much. I still hope, though, that via its use of (largely) non-technical English, the set of serious readers interested in the M.O. of modern macro (which I think is a large set of people) will learn “what we do and why we do it.” 

This brings me to a main point I want to stress: In part 5 of your review, you suggest that the book is not ideal as a rebuttal of macro's critics, and a better book would have focused on this. That may well be true, but that wasn’t my aim.  The majority of the book is nota rebuttal of critics, but instead a description of models and model classes used by mainstream macroeconomists, and why we like them.  As I state at the outset (p. 2): "the goal of this book is to describe the workaday practice of macroeconomists...". On page 3, I state: "To the extent that my efforts leave readers persuaded of our generally held world much the better. But even if they are not persuaded, at least the reader and critic will have a better sense of how the sausage is made."  And on page 5I stress again that "This book aims to describe why we do what we do and think what we think." These are not promises to show the reader what's wrong with every other approach. I simply do not know those other approaches well enough to provide any meaningful discussion of the particular failings of any of the myriad alternatives that currently lie at the fringe of the profession (on this point, many people whom I look up to take alternatives to mainstream macro (such as ABM) very seriously, so I do not feel “turfy” as your readers might infer from the “review-as-a-rebuttal” theme you maintain.  The appropriate yardstick, therefore, that I’d like a lay-reader to use when judging the success of my effort is whether, at the end of the book, they have some feel for what we do.

Indeed, it is only indirectly that this book can serve the role of a rebuttal to critics of macro “method” anyway, and there too, incompletely: only Chapters 1 and 4  talk about methodology much, and here too, only to describe how we communicate with each other (Ch 1), and why we make some assumptions, and the costs therein (Ch 4). There is a lot of discussion in the book on the fact that perfect alternatives are not available, and we strike what might appear, especially to non-macroeconomists, to be Faustian bargains all the time.  So when I describe the role I see for persuasion of the appropriateness of assumptions in macroeconomics, I would have included some important context on how such persuasion is disciplined—and this is key part of what is covered by the book in Ch. 1,  where I describe the quite disciplined manner for "how we discuss research with each other" . (here’s a student relaying this idea: ). So a reader of your blog can be forgiven for thinking that matters are purely subjective. They are not.

One thing I think your readers would have appreciated more focus on was the discussion in the book on the actual specific models(and their variants) that we most often use to come to conclusions about phenomena. This is the stuff of Chapter 5, and in a way, the heart of the book—as it talks about the nitty-gritty details of some major model classes (Growth models, Incomplete market models, Overlapping Generations models, etc.), and lessons that those models have for macroeconomists. This is where the rubber meets any sort of road, and readers will want to see this to be satisfied with any statement about “what we do.”

There are also oversights that seem relevant given the sometimes strong statements made in the review.  One instance is the assertion that the book ignores coordination failures (and the work of Morris and Shin)--when in fact the book has a section in Chapter 5 (p. 228-231), and another passage (p. 269-272) that discusses this idea explicitly, and even talks about the example of how civil rights legislation in 1964 might have helped by coordinating expectations of others—especially those of non-minority groups. If such mechanisms are even a little relevant to the explanation of those colossal events in our history, it is surely is a massively consequential thing, relative to other places where the coordination idea is usually invoked.   Similarly, there is also no direct mention of what is a major meme/theme in the book: modern macro is incomplete markets macro, with financial and labor markets being the ones most prone to dysfunction. It tackles poverty, inequality, and unemployment very directly, and in an empirically motivated manner. I want readers to know this.  Again, this is the stuff of chapter 5. (for your readers, Ryan Decker notes this here: and here:

This response to your review is getting nearly as long as your long review, which was nearly as long as my long book. So enough.

I greatly appreciate the detailed,  critical-but-thoughtful, and in places, quite humorous, review of my book, and the serious effort you took to make it happen.



  1. Macro models are correct; it's the markets that are incomplete.

  2. Nice reply, indeed. And, from Noah's review, I wouldn't have expected him to write so stylishly. I might get the book now... :)

  3. )).

    Opens two parentheses. DOESN'T CLOSE THEM!!! sorry, it needed to be done.

    1. Ha... let me help you with your OCD.



  4. "on this point, many people whom I look up to take alternatives to mainstream macro (such as ABM) very seriously"

    Could you ask for examples of who? I've been looking for papers

  5. Kartik, another take on the importance of models:

  6. Anonymous3:04 PM

    What a respectful and kind response! It seems Kartik knows exactly how to be sympathetic to readers, making him a very different human from the ones he surely use in his models.

  7. I will say this in his defense. I read his book-and I aome in as one of those laypeople tha folks like Sumner stick his nose up about-who are disposed not to believe the Neoclassical economists-and I found him highly readable. I mean certainly at least compared to what has been offered by establishment econ before, his work is very accessible.

    Traditionally establishment economists take Sumner's attitude-laypeople are too stupid to understand anyway and there's no time for displaying pearls for the swine.

    So I have to disagree with you at least that it was inaccessible. I feel that I came away knowing a lot that I didn't before reading him. Also because he's been very nice to me and has had ongoing email correspondences with me while you have always seemed to treat me like I'm kind of like the economic blog equivalent of that chick who used to break into David Letterman's house. You seem like you take pains not to encourage me.

    So on a personal level-and hey I'm not a professional economist so I will capriciously go with my intuitions!-I like him a lot more than you whether I agree with him or not!

    Here is more on my conversations with him

  8. I delve into the whole matter in more detail

  9. See again, you didn't answer me. Boo to Noah Smith. Ok you didn't answer anyone else either but I'm sure later you'll answer everyone else and not answer me. Hey look you may not like me but Brad Delong does-true story. If have a choice I'd take him over you any day of the week.

    I do think though that while I didn't find Athreya inaccessible-but maybe that's because I have a literary flair and love dense tomes like the General Theory especially when I get to 'pore over them'-a good deal of what you argue substantively here has merit.
    I agree that it's problematic to say that 'Modern Macro'-see I'm still skeptical-can only be criticized from within. I guess we have a Catch 22. Basically anyone not within teh field will be considered to ignorant to criticize it but anyone within the field will be too self-interested to criticize it.

    It seems that you and Athreya should be friends-you both think the worse thing to call an economist is 'literary.'

  10. By the way while you and Athreya think that what guys like Hayek or Keynes did was more like philosophy even within philosophy there's a movement to purge such literary flourishes-it's called analytic philosophy. Continental philosophy on the other hand is literary and proud of it.

  11. Oops I forgot my link for where I delve