Our field is not perfect. But the idea that it is so tainted we must "rip it up and start again" isn't just pessimistic—it is based on inaccuraciesby Diane Coyle / April 13, 2018 / Leave a comment
Do the “tenets of neoclassicism” shape our day-to-day work as economists, as Howard Reed puts it in his ill-informed diatribe for Prospect? No—they do not.
These are some of the research papers in economics that I’ve read recently. One by Cameron Hepburn, an economist at Oxford, on policies to encourage environmentally-beneficial innovation. A study by other Oxford economists and engineers on how to design contracts to enable the growth of a peer-to-peer market for matching small-scale energy generation with demand.
A working paper by Boston University, Harvard, and MIT economists, documenting a shift in the character of AI patents in the US from the automation of existing activities to general purpose deep learning. And two studies—one by economists at the OECD and one by university researchers—considering the effects of technology on jobs, both the likely effects in future across OECD countries and the pattern in the US in the 2000s.
Some work by my former colleague at the University of Manchester, Abhishek Chakravarty, on the way tenancy reform in West Bengal had the unintended consequence of increasing families’ preference for sons and substantially increasing the survival advantage sons already had over daughters.
Research on the likely effects on UK obesity rates of the sugar tax on soft drinks by Rachel Griffith and two of her colleagues at the Institute for Fiscal Studies.
A much-praised paper by Dave Donaldson, an economist at MIT, identifying from a painstakingly created dataset the way that 19thcentury railroads in colonial India substantially increased incomes in newly connected districts, and thus providing surprisingly rare evidence of the benefits of investing in transport infrastructure.
These are typical. Most of modern economics is like this: empirical testing, often using new sources of data, addressing questions of immediate importance and relevance to policymakers, citizens and businesses.
Economists are not in thrall to neoclassical economics and they certainly do not neglect the role of technology. Economics does not require that people be rational, calculating automatons. It very often has people interacting with each other rather than acting as atomistic individuals, despite Reed’s charge. As a matter of course, it assumes there is a fog of uncertainty, and that different people know different things: that there are asymmetries of information.