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Do we have confidence in our economic institutions?

Jack Wright

This is the question a collection of economics-related academics and representatives from charities, think tanks, government and financial organisations were asked at a Rebuilding Macroeconomics Discovery Meeting on Friday. The meeting was structured around four themes with an academic making some introductory remarks followed by an open discussion.

Most of the participants seemed to assume the answer to the headline question was ‘no’, or at least ‘not enough’. As such the topic of conversation was more often: what are the problems and what can be done?

Institutional advantages

Kevin Hoover from Duke University informed us that the graduates and faculty of four of the most prominent economics departments—Harvard, MIT, Chicago, and Stanford—dominate the ruling body of the American Economic Association (71% of the positions since the 80’s). The nominations process was thought to be limited.

Some important questions arise from such institutional advantages. Do they exist by merit or privilege? Even if such advantages can be shown to be merit based (what might constitute evidence for that?), should they? Or are there other considerations of democratic representation that should be considered? And, does skewed governance of a significant organisation like the AEA undermine the idea that economics is a competitive ‘marketplace of ideas’?

Other institutional factors were also discussed. These included ‘Americanisation’: US economics is much bigger – 153 institutions are able to grant PhDs in economics—and many European economics departments have followed certain (possibly false) American images. And, structures of funding: the US also has more diverse sources of research funding.

A number of participants suggested spaces for empirical work that might deepen our understanding of the institutional impediments to innovation and the structures of hierarchy and (under)representation in macroeconomics.

On the local level, work exists on how economics training develops a particular ethos, as well as how this continues into both academia and other domains in which economists are employed. But complimentary topics remain unexplored. It was suggested that other aspects of the socialisation of economists (hiring practices, promotions committees) could also be valuable.

On the aggregate level Fourcade et. al.’s work on hierarchical publication patterns was highlighted and other avenues for data collection were suggested: who makes up the National Bureau of Economic Research, what are the governing bodies of other professional organisations like (in addition to the AEA), how do the professional organisations of economics compare to those of other disciplines?


The discussions moved on to how policy-focussed and academic economists influence and differ from one another. Beatrice Cherrier from the Cergy University described in detail how the very deliberate policy engagement of some Minnesota economists, also working at the Minnesota Fed, facilitated the ascendance of the Minnesota school of macroeconomics. Beatrice also noted a striking disconnect between how economists (in some cases the same individuals!) act in the contexts of academia and policy.

It was argued that, in the US at least, innovative economic work is frequently stimulated by interactions between policy focussed and academic economists. If adopting a practical perspective is an important lever for improving the state of macroeconomics, how do we encourage economic work that incorporates such a perspective? Suggested answers included having significant policy economists in universities. What if the main economists of the Bank of England, the Treasury, etc. were also automatically professors with offices adjacent to their academic counterparts?


Sheila Dow from Stirling University argued that defining economics in terms of a specific, positivist, understanding of ‘science’ sets a boundary, encouraging the ‘not seeing’ of other ideas.

Richard Bronk from LSE who argued that the inescapability of radical uncertainty in capitalism meant that no single approach to macroeconomics can be right. But economists’ mental maps and modelling procedures are mutually reinforcing, meaning that professional networks may become dangerous monocultures.

These arguments led to some normative questions. Are there grounds to ‘democratise’ expert based institutions like those of economics? If so, what counts as democratisation: inclusivity of different perspectives, possibilities for contesting ideas? Could this make the analysis of a complex, evolving system more robust?

In this context, and throughout the day, pluralism was a recurring topic. Two of our speakers put forth detailed arguments for pluralism in economic research and teaching, and against ‘illusions of best practice’ and the circularity of the lens ‘a market for ideas’ by which to judge economics. A number of participants pointed approvingly to the campaigning from student groups for pedagogical pluralism.

But pluralism was also pushed. One participant argued that pluralism can cloud the policy relevance of a body of thought. Others questioned what pluralism should mean for economics (apart from a broad curriculum), especially given that the ‘schools of thought’ approach often suggested is quite different from interpretations of pluralism in the natural sciences. And, one participant argued from the premise that at most points in time in most disciplines there are dominant ways of thinking to the conclusion that the impediments to innovation lie not in monism but in whether there are avenues to challenge dominant positions.


In the roundup, it was argued (not uncontroversially) that macroeconomics lacks sufficient empirical feedback, and that demanding empirical feedback could be an important path to chance. This idea can be usefully generalised to think about a number of the problems and avenues for change discussed throughout the meeting.

As well as a (possible) lack of feedback from empirical information, there is an arguable suppression of feedback from competition (‘marketplace of ideas’) if the governance of the AEA and publication patterns favour those from certain institutions. Policy-academic interactions can be seen as a form of feedback arising from the necessity of fitting ideas to concrete contexts.

Encouraging feedback can also be read out of arguments for incorporating different perspectives (gender, race, class, geographic) and encouraging the contestation of ideas. And, it was also suggested that reactions (feedback) to large events (the Great Depression, Stagflation, the Great Recession?) are an important motivator for shifts in economic ideas. Does the closed nature of tertiary education funding constrain avenues for feedback?

Some of these forms of feedback are social, some epistemic, and some a mix. As such different mechanisms and actions (and different research questions!) will be required to encourage different forms of feedback. The question is: where are there serious deficiencies of feedback in macroeconomics that can be readied by a project to rebuild the enterprise?

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