On NZAE's Asymmetric Information blog yesterday, Dennis Wesselbaum reported on the latest (sixth) NZAE member survey. The theme of the survey was views on Kate Raworth's Doughnut Economics (which I reviewed here), Mariana Mazzucato's Mission Economy (which I reviewed here), and the circular economy. The results are eye-opening:
One takeaway from this survey is that academic economists disagreed that these concepts are improving economic policy analyses, and that these concepts should be taught as part of the economics curriculum at all. In the words of one respondent: “As an economics lecturer, I am loathe to introduce non-science based concepts into the curriculum. (This is the same reason I/we are reluctant to teach Modern Monetary Theory - another popular set of non-scientific econ "meme" theories)”.
However, the exact opposite is true for government economists. While the survey is non-representative for either group, this suggests an important and potentially dangerous divergence of views about the usefulness of these fringe concepts.
I'm not sure that I would go so far as to label the difference as 'dangerous', but certainly noteworthy. As one of the academic economist respondents to the survey, I thought it worth adding a bit of additional context.
Consider Question 2 from the survey: "To the extent that [each of Doughnut Economics, Mission-based economics and the Circular Economy] has been incorporated into economic policy analysis by Ministries and Agencies, it has improved the quality of that analysis." Here's the resulting graphs, summarising the survey results for that question:
On the right-hand graphs, the purple bars are academic economists' views, and it is clear that there is a strong belief that each of doughnut economics, mission economy, and the circular economy have reduced the quality of economic policy analysis. Mission economy is viewed a less negatively than the other two, and that is pretty much how I ranked them in my responses. For the government economists (the green bars in the graph), uncertain was the mode response. Aside from being uncertain, government economists tend to have positive views about the impact of these ideas on the quality of economic policy analysis.
This divergence of views makes me wonder about the underlying cause. There is probably little difference in the undergraduate economics training between government economists and academic economists, but academic economists are more likely to have a PhD. However, it seems unlikely that the PhD makes that much of a difference. In what other ways are academic economists and government economists different? Perhaps academic economists have a generally more sceptical or critical viewpoint of new ideas that do not yet have robust empirical support (which is arguably the case for all three ideas)? Or, perhaps academic economists, stuck in their ivory towers, are simply out of touch with the latest ideas? Either of those characterisations of academic economists could be accurate. On the other hand, perhaps government economists are more likely to 'toe the party line', supporting the latest fads or fashions that the government is in favour of? Or perhaps there is a survivorship bias, in that government economists who disagree with the ideas that are currently in favour depart government jobs for the private sector (or academia)? Either of those characterisations of government economists could be accurate. Or, perhaps, a mixture of all of those characterisations explains the difference in views between academic economists and government economists - that would be my guess.
We don't know the cause of the differences, but there is at least a little bit of support for the argument that academic economists are generally more sceptical about new ideas:
The final question asked whether these concepts should be taught as part of the core syllabus in economics... We again find substantial differences between academia and government respondents: academics tend to disagree, while government economists tend to agree that these concepts should be taught.
Even if we don't believe in these ideas, there is something to be said for at least exposing students to them. Students should know that these ideas exist, and are currently influential in policy circles. If we want our students to get good government economic policy jobs, and these ideas are important for economists in those jobs to understand, we should at least be teaching our students to understand them. And we should be teaching students how to critically examine these ideas, so that students (and future government economists) have realistic expectations about what should be contributing to sensible economic policy analysis.
[Update: Eric Crampton makes many of the same points here]
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