Signal and Noise in Economics Writing
Why should anyone accept uncritically that Economics, or any field of human endeavor, for that matter, should be easy to process and contribute to?
Pointer from Greg Mankiw. Read the whole thing.
He is suggesting that bloggers supply more noise than signal on economic topics. I understand his point, but I disagree with it.
It is a fair point that it is tempting when writing for an audience that includes non-professionals to try to oversimplify, to make your views sound more well-grounded than they are, and to make others’ views sound sillier than they are. If you read just one economics blogger, you will get that blogger’s prejudices and blind spots along with whatever insights might be on offer.
It is possible, however, for the collective efforts of many bloggers to produce more signal and less noise. That would be the case if the competitive market serves as a check on the more unsound ideas. I am not saying that it works that way, but it might.
Athreya takes the view that the academic process of refereed journals is more rigorous and works well. I do not fully share that view. The peer-reviewed journal process may be the better than anything else someone has come up with, but it is a deeply flawed process. It rewards ritual over substance, and trend-following over originality. The process failed badly in the area of macroeconomics over the past thirty years, an era which I believe Paul Krugman is justified in describing as a Dark Age.
Athreya draws an interesting contrast between reactions to the economic crisis and reactions to natural disasters. He points out that the tsunami in East Asia and the earthquake in Haiti combined to kill hundreds of thousands and to impose hardships on many others that are far worse than what has been inflicted by the recession. Yet neither of those disasters was met by a denunciation of seismology for failing to predict them nor an outpouring of ill-informed speculation about what happened. He may be forgetting the “God’s revenge” explanation proposed for the Haiti earthquake, but his point is well taken.
My pushback would be that economists have claimed to know more about the process of recessions than seismologists have claimed to know about earthquakes and tsunamis. No seismologist has ever said that we have “conquered” such events the way that economists have in the past claim to have conquered the business cycle.
I agree with Athreya that non-economists should express opinions about macroeconomics only with great humility. Where I disagree is that I think that economists, too, need to show humility. In fact, I have thought about opening my hypothetical book on macroeconomics something along these lines:
If a textbook covers a body of knowledge in order to raise the reader’s level of proficiency, then what should one call a book that covers a body of knowledge in order to raise the reader’s level of doubt? A doubtbook, perhaps. Above all, what you are about to read (or discard, as the case may be) is a doubtbook.
Herbert Stein, in his memoir
Economic Washington Bedtime Stories said that he had learned two things from experience about economic matters.
1. Economists know very little.
2. Non-economists know even less.
Athreya is repeating the second point, and I agree However, I would also place stress on the first point.
[UPDATE: Scott Sumner lets loose with both barrels. Also, follow the other links in David Beckworth’s post to find more on the controversy over Dark Age macro. Finally, one branch of heterodox macro, involving complexity theory and agent-based modeling, gets discussed by David Warsh. The bottom line: I don’t think any of us should be saying that our view of macro is scientific while someone else’s is not.]