Blog | Economics

Annual Review of Economics

. 2 min read

A few months ago there was some media talk of a crisis in economic science. In July The Economist ran a cover article "Where economics went wrong". Two months later Paul de Graauwe, a professor of economics at Leuven University, wrote an opinion piece in the Financial Times under the title "Economics is in crisis: it is time for a profound revamp" but in the article's second sentence we learn that it is not economics, but "the science of macroeconomics [that] is in deep trouble", because "the best and the brightest in the field fight over the most basic problems". Of course, there's nothing special about macroeconomics in this respect. In philosophy, psychology, sociology and neuroscience "the best and the brightest in the field" also fight over the most basic problems. What is emotion? What does the term "social" refer to? What is the mind? What is "good", "moral", "beauty" etc.?

A few months later Paul Krugman wrote an essay in The New York Times Magazine "How did economists get it so wrong?" in which he claimed, among other things that "the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth". I could do some variations on that: "the (psychology, cognitive neuroscience, social science etc.) profession went astray because (psychologists, neuroscientists, social scientists, etc.) as a group, mistook the mere accumulation of data based on statistically flawed methods and clad in purely descriptive diagrams for truth". I am aware that there are computational neuroscientists, social scientists etc. who do formulate mathematical models, but there are also economists who don't spend their days juggling with fixed point theorems.

Of course, as always when there is talk of a crisis in some discipline in the meantime countless researchers working at economics departments around the world just continue their research.

Economics as an academic discipline is thriving. Like all other scientific disciplines it has divided into numerous fields and sub fields. For those who care to take note progress is being made in various areas. The problem is that this knowledge doesn't trickle down. This problem is mostly practical, for how to keep up with what's happening in a particular sub-discipline if you're merely interested in a broad overview of recent advances?

The Annual Reviews journals serve exactly this purpose. They provide an overview of a particular discipline written by top-scholars in the field. I find them indispensable if I want to read about a particular topic.

I was happy to find the recently inaugurated Annual Review of Economics, Resource Economics and Financial Economics journals, which in my view were long overdue. If you don't have access to a university library, you can often find the final paper or a working paper at the author's homepage. Working paper versions of some articles can also be found in the social science research network database. Or else befriend someone in academia.

I admit that the paper by Olivier Blanchard on the state of macro, especially his statement that "the state of macro is good" is a bit premature. Quite frankly I wonder whether the state of macro ever will be good. To me it has always seemed like trying to explain consciousness, the origins of life or the universe.  However as in psychology, cognitive neuroscience, physics and other disciplines in more narrowly defined areas progress is being made.

I can recommend the papers by:

Abhijit V. Banerjee and Esther Duflo: The Experimental Approach to Development Economics. "We argue that the main virtue of randomized experiments is that, owing  to the close collaboration between researchers and implementers, they  allow the estimation of parameters that would not otherwise be possible  to evaluate."

Derek Byerlee, Alain de Janvry and Elisabeth Sadoulet: Agriculture for Development: Toward a New Paradigm

Katharina Wick and Erwin Bulte: The Curse of Natural Resources. "We conclude that there are many open questions and that the case of the curse needs revision and nuance."

Otherwise, just browse the abstracts.