It was predictable. Bloggers have rounded on Kartik Athreya, an Economist with the Federal Reserve Bank of Richmond who lambasted bloggers and journalists in a paper entiteld “Economics is Hard. Don’t Let Bloggers Tell You Otherwise.” Interestingly, his paper has vanished from Google Docs in the meantime, but it’s still available here:
Being a professional journalist I was trying to stay polite when I wrote down my thoughts on the paper yesterday. Most other bloggers critized Athreya in a much harsher way, as you can see.
Here’ a selection of some of the juciest comments:
Some Fed economist (with a hard-earned Ph.D mind you) named Kartik Athreya has written the most idiotic “research” piece to come out of the Federal Reserve since 1913, and the Fed has written a lot of idiotic research since then.
Putting aside agreement and ideology, and just focusing on how one understands an issue, I’ll take my favorite non-Ph.d. bloggers over most professional economists, six out of seven days a week. Not to estimate a coefficient, but to judge public policy, thereby integrating and evaluating broad bodies of knowledge? It’s not even close.
If Athreya really thinks we are so shallow, then I encourage him to enter the fray, start his own blog. I’d love to debate monetary policy with him. He might find out that bloggers know a bit more than he imagined.
What Athreya seems to desire is a professional oligarchy of sorts – where the revered and sanctified economic professionals do not taint themselves by reaching down and attempting to explain their lofty ideas to the common man.
But there seems to us to be more than a touch of PhD elitism in this economist’s argument. Perhaps the profession is just a wee bit uncomfortable with its work drawing increased (and often negative) attention from outside hallowed academic circles, in recent years. But clearly we’re biased. Don’t listen to us.
Mr. Athreya appears to be a reasonably intelligent fellow. But when it comes right down to it, now is not the time for him to be telling us how smart he and his Ph.D. economist friends are. They had their chance. And they blew it.
We’re not going to delve into it, because the whole thing is silly, trivial, and unimportant but we will make one point. If there’s one message that consistently comes out of the econoblogosphere it’s that economics is hard. Really hard.
This is actually a very interesting document for two reasons. First of all, it tells us a lot about the writer and illustrates the inbred culture of the Fed, which is almost certainly the largest employer of economics Ph.D.’s in the world and the largest source of funding for economics in academia. The result is a “Fed school” of thought which dominates the field of economics. Secondly, it illustrates the structural fallacies inherent in the academic study of economics. These fallacious assumptions are the root of the continuing failure of modern economics to provide accurate forecasts and sound advice to policy makers.
I’m going to duck out of this one, and leave it to Federal Reserve Bank of Minneapolis President Narayana Kocherlakota.
He will explain to Kartik Athreya that someone who has taken a year of Ph.D. coursework in a decent economics department (and passed their Ph.D. qualifying exams) is unlikely to be able to say anything coherent about our current macroeconomic policy dilemmas: “Why do we have business cycles? Why do asset prices move around so much? At this stage, macroeconomics has little to offer by way of answer to these questions. The difficulty in macroeconomics is that virtually every variable is endogenous – but the macro-economy has to be hit by some kind of exogenously specified shocks if the endogenous variables are to move. The sources of disturbances in macroeconomic models are (to my taste) patently unrealistic. Perhaps most famously, most models in macroeconomics rely on some form of large quarterly movements in the technological frontier. Some have collective shocks to the marginal utility of leisure. Other models have large quarterly shocks to the depreciation rate in the capital stock (in order to generate high asset price volatilities). None of these disturbances seem compelling, to put it mildly. Macroeconomists use them only as convenient short-cuts to generate the requisite levels of volatility in endogenous variables…”
It seems to have escaped Athreya that this here country is a liberal democracy, and not some kind of bloated Singapore. His response to worries about the rule of experts seems to be that there is no reason to worry because of peer review. Yet as far as I can tell, there is no reason at all to believe that academic peer review in economics favors work relevant to policymaking in the real, embodied political economy as opposed to clever mathematical accounts of phenomena in fictional worlds that bear at best some tenuous structural similarities to this world.
Heidi Moore, Street Sweep (Fortune)
The problem doesn’t seem to be that the study of macroeconomics is difficult; the problem is that, in a crisis, it was not particularly accurate. (…) So are bloggers the problem with macroeconomics’ perception problem? Probably not. This seems like it might be a bigger war that the profession has to fight — among themselves
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Quite so; I think economists shoud be left to work things out among themselves, as suggested by one of their number. Can we find an isolated island big enough with a total lack of communication with the outside real economy, as opposed to finanical services, is the question?