If I am right that in recent decades the equilibrium in post-real macro has discouraged good science (and remember, many economists do not agree with me, at least not yet) there is some risk that a rear-guard of post-real macroeconomists will continue to defend their notion of methodological purity. At this point it is hard to know whether this group will fracture or dig in for a fight to death. If they dig in, I suspect that it will be in a few departments and that the variation between departments will be larger. Watch to see how this plays out and choose where you go with this in mind.
Pointer from Mark Thoma.
My own advice is to look for opportunities other than graduate school in economics.
One way to think of my latest book, Specialization and Trade, is as a denunciation of the path that academic economics took since 1940. It is a Quixotic attempt to pull off what Paul Samuelson did in the 1940s, which is completely re-orient economics from undergraduate education on up. That is not going to happen. I think that academic economics (especially macro, but not just macro) is simply too far gone.
If you have a strong interest in studying economics and in joining in the intellectual conversation, you can do that on your own, without going to graduate school. This was less true forty years ago, when I was starting grad school, because we did not the Internet, with its blogs, online working papers, podcasts, and so on.
On your own, you can be selective about what you study and how intensively you delve into various areas. Studying on your own will be a lot less expensive than going to graduate school, particularly in terms of opportunity cost. Graduate programs will make you waste a lot of time studying things that are either uninteresting to you or uninformative, or both.
It could be that you really want the academic lifestyle, and suffering through an economics Ph.D program is the best way to get it. But be careful about assuming that the academic lifestyle is the only one for you. I think that bright college students tend to over-estimate the intellectual stimulation that they can get out of academia and they under-estimate the intellectual stimulation that they could get out of working in business.
Hard to get contrarian views out there, or be taken seriously at all, without credentials.
Graduate school looks attractive, relative to business, to bright graduating undergrads for many reasons beyond intellectual stimulation.
In my experience, a lot of it is fear and uncertainty about not being in school any more. Many smart 22-year-olds’ self worths or self identities come from being good students, and leaving school means abandoning the very thing that they value most about themselves.
I’d also add that, with the possible exception of business or engineering schools, most top schools don’t prepare students for business. They prepare students to go to graduate school.
That ‘prepping for next academic step’ focus seems to have trickled down all the way into middle school, with most of the alternatives and off-ramps being discouraged or getting eliminated over time.
I love this post, because it essentially describes what I’ve done. I took a microeceonomics course (with Steven Landsburg’s excellent Price Theory textbook) as part of my actuarial continuing education and it turned me on to economics as a way of thinking. That was 8 years ago, and I’ve read a ton of economics and participated a little bit in the comment threads of my favorite econ blogs. It’s occasionally quite rewarding.
I’m a research actuary, so I get to live “the life of the mind” at work. I get to use massive data sets containing hundreds of thousands of people and apply predictive modeling (mostly GLMs) to these datasets. It feels like being a social scientist. I’m trying to answer questions like “What traits predict the likelihood of an auto accident, or a policy non-renewal, or a moving violation, or a homeowners claim?” It’s not mere number-crunching, either. Sometimes you have to ask, “Is this a causal effect or not? Does the result even make logical sense? If we use these results to make a business decision, will they still hold true?” It’s really fun to get a novel question or a new dataset. It could be the first time anyone’s asked that question or seen that data, so your answer will be the first anyone’s ever seen.
I left grad school (physics, not econ) to do essentially what Arnold is describing.
Couldn’t agree more. I studied as a finance guy (i.ei, MBA). I’ve not worked in academia, so I can’t speak to that. Rather I have worked in business, and for me at least I see some nice benefits from doing so. First, things change and I’ve also changed. There are many opportunities in the real world and these opportunities are not always well defined and the don’t remain fixed. During a long career that started in accounting and banking, then to boutique private equity real estate, things have kept moving and are always interesting. Second, for anyone with talent and initiative, there is opportunity in non academic work. Also, I respectfully disagree with commenter Handle’s statement that credentials are necessary. Bill McBride of Calculated Risk is a very widely followed blog and I doubt many people care what Bill’s credentials are.
A St. John’s College alum, I study economics as a liberal art, reading classics in the field from Smith to Buchanan — I’m enjoying Fisher’s *The Theory of Interest* at present. I also like economic/business history by people like Schumpeter, Viner and Chandler. Arnold, your books — I have in mind both *From Poverty to Prosperity* and *Specialization and Trade* — are right in the line of someone like me who is more interested in understanding the world around me than hydraulic-modeling-schemes of prediction, manipulation and control. Thanks for writing them!
And as a business man who is a convert from academia — I teach Ancient Greek philosophy as an Adjunct, present papers on Plato at conferences once a year, and am also CEO of an apartment construction & management company — I can attest that there are richer intellectual pleasures in doing business than my academic friends are aware.
Education as a signal is useless, yes – but is it right to suggest that economics students without Master’s or PhDs are offered comparable opportunities to those with these degrees?
I agree that in the short run (say up to 5 years from matriculation date), students without advanced degrees are offered less attractive opportunities. However, in the intermediate to long term, this difference fades in significance. Assuming say a 40 year career, I think these credentials are relatively insignificant. For example, I’m relatively confident that if one were to look at the CEOs of the fortune 500, one would find many Harvard MBAs yes, but also many people with undergraduate degrees from non prestigious institutions. And this is for the Fortune 500. There is likely even greater diversity in education background for privately-held enterprises.
The policy world has a place for the autodidact in economics. In fact, I think the policy world has too few people that can communicate well ideas like opportunity cost and marginal analysis along with basic statistics concepts.
I think we’re seeing a shift from bits back to atoms (the “next” Facebook is self-driving cars and drones). I see economics as a form of leisure for those whose main vocation requires a strong education with a lot of math. In my case I am nearly done a Plasma Physics PhD (whilst managing a tech team by day) and I read economics to relax. It’s more relevant to more people, more current, and the conversations are much more lively. I can’t chitchat about plasma physics with the in-laws at XMas.
“Advanced” macro papers appear to me like those fake papers generated by AI algorithms. Lots of words, but where is the graph I can cite and then compare my experimental data to for my next paper? That’s what “science” means, dudes! The theory (and ancillary wasted electrons on number crunching) is masturbatory if it doesn’t set up some RA for experiments. Theory->Simulation->Experiment->Results. You can’t only do the first two and call it done.
I’ve learned more “real” economics from blogs like this one, and it’s had a dramatic impact on how I see my career, education, and politics. Price theory, the economic way of thinking, the seen and the unseen, all so interesting and I keep seeing them pop up unexpectedly in my day-to-day life.
tl;dr – Get a hard-science education. Atoms put bread on the table. Bits are for entertainment.