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Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
I don’t want to suggest that economists are useless. Nor will I claim that they should all be obviously useful. If some want to do research that may seem like “mathematics” but actually pushes the boundaries of knowledge, then good for them. But I think there is a gap between the supposedly policy-relevant research of academia and what policymakers actually want. And that it could be smaller.
The biggest criticism is that researchers all too often ask the wrong questions and then communicate the answers poorly. Some of this isn’t their fault. Science rewards novelty over usefulness. It can also lead to precision (“Did the dog tax affect dog food spending in the first three months?”) rather than breadth (“Is taxing barking pets crazy?”). And it offers the freedom to think about solving a single problem with a perfect instrument. Politicians are now increasingly faced with the task of combating multiple distortions with limited legal instruments.
To give an example: Economists have tried for years to estimate the social costs of CO2. They argued that a carbon tax was the best way to combat climate change and criticized industrial policy as misguided. But when the Biden administration began asking how to use subsidies, the evidence base was lacking. “Economists don’t know what to do when they just think something is a bad idea,” says Betsey Stevenson of the University of Michigan, adding that when it comes to carbon taxes, “they should figure out why the public doesn’t have sold.”
What to do? The government itself could improve access to current data. If economists themselves are interested in having more influence, a recent post by Jed Kolko, a former U.S. Department of Commerce official, gives examples of work he found useful during his time in government. New data, like rental prices from Zillow, can help with real-time analysis. Literature searches save policymakers from having to wade through reams of papers. Quantifying the impact of policy changes can also be helpful, such as estimating labor demand from investments in semiconductor manufacturing that fed into human resources policy.
One challenge is that the path to employment isn’t exactly littered with literature reviews. Academics are not rewarded when their work is cited by a government agency or regulatory body. But a group that includes Stanford University’s Gopi Shah Goda is working on a metric that captures this kind of reference, which could eventually stand alongside academic citations as a sign of success. “If you can’t measure it, you can’t even begin to reward it,” she says.
Other initiatives include work by scholars such as Eva Vivalt at the University of Toronto to develop reporting standards for published research and to facilitate comparison between study results. She collected more than 600 studies on development economics and found that fewer than 10 percent mentioned the costs of a policy. (Prices are important to policymakers.)
Researchers would also be able to better assess the constraints facing policymakers if there were easier routes from academia to government and back again. In the UK it can be difficult to return to academia after a more practical job. In the US, Martha Gimbel, who recently worked for the White House Council of Economic Advisers, rightly calls it “crazy” that staying there seemed to affect academics’ chances of advancement in some cases.
My final appeal to economists is to write more clearly. I’m not asking for titles like “10 Amazing Consequences of Higher Interest Rates You Won’t Believe Exist.” I ask for titles that reveal the question or result. Too many have the “thing, thing and thing” format. Try again, unless one of those things is “sex,” “drugs,” or “rock ‘n’ roll.” Less than 15 percent of the National Bureau of Economic Research’s working paper titles contain a question mark. Aim higher.
As for the rest of the paper, please note that impenetrability is a poor quality feature. Papers with abstracts that have higher readability scores – depending on word and sentence length – are cited more frequently. Admittedly, a comparison of abstracts published in the American Economic Review and two other top sociology and political science journals suggests that other disciplines fare worse. But considering how many NBER working paper summaries hover around the “difficult” mark, believe me when I say there is room for improvement.
I don’t plan on putting myself out of a job. Specialization is important. The comparative advantage is real. Some works are for think tanks, others for journalists. But economists in particular should be aware that consumers of their research face limitations.
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