An Age Such As This

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Posted in Contemporary economics

A fresh copy of The Age of the Applied Economist: The Transformation of Economics since the 1970s (Duke, 2017) arrived in the mail the other day.  Editors Roger Backhouse and Béatrice Cherrier note in their introduction that ten of the last twelve winners of the John Bates Clark Medal were described as “applied” or “empirical” or doing work of “practical relevance.”

Make that eleven of thirteen.  Parag Pathak, of the Massachusetts Institute of Technology, a market designer known for his work on the assignment of students in public schools, was recognized earlier this month. The Clark Medal is awarded annually by the American Economic Association to an economist under the age of forty, teaching in an American university, judged to have made the most significant contribution to economics

Backhouse, of the University of Birmingham, and Cherrier, of the Centre National de la Recherche Scientifique, are among today’s leading professional historians of economics.  Their book is the annual supplement to the quarterly journal History of Political Economy (HOPE), which is also published by Duke University Press. The Age of the Applied Economist contains eleven essays on various topics, including “‘It’s Computers, Stupid’: The Spread of Computers and the Changing Roles of Theoretical and Applied Economics,” by the editors.

They trace the development of computers after World War II from mainframes running punch cards, in the 1950s and1960s, to the advent of personal (or “micro”) computers and the Internet after 1981 (omitting the development of mini-computers in the 1960s and 1970s, which I suspect will turn out to have been significant to their story). They wisely note that “the evidence required to write a comprehensive history of the role of computing in economics is often hard to locate”: they urge their fellow historians nevertheless to pay careful attention to the significance of new computational tools for the discipline.

Still, they argue, the advent of powerful and easy-to-use computers is undoubtedly important, although by itself it is not sufficient to explain the turn toward applied economics that they document in the their conference volume. Beginning in the1980s, they write, “some computationally very intensive techniques were marginalized, and computationally less-demanding approaches based on quasi-experiments became widely used in microeconomics.”

They mention the development of new databases and the emulation of methods of clinical testing in medical science.  They cite the account in their conference volume, by Matthew Panhans, of Duke University, and John Singleton, of the University of Rochester, of a “credibility revolution.”

For all the brio of The Age of the Applied Economist, the book reads more like a prospectus for a research program than a persuasive account – which, of course, is the end that many of the forty-eight previous HOPE conferences have served.  A good gloss on the subject is no substitute for shoe leather and sitzfleisch. Whether the age belongs to applied economists, or behavioral economists, or experimental economists, or even organizational economists, is far from settled. The distinction between theoretical and empirical work seems overdrawn.  Under a broad definition, a dozen Nobel prizes have been awarded  for work in applied economics over the years, beginning with Simon Kuznets in 1971, including, most recently, Angus Deaton; but the first recognition of what will presumably be several awards for work in the “methods revolution” still lies ahead.

To reassure myself on this point, I took down from the shelf two classics of the recent history of economics: The World in the Model: How Economists Work and Think (Cambridge, 2012), by Mary S. Morgan, of the London School of Economics; and How Economics Became a Mathematical Science (Duke, 2002), by E. Roy Weintraub, of Duke University.

Morgan develops an essentially philosophic argument though a series of closely-examined case studies: David Ricardo’s groundbreaking “recipes,” more persuasive than syllogisms; Francis Ysidro Edgeworth’s diagrams; the caricatures of Max Weber (“ideal types”), W.S. Jevons (“calculating man”), and Frank Knight (“slot-machine man”); the thought experiments of Alfred Marshall; the analogical model of Walter Newlyn and Bill Phillips, a model run by water;  the question-and-answer models of John Maynard Keynes and Paul Samuelson; the microscope-like simulations of Martin Shubik and Guy Orcutt; the “exemplary narratives” of game theory.

Weintraub, on the other hand, tells a series of stories, often quite personal:  his economist father’s struggles with mathematics in an age of rapid change, and his own struggles, as a mathematician, with his father; and the relation of both to Hal Weintraub, brother to Sidney, uncle to Roy, a talented mathematician taken off by Hodgkin’s Disease at the age of 31. All this serves as a web in which to weave stories of Alfred Marshall and  the development of the math-heavy Tripos final examination in economics at the University of Cambridge at the beginning of the twentieth century as a way of sorting out candidates; the influence of French Bourbaki scholarship on the further development of mathematical economics after 1945; and the spadework chapters that led to Weintraub’s 2014 book, with Till Düppe, of the Université du Québec à Montréal, Finding Equilibrium: Arrow, Debreu, McKenzie and the Problem of Scientific Credit (Princeton). In that book Weintraub’s doubts about mathematical austerity seem to give way to a tough-minded acceptance of one of the major tools – perhaps the major theoretical tool – of post-World War II technical economics.

These books are obviously not for those who are casually curious about what happened to economics in the twentieth century.  But for anyone seeking to understand “the age of models,” or “the age of mathematical economics,” including practicing economists, they are landmarks. Establishing “the age of applied economics” will require a similar effort.  The problem is that it isn’t easy to make a living as a historian of economics. Economics departments have ceased to teach the subject, much less require it of graduate students.  And jobs involving the production of new knowledge of the field’s history are few and far between.

The miracle is that the community of the historians of social science continues to produce important books. We’ll just have to wait a little longer for a history of whatever age this is.