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Thursday, August 02, 2018

How Econ Went From Philosophy to Science | Opinion - Bloomberg

A new study shows how much the field now relies on hard data instead of airy theories, inform Noah Smith, Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion. 

Plato’s Symposium. Not an economist in sight.
Photo: DEA/Rapizzi/De Agostini/Getty Images

Big changes have been happening in the economics profession, but many people still don’t seem to realize this. Maybe it’s the steady drumbeat of think pieces reiterating the same outdated critiques. Or maybe there’s a lingering collective memory of the time when the public face of economics was strongly libertarian. Or perhaps think tanks and pundits have publicized a caricature of economics.

But recognized or not, the changes are real and substantial. First, the profession has become much more empirical, increasingly emphasizing evidence and data over theoretical conjecture. Second, economists are much more concerned with inequality these days. And finally, economists are more willing to question basic assumptions, such as the premise that economic actors are perfectly rational.

Princeton University economist Henrik Kleven recently gave a presentation in which he evaluated how the profession has changed in recent years. Kleven used software to search the texts of National Bureau of Economics Research working papers. His search was limited to the field of public economics, which deals with taxes, government spending and similar issues. But it probably reflects trends that are present, to a greater or lesser degree, across the discipline.

The first thing Kleven found is that empiricism is on the rise. Many more papers mention the term “identification,” which basically means testing models against data:

Source: Bloomberg

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