4 ms·

A field fixes itself: the applied turn in economics

54 points by INGELRII 5y ago

ContrarianBrit 5y ago
Very interesting - thanks
huitzitziltzin 5y ago
Nice piece which to me reads as being an accurate account of the recent history of the field (as far as I know it). Short summary: 90% of the work that is taken seriously in economics is empirical. Moreover, we only care about cases where causal inference is possible and those are the papers that get published. (If your first complaint about a published piece in an economics journal is “correlation does nor imply causation,” we know that too and the kind of work which can fall for that criticism is only rarely and accidentally going to make it through the refereeing process.) Far better than a similar, much less informed piece from Aeon which was shared here a few days ago…
- civilized 5y ago
  I think there is sometimes too much confidence placed in these results (no different than any other empirical field that makes heavy use of statistics and significance testing). But it's still a positive direction, unquestionably.
  - huitzitziltzin 5y ago
    Fair point and I completely agree with you. We don’t yet have a great answer on “researcher degrees of freedom” for example (ie what specification is run, which one is reported). Definitely better than what came before and surely in another 30 years empirical standards will be even higher!
- NeutralForest 5y ago
  I mean, Aeon is pretty bad
- ackbar03 5y ago
  How do you prove causation instead of correlation exactly?
  - NeutralForest 5y ago
    There is a whole subfield dedicated to the question called causal inference. You can read something like the "causal inference : the mixtape" https://mixtape.scunning.com/ https://mixtape.scunning.com/
    - deleted 5y ago
      [deleted]
  - INGELRII 5y ago
    1. Experiments, and natural experiments 2. causal discovery methods + generic assumptions Economists are really putting effort into sound methodology.
  - huitzitziltzin 5y ago
    First thing: all claims to have proved a causal relationship are relative to a set of assumptions which may or may not be satisfied (even in experimental sciences). Taking the experiment as an ideal we cannot reach, there are many settings where there is useful variation in the data which can approximate the random assignment to treatment which is the essence of experiments. Some canonical research designs which can be used here include differences in differences, regression discontinuity, synthetic control methods, or instrumental variables methods. They are differently appropriate to different settings but permit causal claims to be made. These methods are widely used in contemporary empirical economics (indeed this is a nearly exhaustive list of methods used in applied micro!). Useful, accessible references here include Angrist and Pischke, “mostly harmless econométrics,” or “causal inference the mixtape” by a guy at Baylor whose name I’m forgetting, and the very recent “the effect” by Huntington-Klein, which I have not yet read. Other slightly more exotic models are used in (for example) industrial organization which still permit causal claims to be made about the effects of increasing prices or changing product features on demand for a product or set of products.
  - 5y ago
Mizza 5y ago
Modern calipers revolutionizing the field of phrenology.
- carapace 5y ago
  LOL! It's hilarious that economists are talking about "empirical" economics. What were they doing before this? "Unempirical" economics? Seriously though, economics seems (has seemed) little better than numerology to me, so I'm glad to see the field start to graduate from the alchemical to the chemical stage of knowledge. Good for them.
  - AtlasBarfed 5y ago
    I like to condemn economics as only being able to predict value based on a very limited set of things that can be measured/tested. The strange thing is, even with "measurements" like CO2/global warming so clearly pointing to armageddon in a few generations, the field of economics is STILL unable to quantify such impacts on models, or produce effective economic pricing measures. Of course, because in addition to being only a crude "science" that basically reduces to bad accounting practice on a massive scale, economics is also dressed up as a "crystal ball science" that the oligarchical powers can trot out to justify their positions and current structure of monetary distribution as a priori destiny. So it is ALSO politically corrupt, not just computationally bankrupt. The reality is of course that there is plenty of money to deal with most of our massive structural problems. But who owns that money? The rich who will rather see the world destroyed than give it up.
    - carapace 5y ago
      Yeah, you're preaching to the choir. The paltry predictive power of economics as "science" combined with the role economists play as modern-day court astrologers has always made it seem absurd to me. > The reality is of course that there is plenty of money to deal with most of our massive structural problems. I'm a fan of Bucky Fuller, he calculated that we could do it with only about $25B in 1970's dollars. The catch is we would have to deploy our resources and technology efficiently (rather than maximizing profit.) > But who owns that money? The rich who will rather see the world destroyed than give it up. It seems that way. In any event, the solution will be social and even spiritual (rather than technological.)
wallacoloo 5y ago
i think the bit about old paradigm vs new paradigm tenure application bias overlooks a few things. this bias doesn’t just affect the proportion of admissions across paradigms, it’s a selection filter that allows only the best of the new paradigm people through. so even if this bias results in only 5% of the field being new-paradigmers after the first round, that selection might mean that closer to 10% of the overall output comes from new-paradigmers (because it’s selected for new-paradigmers which are in some way exceptional). that’s not enough to reverse the direction of this selection, but the effect would reduce the requirement for the other “luck”-based elements in order for the new paradigm to “take root”.
tomcat27 5y ago
I studied MIT's development policy course. I was surprised how many times I guessed something and the results were different. A qualitative interpretation of RCT results is the end game. It was hard to do it right, and easy to do it wrong. I find the design of RCTs very artsy.

54 points by INGELRII 5y ago

Very interesting - thanks

Nice piece which to me reads as being an accurate account of the recent history of the field (as far as I know it). Short summary: 90% of the work that is taken seriously in economics is empirical. Moreover, we only care about cases where causal inference is possible and those are the papers that get published. (If your first complaint about a published piece in an economics journal is “correlation does nor imply causation,” we know that too and the kind of work which can fall for that criticism is only rarely and accidentally going to make it through the refereeing process.) Far better than a similar, much less informed piece from Aeon which was shared here a few days ago…

civilized 5y ago
I think there is sometimes too much confidence placed in these results (no different than any other empirical field that makes heavy use of statistics and significance testing). But it's still a positive direction, unquestionably.
- huitzitziltzin 5y ago
  Fair point and I completely agree with you. We don’t yet have a great answer on “researcher degrees of freedom” for example (ie what specification is run, which one is reported). Definitely better than what came before and surely in another 30 years empirical standards will be even higher!
NeutralForest 5y ago
I mean, Aeon is pretty bad
ackbar03 5y ago
How do you prove causation instead of correlation exactly?
- NeutralForest 5y ago
  There is a whole subfield dedicated to the question called causal inference. You can read something like the "causal inference : the mixtape" https://mixtape.scunning.com/ https://mixtape.scunning.com/
  - deleted 5y ago
    [deleted]
- INGELRII 5y ago
  1. Experiments, and natural experiments 2. causal discovery methods + generic assumptions Economists are really putting effort into sound methodology.
- huitzitziltzin 5y ago
  First thing: all claims to have proved a causal relationship are relative to a set of assumptions which may or may not be satisfied (even in experimental sciences). Taking the experiment as an ideal we cannot reach, there are many settings where there is useful variation in the data which can approximate the random assignment to treatment which is the essence of experiments. Some canonical research designs which can be used here include differences in differences, regression discontinuity, synthetic control methods, or instrumental variables methods. They are differently appropriate to different settings but permit causal claims to be made. These methods are widely used in contemporary empirical economics (indeed this is a nearly exhaustive list of methods used in applied micro!). Useful, accessible references here include Angrist and Pischke, “mostly harmless econométrics,” or “causal inference the mixtape” by a guy at Baylor whose name I’m forgetting, and the very recent “the effect” by Huntington-Klein, which I have not yet read. Other slightly more exotic models are used in (for example) industrial organization which still permit causal claims to be made about the effects of increasing prices or changing product features on demand for a product or set of products.
- 5y ago

Mizza 5y ago

Modern calipers revolutionizing the field of phrenology.

carapace 5y ago
LOL! It's hilarious that economists are talking about "empirical" economics. What were they doing before this? "Unempirical" economics? Seriously though, economics seems (has seemed) little better than numerology to me, so I'm glad to see the field start to graduate from the alchemical to the chemical stage of knowledge. Good for them.
- AtlasBarfed 5y ago
  I like to condemn economics as only being able to predict value based on a very limited set of things that can be measured/tested. The strange thing is, even with "measurements" like CO2/global warming so clearly pointing to armageddon in a few generations, the field of economics is STILL unable to quantify such impacts on models, or produce effective economic pricing measures. Of course, because in addition to being only a crude "science" that basically reduces to bad accounting practice on a massive scale, economics is also dressed up as a "crystal ball science" that the oligarchical powers can trot out to justify their positions and current structure of monetary distribution as a priori destiny. So it is ALSO politically corrupt, not just computationally bankrupt. The reality is of course that there is plenty of money to deal with most of our massive structural problems. But who owns that money? The rich who will rather see the world destroyed than give it up.
  - carapace 5y ago
    Yeah, you're preaching to the choir. The paltry predictive power of economics as "science" combined with the role economists play as modern-day court astrologers has always made it seem absurd to me. > The reality is of course that there is plenty of money to deal with most of our massive structural problems. I'm a fan of Bucky Fuller, he calculated that we could do it with only about $25B in 1970's dollars. The catch is we would have to deploy our resources and technology efficiently (rather than maximizing profit.) > But who owns that money? The rich who will rather see the world destroyed than give it up. It seems that way. In any event, the solution will be social and even spiritual (rather than technological.)

wallacoloo 5y ago

i think the bit about old paradigm vs new paradigm tenure application bias overlooks a few things. this bias doesn’t just affect the proportion of admissions across paradigms, it’s a selection filter that allows only the best of the new paradigm people through. so even if this bias results in only 5% of the field being new-paradigmers after the first round, that selection might mean that closer to 10% of the overall output comes from new-paradigmers (because it’s selected for new-paradigmers which are in some way exceptional). that’s not enough to reverse the direction of this selection, but the effect would reduce the requirement for the other “luck”-based elements in order for the new paradigm to “take root”.

tomcat27 5y ago

I studied MIT's development policy course. I was surprised how many times I guessed something and the results were different. A qualitative interpretation of RCT results is the end game. It was hard to do it right, and easy to do it wrong. I find the design of RCTs very artsy.