The Future Of Economics

The economics profession is splitting into different schools.

One school, exemplified by Levitt and Dubner's Freakonomics and Tim Harford's The Undercover Economist, studies popular issues. Their audience is not economists but the (educated) public. They are applied statisticians and mathematicians. They do not care for normative debate. (Sam recently sent me this example.) Give this school data, and they will make an interesting conclusion about modern life. This is the Freak School.

The Traditional School focuses on government as an audience. They live by government grants. Most of the applied articles in journals are of this type. They make conclusions the public do not care about. They write for other economists. They rarely get into newspapers. They cannot author nightstand books. This Traditional School taught the Freak School.

The Archaic School is irrelevant. It is a group of failed mathematicians. It takes someone from the Freak or Traditional School to make the Archaic School's ideas relevant. Their ideas are rarely worth the paper they are written on. I refuse to consider them as having a future.

There are other Schools too. But I do not want to talk about them today.

The Traditional and Freak Schools requires statistics. Much of their empirical work is questionable. They miss the forest for the trees. The Traditional School has too many connections with the Archaic School to remain relevant. I am not saying government will lose faith in Traditional economists anytime soon, but government depends on popular opinion. The Freak School does a better job of recognizing popular opinion. The Freak School will eventually overtake the Traditional School. But both schools will suffer as social statistics is questioned by a greater number. Their conclusions cannot be supported by positive logic. Positive logic requires one to have no faith. Without faith statistics has no foundation to stand. Freak economists will start to battle one another over statistical details. They will quickly become archaic.

Also Freak economists cannot solve problems. They are passive observers. They study the correlation between waiting and successful surgery but will never convince a doctor to post prices. Their positivism will hamper their ability to generate change. Their lack of ideals will keep them in the middle of society. They will never be leaders or good teachers.

The Freak economists have the right audience. It is always about the marks. But by working with government the Traditional economists have greater opportunity to change society. It will take another school of economists to bridge the Freaks and Traditionalists. This school will be an idealistic group who believes in economics didactic value. It will be filled with a mix of politicians and entrepreneurs. It will create, instead of describing, our future.