REVEALED PREFERENCES.

Independent Institute contributor Randall G. Holcombe takes a jaundiced view of the latest Papers and Proceedings issue of The American Economic Review.

These papers should give a pretty good indication of the research interests of academic economists. They are, in fact, the research findings of the economists who wrote the articles, and they went through a two-stage selection process, first being selected to be on the program and then being selected to be published in the journal. Presumably, with the journal’s readership in mind, the articles that were published represent those that would be of most interest to academic economists, and that are representative of the research topics undertaken by them.

Economic issues have been in the news lately, with inflation accelerating, supply chain issues interfering with markets, with COVID policies interfering with economic activity, a rising national debt, and questions about international trade policy. What subjects do those 115 articles address?

Race and gender issues get the most coverage, and are the subjects of 44 of the 115 total articles. That’s 38% of the total. Migration and immigration are the subjects of 10 articles, or 9%. Much has been made lately about the Diversity, Equity, and Inclusion movement in academics, and it is apparent in the research interests of economists.

Twelve articles deal with the effects of COVID and the government policies addressing it, although some of these articles are also included in the race and gender category. For example, I included articles like “COVID-19 and its Impact on Minority-Owned Banks” and “Gendered Impacts of COVID-19 in Developing Countries” in both categories. (I didn’t include any articles in both the race and gender category and the migration and immigration category.)

The Proceedings issue has long been a way for the Association to highlight Rising Stars and recognize continued work by Established Senior Scholars.  Paper sessions are organized well in advance, and it's rare for an over-the-transom submission to get into a Proceedings session, let alone into the Papers and Proceedings.  The lineup of papers might reflect Contemporary Relevance, or it might reflect Pasha talking to the department head.

What other topics interest economists? Twelve articles were about wealth and saving, six were about unemployment, four discussed government debt and deficit finance, and three discussed international trade. Several articles also discussed taxation, including ways that governments could implement wealth taxes.

Several noteworthy topics were not covered at all. There were no articles on inflation, and no articles on supply chain issues, despite the frequent appearance of those issues in the popular press. While the general public looks at the economy and is concerned about rising inflation, the rapidly increasing national debt, and supply chain issues that disrupt markets, academic economists appear to have much more interest in issues surrounding Diversity, Equity, and Inclusion. Welcome to the Ivory tower.

A good evaluation of recent inflation, whether taking issue with Modern Monetary Theory or not, would take up more space and be more technical than the shorter contributed papers comprising the Proceedings issue.  Supply chains, likewise, are too empirical a topic, with little by way of advanced theory or econometrics to merit publication; that is, if the discipline hasn't delegated all such work to logistics faculty in business colleges.

Professor Holcombe follows up with an evaluation of the Distinguished Lecture.  That might be the sanitized name for what used to be the Richard T. Ely Lecture, or it might be one of the other plenary presentations (which I mostly missed in later years, serving on the hiring committee will do that to you).

The presentation has potential.

The lecture is titled “On the Dynamics of Human Behavior: The Past, Present, and Future of Culture, Conflict, and Cooperation,” and was presented by Harvard economics professor Nathan Nunn. As I discuss it, keep in mind that these are the ideas the American Economic Association has chosen to promote to its members.

Professor Nunn develops a model in which potential conflict arises because people adopt their views on values, culture, and public policy from two different sources. People learn what has worked in the past and adopt those values as appropriate for the future. Those people are traditionalists, to use Professor Nunn’s terminology. But tradition generates persistence, and as things change, new ways of doing things are more appropriate in response to new conditions. This creates a mismatch of values, beliefs, and culture between traditionalists and those who seek change in response to a changing world.

That's something that's interested me.  The model probably oversimplifies, limiting views to two sources, but as a first approximation, that's fine.  The normative conclusions Professor Nunn reaches might not be correct.  But if they are the consequence of a rigorous argument, that's room for people to work on improvements.

The quotation above [it's long; go to the article -- Ed.] starts by saying that people in leadership positions “are dominated by individuals with cultural backgrounds that have been successful in the past,” but that “traits of the future will be different from those of the past.” This implies that we could benefit by replacing those leaders who have proven track records of success with individuals who have no past successes. I don’t know whether Professor Nunn would agree with my interpretation of his message, but I’m quoting him to show that that’s what he said.

The primary problem with this article, which is common in the social sciences, is that the article develops a plausible model of institutional development and uses it to draw conclusions that do not follow from the model.

Yes, when conditions change, traditional ways of doing things, which worked well in the past, may not work as well in the future. But it does not follow that we should move beyond the western, educated, individualistic, rich, and democratic values and behaviors that have brought past success. Rather, those are the very values and beliefs that enable societies to address changing conditions.

It's possible that those "western, educated, individualistic, rich, democratic" values are evolutionarily stable in ways that those "alternative ways of knowing" are not.

Sure, new ways of doing things may be appropriate when conditions change. But the western values and individualism that Professor Nunn questions are very responsive to changing conditions. The social sciences, including economics, have become increasingly hostile to the ideas of freedom, individualism, and personal responsibility, and this article is an example.

But Pasha and the other Diversity Zampoliti are watching the economics department, even at Harvard, and the Harvard faculty had better get with the program.