What’s the relationship between the economics blogosphere and academic economics?

A discussion on quora.com on the topic.

Alex Tabbrok of MR blog sums it up really well:

Economics blogs have become the first place for policy debate and policy development.

Following the financial crisis of 2008, for example, we witnessed economists such as Paul Krugman, Tyler Cowen, Scott Sumner, Jeff Sachs, Gary Gorton, Yanis Varoufakis and many others engage in widespread, real-time, robust debate about the causes, consequences and solutions to the crisis. The debate on the blogs has been very influential in policy development and is also contributing to the further development of economic models.

Scott Sumner’s blogging, for example, caused a resurgence in the idea of NGDP targeting. We went from Scott talking about NGDP targeting on his blog to these idea being debated at the Federal Reserve’s Open Market Committee in just 3 years. Gary Gorton’s important work on shadow banking first become transmitted through the blogs. Paul Krugman worked out issues on the debt transference problem on his blog before developing these in models. Tim Geithner met with bloggers on several occasions to discuss ideas as the crisis was occurring. And, of course, Yanis Varoufakis went from blogging about the financial crisis in Europe to becoming the Greek finance minister.

To understand the role of blogs in policy debate and development it’s useful to compare blogs with journals.

1. Blogs are fast, journals are slow.
Blogs operate in real time when choices are being made. In contrast, it can take years to get a journal article published.

2. Blogs are open, journals are closed.
In the blogosphere anyone can contribute to the conversation. That is especially important in developing policy because legal, political and historical facts all matter. Good policy requires development and input from a diverse set of voices and skills. The journals are more insular, more theory driven and less open to different approaches.

3. Journals reward cleverness. Policy requires wisdom.
In an economics journal the goal is to prove that the model works, given the assumptions. The realism of the assumptions doesn’t matter much; the question is does the logic hold given the assumptions? For this reason, journal articles can be refereed. In a journal article, policy implications are usually reserved to one or two paragraphs at the end.

In contrast to developing models, policy requires wisdom. The question in policy is, From the 10 models available which are the most relevant? The assumptions in the model are now critical because to apply the model, the assumptions have to hold in the real world. Thus, it’s also critical to know something about the world. In order to pick the right model and follow it’s suggestions the policy markers need to ask, Do the assumptions of this model apply at this time in this place? In policy, economic history is of great use and history, psychology, politics and law are all of importance. It’s hard to referee policy since so much depends not on whether the logic is correct but whether the judgment is sound.

The Return of Political Economy

In short, economics on the blogs is less about formal proofs and more about combining economics, politics, psychology, history, and law to give useful advice. Adam Smith, David Hume, John Stuart Mill, Fredrick Bastiat–they would have understood the debate on the blogs much better than what goes on in the journals–I mean not simply that the journals are technical but that these economists would have understood the practice of blogging and recognized it as being much closer to what they were doing. Thus, I refer to economics blogging as The Return of Political Economy.

Some people avoid blogs and call it non-serious research. The reality could not be more false with most prominent economists of the world joining the blogging forum. Blogs have livened up discussion on economics and has given a lot of new ideas. Blogs have become the place where econs discuss their key ideas/philosophies which are then debated by ithers. It has both provided clarity over what the subject can achieve and exposed the limitations of the subject. The way several bloggers have called to make economic more broadbased has exposed the entire discipline of economics for making it a narrow field.

Most people do not have either access or time to read the specialised journals which are really just abstractions from the world. Blogs not just explain the various research around but also the issues with the research. Blogs also introduce several research articles which are highly important but ignored by the journal world for not being quant enough.

In India’s case (and other non-US countries), blogs assume even more importance. We hardly have any research journals here and the foreign journals hardly cover India. Those few papers that do cover India are written by economists who are based in US and have a very superficial understanding of things. It is a different story that such people maintain their  eminence in Indian economic diaspora because of the “US factor”. We need more informative blogs in the country giving a good detailed coverage on several policy issues. We hardly have much in the blogging sphere as well.

Ajay Shah has a more detailed post on the topic and raises several issues with Indian economic research. Serious economics blogging should be seen as an equally important research activity. The amount of importance given to irrelevant journal articles over relevant economics blogging is way too overstated.

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