Economists and the Real World..

Tim Sablik of Richmond Fed says ivy tower econs are trying to get accustomed to the real world.

This is noting new actually. Most econs actually worked before giving gyan:

How important is it for economists to gain real experience with the markets they study in theory? Many of the founders of the discipline held other jobs before becoming professors. Nineteenth century French economist Leon Walras, who developed general equilibrium theory, worked as a journalist, novelist, railroad clerk, and bank director before becoming a profes­sor at the age of 36. William Stanley Jevons, the 19th century British economist who helped develop the theory of mar­ginal utility, initially studied the physical sciences and spent five years as a metallurgical assayer in Australia.

For much of the modern era, however, the careers of economists have seemed to stay close to the ivory tower of academia. Although hard data is limited, the typical path for a research economist appears to go from college straight into doctoral study with little or no experience outside the profession along the way. And according to a 2013 Inomics survey, employers of economists in the United States and Canada said that of nine factors in the selection of a job candidate, “experience in the private sector” was by far the least important.

Some critics have argued that such isolation from the real world is a cause for concern. For example, many claimed that economists failed to predict the 2007-2008 financial crisis because their models had become too detached from the way real financial markets operate.

But that image of academic isolation may not be wholly accurate today. Many academic economists have begun collaborating more actively with private firms and public institutions. This practice has become common in the discipline of market design, for example. Robert Wilson of Stanford University helped design auctions for the oil, communications, and power industries. Along with his former student Paul Milgrom of Stanford University and with Preston McAfee, who is now the chief economist at Microsoft, Wilson received the 2014 Golden Goose Award for designing the first spectrum auctions used by the Federal Communications Commission in 1994. Alvin Roth of Stanford University and co-winner of the 2012 Nobel Prize in economics collaborated with public schools in New York City and Boston to design algorithms to improve student placement in preferred schools and with doctors to arrange kidney transplant exchanges between pairs of donors and recipients.

There was a reason why earlier econs could write to general masses. They could think about issues that matter rather than the esoteric and exotic world of today’s econs. Any sort of experience is actually seen as a bad thing as those are the years someone has spent doing some random work. It could have been instead used to do math as older one becomes these math skills are difficult to learn. Even  more troublesome has been how the profession has been taken by people from areas like physics, math and engineering who think of the subject and fir the subject into a highly narrow specialised field.

 

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