Notes on the Floating Crap Game (Economics Inside Baseball)

Posted on November 30, 2014 by


November 30, 2014 NYT by Paul Krugman — A new paper by Marion Fourcade, Etienne Ollion, and Yann Algan on the structure of academic economics (pdf) is getting a fair bit of attention among people I talk to. The tone is rather jaundiced, but that’s surely a defensible attitude, and everything substantive it says about economics rings true from my own experience; I’m glad to see that quantitative analysis confirms what I thought.

krugman-circularTheir basic point is that successful economists tend to be intellectually arrogant because they live in a social setup that is very hierarchical, with steep gradients of prestige, widespread agreement about what constitutes good work and who is doing it, and pretty big rewards by professorial standards for climbing to the top of the heap. Quite. I’ve played that game and lived that life; I’ve even written about it. My observations may be somewhat out of date, because while I’ve kept my academic ties I spend more and more of my time in my second career as indie music critic public intellectual. But maybe I can still add a bit to the description, and also talk about how all of this bears on some recent controversies.

So, academic economics is indeed very hierarchical; but I think it’s important to understand that it’s not a bureaucratic hierarchy, nor can status be conferred by crude patronage.

The profession runs on reputation — basically the shared perception that you’re a smart guy. But how do you get reputation? Not by having a chair at a major school; that helps your visibility, but doesn’t protect you from being perceived as none too bright (in fact, even past work doesn’t do that — you hear younger economists wondering how that guy wrote those papers.) Nor does having the support of a powerful person do very much; you can be the favorite student of the top person in your subfield, but that won’t do more than get your foot in the door.

Instead, reputation comes out of clever papers and snappy seminar presentations. There are problems with that, which I’ll get to. But the point for now is that while it may seem like a vague concept, within each subfield everyone knows who the top guns are, and there’s a very steep slope downward from the few people at the very pinnacle and the next level. In my original home field, international trade, we used to joke that senior hires were difficult because there were only four people in the top ten.

Having sufficient reputation gets you into a charmed circle; as I wrote in that old essay,

In the modern academic world there tends, in any given field — whether it is international finance, Jane Austen studies, or some branch of endocrinology — to be a “circuit”, the people who get invited to speak at academic conferences, who form a sort of de facto nomenklatura. I used to refer to the circuit in international economics as the “floating crap game”. It’s hard to get onto the circuit — it takes at least two really good papers, one to get noticed and a second to show that the first wasn’t a fluke — but once you are in, the constant round of conferences and invited papers makes it easy to stay in.

I may have been exaggerating the extent to which this is true of other disciplines, but economics for sure.

Because everything runs on reputation, a lot of what you might imagine academic politics is like — what it may be like in other fields — doesn’t happen in econ. When young I would have relatives asking whether I was “in” with the department head or the senior faculty in my department, whether I was cultivating relationships, whatever; I thought it was funny, because all that mattered was your reputation, which was national if not global. If you kept turning out clever papers and giving great seminars — I used to pride myself on turning out the best paper in the field each year (not a bit arrogant, not me) and giving the best seminars in the profession — you’d get a tenure offer somewhere good really soon, and your home school would almost surely match.

By the way, the field most in the news — business cycle macroeconomics, aka economic fluctuations — can give you a misleading impression of how the profession in general works, precisely because macro is divided into hostile camps. Trade wasn’t and isn’t; neither, for the most part, was my other home, international macro, which was surprisingly free of hard-line anti-Keynesianism. Because there weren’t rival camps, the hierarchy of reputation was crystal clear and undisputed.

And reading Fourcade et al, it occurs to me that the way everything outside macro works may explain one of the things that has puzzled me in the disputes over macro policy — namely, the seemingly unquenchable certainty among some of the freshwater guys that Keynesians are stupid.

Again and again we’ve seen freshwater macroeconomists declare that New Keynesians, let alone those who respect the older stuff, don’t get some basic point; they don’t understand the accounting identities, they don’t understand Ricardian equivalence, they don’t understand the Euler condition, they don’t understand the Fisher equation. Each time it has turned out that the Keynesians understood the concepts perfectly well, and that it was the anti-Keynesians, in their haste to cry “Gotcha!”, who were making elementary logical errors or suffering failures of reading comprehension. You would think that at some point they’d catch on, and realize that New Keynesian economics may be wrong, but it’s not stupid, and neither are the people who do it. (If your worldview says that Stan Fischer and Olivier Blanchard must be dumb, you have a problem.) But they never do seem to learn. Why?

Well, my guess is that it’s the habits that come from the economists’ reputation-based hierarchy interacting with the insularity of the freshwater macro school. People in that camp tuned out alternative views more than 30 years ago, so all they observe is their own repetitional universe. They haven’t heard about these New Keynesian guys or their papers, so there must be nothing there — which is something you can get away with in trade, but not in macro amid a global crisis.

But back to the structure of academic economics. It’s hierarchical; it can be very frustrating to people who haven’t managed to get in on the floating crap game; I suspect that it has a lot to do with the barriers women face in the field (which will have to be a different essay.) But here’s one question: Are the reputations deserved?

I used to think so. Hey, it worked for me. But the macro wars have been revealing: we’ve seen quite a few highly successful academics, with lots of widely cited papers, prove remarkably dense when trying to weigh in on real-world events. It has been all too obvious that there are people with big reputations who can push equations around but don’t seem to have any sense of what the equations mean. And they don’t even seem to know what they don’t know; there has been an awful lot of Dunning-Kruger effect at work in some of these debates.

I guess I hope that these things are outliers. But if you feel cynical about economics after reading Fourcade, you may be right.