In the long-running popular series about what’s wrong with economics, there is a new entry: Our profession is too insular. “Economists generally agree that competition is good, and that markets with only a few dominant players are inefficient,” writes the economist David Deming in the Atlantic. “We may need to take a hard look in the mirror.”
Citing a new research paper by (naturally) four economists, which analyzes almost 6,000 award-wining academics in 18 disciplines, he notes that the recipients of the major economics prizes, including the Nobel, “have collectively spent half their career at just eight universities: Harvard (where I teach), Yale, Princeton, Stanford, MIT, the University of Chicago, Columbia and Berkeley.” This is a far higher level of concentration than other fields.
I am hardly an apologist for my profession, but I would frame the issue differently. The first point is that economics is a relatively mature science, and even surprising results are typically consistent with the laws of supply and demand. Innovations tend to be subtle — they could also be described, less generously, as underwhelming — concerning the relative size of effects. So it is hard for radical new ideas to come out of nowhere, and that does lead to some geographic concentration, centered in the highest-reputation schools.
Compare this to the biosciences, where the successes of mRNA vaccines have been startling. Katalin Karikó, who shared the 2023 Nobel Prize in Medicine for her research into mRNA technology, did not receive a tenured professorship at a top university. GLP-1 drugs, which appear highly effective in treating obesity and other maladies, were developed in Denmark, not at a US research university.
Can economics come up with truly novel remedies or ideas? Probably not. If there is a recession, or say hyperinflation, there is a standard kit of tools involving monetary policy, fiscal policy, deregulation and some other policy changes. Economists can and do argue about the right mix of those policies in a particular case. But there is no “new drug” waiting to be discovered.
This lack of novelty does not make economics less scientific. Brazil, using standard economic tools, was able to beat back hyperinflation 30 years ago. President Javier Milei of Argentina is pursuing some time-honored reforms, and if those policies are allowed to persist — a big if, but mostly about politics — they will succeed. Many nations have performed successful fiscal consolidations following standard economic advice.
