Tag Archives: economics

Advice to young economists

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Today I gave a talk to sixth formers at Gosford Hill School, near Oxford: “I never meant to become an economist,” was the title. (This was via the excellent Speakers for Schools initiative set up by Robert Peston.)

It was a riff on my own career history, and what being an economist means, set in the context of some of my family history and the structural changes in the economy between 1935, when my dad started work at 14, and now, as the young people think about their future careers. Here’s my dad in his first job, front row extreme right. He stayed there most of his working life, apart from the army, although after the mill closed in the late 1970s he was lucky enough to find a job as a meter reader.

Joseph Coyle, The Old Ground Mill

The students were extremely polite and asked lots of good questions. One was what I’d recommend them to read to see if they were interested in economics at university. Off the top of my head, I recommended Tim Harford’s [amazon_link id=”0349119856″ target=”_blank” ]The Undercover Economist[/amazon_link] (which turned my eldest boy into an economist) or any of his books, the Keynes- Hayek rap, Thomas Schelling’s [amazon_link id=”0393329461″ target=”_blank” ]Micromotives and Macrobehaviour[/amazon_link], Ha Joon Chang’s [amazon_link id=”0141047976″ target=”_blank” ]23 Things They Don’t Tell You About Capitalism[/amazon_link], and anything by David Smith, like his recent [amazon_link id=”1781250111″ target=”_blank” ]Free Lunch[/amazon_link]. I forgot to mention Ariel Rubinstein’s [amazon_link id=”1906924775″ target=”_blank” ]Economic Fables[/amazon_link]. There are surely lots of other good resources I should have mentioned too – but not [amazon_link id=”0141019018″ target=”_blank” ]Freakonomics[/amazon_link], which I found too gimmicky.

[amazon_image id=”0349119856″ link=”true” target=”_blank” size=”medium” ]The Undercover Economist[/amazon_image]

Educating economists

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How well are universities teaching their economics students? This is the question a number of academic and non-academic economists have been addressing since a conference this time last year held under the auspices of the Government Economic Service and Bank of England. The conference papers were published as [amazon_link id=”1907994041″ target=”_blank” ]What’s The Use of Economics: Teaching the Dismal Science After the Crisis[/amazon_link] – reviewed by Declan Jordan yesterday in the LSE Review of Books.

[amazon_image id=”1907994041″ link=”true” target=”_blank” size=”medium” ]What’s the Use of Economics?: Teaching the Dismal Science After the Crisis[/amazon_image]

The debate continued yesterday at a meeting of several dozen economists held at the Treasury, working towards a statement suggesting some directions for curriculum and teaching reform, although of course it will be for individual university departments to decide whether or not they think change is needed. The statement will be published after a bit of revision and discussion.

At the meeting Wendy Carlin presented an updated model from her [amazon_link id=”0198776225″ target=”_blank” ]macroeconomics text with David Soskice[/amazon_link], integrating a financial sector into the basic three equation model. Their new textbook will be published later this year and will obviously be well worth while. Wendy cited Claudio Borio’s excellent paper on what we’ve learnt about the financial cycle and macroeconomics, thanks to the crisis.

All-powerful economists?

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There are really two separate books rubbing shoulders in [amazon_link id=”0857284592″ target=”_blank” ]Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards[/amazon_link] by Norbert Häring and Niall Douglas.

One of them is a clear and well-made case that modern economics has been in error in ignoring the part played by institutions, politics and power relations in actual economies. It has chapters covering the acquisition and abuse of power by the financial services industry, the distortion of business in the interests of executives rather than customers, employees or shareholders, and the increasing concentration of the US economy through merger waves. Although many or most professional economists who work in business or regulators or consultancy have always been well aware of institutional detail, I think it is fair comment that academic economics overlooked the reality of markets and economies for too long. I’d also add that this has been changing quickly, with the rise over 20 years of institutional economics, behavioural economics etc (see [amazon_link id=”0691143161″ target=”_blank” ]The Soulful Science[/amazon_link]) – but there is further to go.

The second book within this set of covers is more tendentious. It is a history of economic methodology in the first chapter (I must say, I’d have put this at the end if I’d been the author). While the authors land some punches, and make some good points about the way theory shapes reality (see my Tanner Lectures on this question of performativity), they are too conspiracy theorist about it. The original spin-meister Edward Bernays is wheeled out, along with the Inside Job accusations that the financial crisis came about because some economists were paid to write a report by the Icelandic government. Although many economists in universities do paid consulting work – and should certainly declare it when they publish their work – I don’t believe there is signficant distortion of what gets published as there seems to be in the case of pharma companies and medical research. The economists simply have a much wider choice of options, and are not beholden to one set of powerful business interests. There would be something interesting to say, nevertheless, about the narrowing of economic research as published in mainstream journals – I just don’t believe it’s as crudely marxist as suggested here. Similarly, the way economic theory and practice developed from the 1940s to 1980s was certainly bound up with the wider ideological/political climate (like any social science discipline is sure to be), but not in such a purposive way. I think the messy sociological reality of the profession would be far more interesting to understand than the ideological, top-down assertions presented in this book.

Still, it’s an interesting read. The argument that marginalism, the refusal to compare individuals’ utility and rational choice added up to the inevitable demotion of interest in economic institutions is quite interesting. Besides, I’m all in favour of economists continuing to introspect for at least as long as the world economy remains in such a fragile state.

[amazon_image id=”0857284592″ link=”true” target=”_blank” size=”medium” ]Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards (The Anthem Other Canon Series)[/amazon_image]

Reality versus belief about corporate success

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Frank Koller, the author of [amazon_link id=”1610390539″ target=”_blank” ]Spark: How Old Fashioned Values Drive a Twenty-First Century Corporation[/amazon_link], emailed me this week in response to reading (on VoxEU) about the book I edited on the teaching of economics, [amazon_link id=”1907994041″ target=”_blank” ]What’s The Use of Economics? Teaching the Dismal Science After the Crisis[/amazon_link].

Frank’s book is about businesses with no-layoff employment policies, and particularly about a company called Lincoln Electric – I’d never heard of it but it’s the global number one in arc welding. Lincoln has a formal guaranteed employment programme as well as rewarding employees with bonuses and incentives. The company history sets out its longstanding (since 1895) commitment to employees and customers as well as shareholders. According to its latest results, published last week, employees got an average bonus of $33,915, the 79th annual bonus in a row, a bonus pool of $99.3m (the pool normally represents 32% of pre-tax profits).

[amazon_image id=”1610390539″ link=”true” target=”_blank” size=”medium” ]Spark[/amazon_image]

Spark has sold very well but the depressing news is that Lincoln’s CEO John Stropki told Frank that not a single other senior US executive has asked him the secret of the firm’s combination of phenomenal financial success with employment practices so good they sound like something out of a fairy tale. Why the lack of interest? Maybe – and this is where economics comes in – it’s because the reality demonstrated by Lincoln and the handful of other companies with such a strong commitment to what by now seem to be extraordinarily good employment practices is inconsistent with the belief system so many people hold about the way business works and the imperative of free markets. If so, the charge sheet against the narrow version of economics grows even longer.

[amazon_image id=”1907994041″ link=”true” target=”_blank” size=”medium” ]What’s the Use of Economics?: Teaching the Dismal Science After the Crisis[/amazon_image]

Festival of Economics

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It’s an exciting day – the kick-off of what I think is the UK’s first Festival of Economics, taking place in Bristol tonight and tomorrow. There’s a fantastic line-up, including a number of authors of excellent books. So here’s the Festival bibliography:

David Smith [amazon_link id=”1781250111″ target=”_blank” ]Free Lunch: Easily Digestible Economics[/amazon_link]

John Kay [amazon_link id=”1846682886″ target=”_blank” ]Obliquity[/amazon_link]

Larry Elliott and Dan Atkinson [amazon_link id=”0230392547″ target=”_blank” ]Going South: Why Britain Will Have A 3rd World Economy by 2014[/amazon_link]

Daniel Stedman-Jones [amazon_link id=”0691151571″ target=”_blank” ]Masters of the Universe: Hayek, Friedman and the Birth of Neoliberal Politics[/amazon_link]

Geoff Andrews [amazon_link id=”0745327443″ target=”_blank” ]The Slow Food Story: Politics and Pleasure[/amazon_link]

Lynsey Hanley [amazon_link id=”1847087027″ target=”_blank” ]Estates: An Intimate History[/amazon_link]

Vicky Pryce [amazon_link id=”184954400X” target=”_blank” ]Greekonomics: The Euro Crisis and Why Politicians Don’t Get It[/amazon_link]

Peter Marsh [amazon_link id=”0300117779″ target=”_blank” ]The New Industrial Revolution[/amazon_link]

Diane Coyle [amazon_link id=”0691156298″ target=”_blank” ]The Economics of Enough: How to Run the Economy as if the Future Matters [/amazon_link]and [amazon_link id=”1907994041″ target=”_blank” ]What’s The Use of Economics: Teaching the Dismal Science After the Crisis?[/amazon_link]

The hashtag for the events is #economicsfest and the podcasts will be online in a few days’ time.