Is economics broken?
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The experimental approach to economics adopted by co-founders and co-directors of the Abdul Latif Jameel Poverty Action Lab (J-PAL), Esther Duflo and Abhijit Banerjee, is highlighted as a new pathway in the evolution of economics by a special report by World Finance on the current status of the field and its future.
Their approach, which relies on empirical research and statistical analysis of controlled experiments and evidence-based randomised control trials, marks a broader shift in the field according to George DeMartino, an economics professor at the University of Denver: "Among younger economists there is a move toward empiricism. Rather than deducing policy implications from a blackboard using supply and demand models, there’s a turn to data," he said.
As a science, economics has never been more widely read and discussed, occasionally even turning into a pop culture phenomenon. Economists like Thomas Piketty, author of the much-discussed and little-read Capital in the 21st Century, and Yannis Varoufakis, Greece’s former finance minister, are the high-brow equivalents of football superstars, filling amphitheatres with young students hungry for alternatives to runaway capitalism. At the same time, the discipline has never faced more uncertainty and criticism, even from within its own ranks. Following the Brexit referendum, Andy Haldane, then Chief Economist of the Bank of England, acknowledged that the profession faces a crisis, as economists are increasingly blamed for society’s ills, while failing to account for human irrationality. A 2019 YouGov survey for Bristol University found that economists were among the ‘least trusted professionals’ in the UK.
One reason for the discipline’s unpopularity is its complexity. “Economists have made a point of turning economics into a closed profession with a lot of jargon. People think that economics is beyond their understanding,” says Paola Subacchi, who teaches international economics at Queen Mary University of London. Despite being a social science, economics relies on advanced mathematics to describe a complex phenomenon like the economy. A recent survey of 350 Bachelor’s degrees by the International Student Initiative for Pluralism in Economics, a group including over 100 universities worldwide, found that economics degrees were highly mathematical, with non-mathematical subjects covered by just 2.5 percent of modules, while real-world applications and history were largely ignored. “The way economics is taught in universities does not include half the tools and concepts necessary to understand economic problems. The core of economics teaching is mathematics, statistics, macroeconomics and microeconomics, meaning that there is no pluralism in terms of theories and disciplines,” says Arthur Jatteau, the University of Lille economist who led the project.