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Steve Horwitz on “The Graduate Student Disease”

Jeremy Horpedahl1 Comment

On Sunday the world lost a great teacher, economist, and all-around fantastic person in Steve Horwitz. If you don’t know about Steve, I recommend reading the tributes from Pete Boettke and Art Carden.

Pete and Art speak to Steve’s overall legacy and greatness. But I will tell you about a very specific piece of advice that Steve gave me about teaching undergrads.

Steve called it “the graduate student disease.” By this he meant the tendency of newly minted PhD economists to teach undergraduate courses as if they were mini versions of graduate courses. Steve insisted this was the wrong approach.

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1970’s SNL on the Problem of Inflation

Scott BuchananLeave a comment

Any student of economics knows that inflation emerged as a big issue in the late 1970’s, first under the presidency of Jimmy Carter. The newly minted Saturday Night Live rose to the occasion. First, Dan Akroyd as Jimmy Carter proposed that that every American take 8 per cent of his or her money and burn it (Season 3, Episode 17, 4/15/1978), to reduce the money supply.

The President demonstrated leadership here by burning 8% of the $12.50 in his daughter’s little peanut bank:

A few months later (Season 4, Episode 4, 11/4/1978), the President changed his mind. Since austerity did not seem to be working, he offered a new approach – –  “Inflation is our friend”:

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Rudyard Kipling As Macroeconomic Commentator

Scott BuchananLeave a comment

In a random article I read on investing the author cited (in defense of commonsense finance versus novel economic flimflam) the following passage by Rudyard Kipling:

And that after this is accomplished, and the brave new world begins

When all men are paid for existing and no man must pay for his sins,

As surely as Water will wet us, as surely as Fire will burn,

The Gods of the Copybook Headings with terror and slaughter return!

I was vaguely familiar with Kipling as an author of children’s stories like The Jungle Book and for writing poems celebrating British imperialism, but this seemed like some sort of macroeconomic commentary. “All men are paid for existing” sounds very much like Universal Basic Income, and “no man must pay for his sins” is consistent with a culture of blame-shifting. I was not aware of Kipling-as-economist, so I looked up the reference here.

This verse is the closing stanza of Kipling’s “The Gods of the Copybook Headings”. He penned this in 1919, as an expression of concern over trends in post-WWI Anglo-European society. “Copybook Headings” were maxims which appeared at the top of schoolchildrens’ copybooks in nineteenth-century Britain and America; the pupils would learn penmanship, vocabulary, spelling, and hopefully socially-useful values by copying these sayings over and over down the page. These maxims were based on traditional morals or on Bible sayings, like “A stitch in time saves nine” or “If a man will not work, let him not eat”.

I found that other investing advisers, such as John Bogle, also cited this poem in support of value-oriented financial strategies and claimed that it “beautifully captur[ed] the thinking of Schumpeter and Keynes”. Kipling felt that the old time-tested values were being replaced by trendy, flashy fads, but society would come to grief by rejecting the old common-sense virtues.  Eventually the “Gods of the [innovative] Market” would tumble, their “smooth-tongued wizards” would be silenced, and the public would realize that it is still the case that “Two and Two make Four.”

Without further ado, here is the complete poem:

The Gods of the Copybook Headings

AS I PASS through my incarnations in every age and race,

I make my proper prostrations to the Gods of the Market Place.

Peering through reverent fingers I watch them flourish and fall,

And the Gods of the Copybook Headings, I notice, outlast them all.

~

We were living in trees when they met us. They showed us each in turn

That Water would certainly wet us, as Fire would certainly burn:

But we found them lacking in Uplift, Vision and Breadth of Mind,

So we left them to teach the Gorillas while we followed the March of Mankind.

~

We moved as the Spirit listed. They never altered their pace,

Being neither cloud nor wind-borne like the Gods of the Market Place,

But they always caught up with our progress, and presently word would come

That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

~

With the Hopes that our World is built on they were utterly out of touch,

They denied that the Moon was Stilton; they denied she was even Dutch;

They denied that Wishes were Horses; they denied that a Pig had Wings;

So we worshipped the Gods of the Market Who promised these beautiful things.

~

When the Cambrian measures were forming, They promised perpetual peace.

They swore, if we gave them our weapons, that the wars of the tribes would cease.

But when we disarmed They sold us and delivered us bound to our foe,

And the Gods of the Copybook Headings said: “Stick to the Devil you know.”

~

On the first Feminian Sandstones we were promised the Fuller Life

(Which started by loving our neighbour and ended by loving his wife)

Till our women had no more children and the men lost reason and faith,

And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”

~

In the Carboniferous Epoch we were promised abundance for all,

By robbing selected Peter to pay for collective Paul;

But, though we had plenty of money, there was nothing our money could buy,

And the Gods of the Copybook Headings said: “If you don’t work you die.”

~

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew

And the hearts of the meanest were humbled and began to believe it was true

That All is not Gold that Glitters, and Two and Two make Four

And the Gods of the Copybook Headings limped up to explain it once more.

~

As it will be in the future, it was at the birth of Man

There are only four things certain since Social Progress began.

That the Dog returns to his Vomit and the Sow returns to her Mire,

And the burnt Fool’s bandaged finger goes wabbling back to the Fire;

~

And that after this is accomplished, and the brave new world begins

When all men are paid for existing and no man must pay for his sins,

As surely as Water will wet us, as surely as Fire will burn,

The Gods of the Copybook Headings with terror and slaughter return!

Commentary:

This poem made little sense to me until I read some commentary by the Kipling Society. I’ll reproduce just a few excerpts here. Everything below is taken verbatim from that commentary except a couple of my side comments in square brackets:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Against the fundamental, unchanging values of life – the “Copybook Headings” which a child was expected to imbibe while learning to write – Kipling sets the transient, fashionable “Gods of the Market-Place”, which can be taken to refer to both trendy attitudes and the public figures associated with them.

Kipling argues that throughout the ages mankind has always been jostled between wisdom and foolishness. The references to past periods of time appear to reinforce the air of an historical survey, but the geological terms are fake, and Kipling’s concern is not with the past, but with post-war Britain. In the final two stanzas of the poem, the knockabout satire is replaced by a sterner prophetic tone:

As surely as Water will wet us, as surely as Fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!

Notes on the text
[Verse 2]

living in trees Kipling starts his story with the first human ancestors.

Uplift, Vision and Breadth of Mind the capitals emphasize the trendy empty terms used by the Gods of the Market-Place [as evolving human society tries to transcend the elementary facts of nature such as water wets and fire burns, which even the gorillas honor].

[Verse 3]

word would come That a tribe had been wiped off its icefield When the Gods of the Copybook Headings are ignored, retribution follows, whether among savage tribes or in the heart of civilisation

[Verse 4]

Wishes were Horses ‘If wishes were horses, beggars would ride’ and a Pig had Wings ‘If a pig had wings it would fly’. Both these traditional sayings pour scorn on wishful thinking.

[Verse 5]

Cambrian a real geological period. Here, as Keating points out, it stands for the Welshman Lloyd George, who was Prime-Minister for much of the Great War. (Cambria is the Latin name for Wales). Lloyd George was the chief British negotiator for the Treaty of Versailes in 1919 which officially ended the War. This disarmed Germany but pledged all the Great Powers to disarm themselves progressively. Kipling strongly disapproved of Lloyd George, the Liberals, and the Treaty.

‘Stick to the Devil you know.’ The usual form of this saying is ‘better the Devil you know than the one you don’t.’ Here it means that being prepared for war is better than being disarmed and defenceless.

[Verse 6]

Feminian a made-up term which sounds suitably geological. It refers to the emancipation of women, a lively issue at the time [and perhaps to the new morality which increasingly separated sexual activity from committed marriage; the result being a decrease in child-bearing and an increase in infidelity].

‘The Wages of Sin is Death.’ See Paul’s Epistle to the Romans 6,23.

[Verse 7]

Carboniferous Another genuine geological period, in which coal measures were formed. Here it stands for the increasing power of trade unions, particularly the coal-miners.

robbing selected Peter to pay for collective Paul ‘Robbing Peter to pay Paul’ is a traditional phrase, usually meaning borrowing money to pay off debt. Here it means taxing the productive part of the population to support the idle. [This is a live issue in 2021…]

Information Deserts

mdmakowsky6 Comments

I am a tenured professor at an R1 research department who gets to work every day with scholars at universities all over the world. In 2002, when I applied to get my PhD at a local school, I did not know how grad school, academia, or research worked. More importantly, I didn’t know that I didn’t know, so I didn’t try to find out. I tell you this only to illustrate, via personal example, the depth of ignorance that is possible among exactly the people who, in theory, should be be the most informed, or at least trying the hardest to become informed. 1

https://twitter.com/jtlevy/status/1405152284800126978?s=20

When you spend enough time with the same group of people, there is a tendency to treat shared in-group knowledge as universally common knowledge. I don’t think this tendency is unique, or even especially strong, among academics, but it is something I am acutely aware of when discussions turn to higher education. The paper linked to in the tweet below reports the results of a field experiment where subjects in the treatment group received a packet of information regarding the availability of financial support to attend the University of Michigan for qualified applicants. It was impeccably designed and well-funded, and included the composition of informational materials rivaling any educational marketing I have ever seen. Go read the paper yourself, but the punchline is that the exogenous shock of information mattered, significantly increasing applications and subsequent matriculation to the University by students from economically disadvantaged backgrounds.

The results did not surprise me in the slightest (that is not a dig at the paper, which is tremendous). What surprised me when I saw the paper presented was the shock expressed by so many fellow members in the audience, who simply could not reconcile the implication that students (and their families) were unaware that college education was accessible to them. How did they not know? How could they not know? The information was everywhere.

Ivory tower academics live in bubble, yeah yeah. Shrug. I don’t think this is an ivory tower phenomenon, to be honest. This is, instead, a story about information deserts. Food deserts, yeah they’re not real. But information deserts, in my carefully cultivated opinion very much are. Academics expressing shock that people don’t know how much financial aid is available, that Harvard of all places is entirely “need-blind” in their application process (and to be clear, every university with a multi-billion endowment should be ashamed to not be need-blind in their application process). It’s easy to forget that the majority of people don’t get an undergraduate degree. They don’t interact with the aid process, it’s not something that people discuss with their neighbors. I don’t buy a lot “economic class as causal mechanism” theorizing, but there is something to be said for the fact that, culturally, we don’t discuss money with our friends. We don’t talk about our salaries and loans, how we are paying for education or how your kid might be able to pay for theirs. It’s simply not the kind of information that fills the air, doubly so in communities where most of the parents never attended college. Compounded the with greater urgency of day-to-day living for poor families, there just aren’t a lot of channels through which students can get a first moment’s traction to start asking the question about how they can go to college, let alone arrive at answers.

When smart and good technocrats like me are looking for policies that can stand up to the rigors of cost-benefit analysis from skeptics, information campaigns manage to be some of the very worst and very best ideas out there. When they’re bad, they talk down to disadvantaged communities with condescending messages filled with information they already have (crack is bad!), common sense everyone has (guns are dangerous!), or the kind of avuncular suburban conservative wisdom that leaves no one an ounce more informed.

But, when they’re good, they’re great. Information campaigns scale, with manageable marginal costs and often zero downside risk. They provide a very specific kind of information– information you didn’t even know you were missing, often answers to questions you didn’t know you should be asking. Did you know there was a Hepatitis vaccine? Did you know that you can save for our kid’s college education tax free? Did you know you qualify for the EITC and if you file your taxes you’ll get a check for $4,600? Did you know the flagship university of the state, one of the very best in the world, guarantees sufficient financial support to allow 100% of admitted students to attend without being financially crippled for life?

Rather than focus on what you think people know and don’t know, just start from the basics. What is the information that you relied on when making the biggest decisions in your life? Do other people have that information?

Are you sure?

1 I’ll abstain from telling the long version here, but I had absolutely no clue how graduate school and academia worked when I applied to a PhD program. I was a public high school teacher, I thought I’d work hard, write a dissertation, and make 50k a year teaching in a local community college. It’s funny in hindsight because what was then an ocean of unknowns is now the entirety of our academic working lives. Being told that families don’t know how college works is can feel like being told people don’t know the water we live in is wet.

The Internet Knows Everything

Scott BuchananLeave a comment

About ten years ago, movers showed up to pack up and move our worldly goods across town. Because this was a short move, we went with some local, low-priced labor, instead of name-brand professionals. From a previous move, we knew that the legs of our baby grand piano could and should be removed for transport. Unfortunately, none of the movers knew how to detach the legs, and neither did I. I squirmed underneath and looked up, and did not see how to do it. I only saw some massive screws that looked like they were not about to move.

The internet to the rescue – – a quick search led to a YouTube video showing somebody moving a piano like ours, and just reaching under and knocking something with a rubber mallet, and voila, off came the legs. I could not see exactly what they did, but when I crawled under the piano again to look for something easily knocked aside, which had to be there, it was obvious what to do.

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Rules, Discretion, and Privilege

mdmakowskyLeave a comment

I’m often wary of personal stories that illustrate an idea too perfectly, but here we go.

I was in a small local grocer purchasing tonic water, which elicited a comment from a White middle-aged man about the importance of never running out of tonic when there is gin to drink, followed quickly by an unsolicited story of his drinking and driving, only to get pulled over by a police officer and be told to “Go straight home, I don’t want to see this car on the road the rest of the night.” This prompted innocent confusion on the part of the young Black cashier, who asked

“Wait, were you drunk?”

“Oh yeah, I was completely hammered”

That’s it, that’s the whole story. The young woman was flabbergasted that an officer would pull over a clearly drunk driver and let them off the hook. I doubt she was unaware of the concept of White Privilege, but rather I suspect she was shocked to find it extended to something as socially stigmatized as drunk driving. She rang up my bill, her face frozen in a “Really?” that for all I know she is still wearing to this day.

The optimal balance of unbending rule adherence/enforcement versus pure discretion in judgement/enforcement will always be an open debate at the level of macro institutions and the day-to-day micro decisions of the agents presiding over our lives. Rather than further adjudicate how much discretion is optimal, I ask that you only grant me that the median voter in nearly every context demands that discretion remains > 0.

In the context of law enforcement, what I would like to contend is that we have chosen the wrong kind of discretion. Or, perhaps more precisely, the emphasized discretion in the wrong direction. With rare exception, our rules dictate overly-harsh punishments, and it is in the agents of enforcements that we have both imbued, and burdened, the power of discretionary lenience. The officer can let you off with a warning or record a speed below a key punishment threshold, the judge can sentence you to probation instead of jail time or suspend your sentence entirely. We are, many of us, comfortable with this construct because at some level we have faith in the humanity, the sympathy, of the enforcer.

This construct has consequences. Most obviously, it means the system will be harsher on groups of people with whom the enforcing agents have less sympathy, in whom they see less in of themselves (or their children). Showing how ticket speeds “bunch” on different sides of a punishment threshold for white and black drivers, Goncalves and Mello neatly show officer discrimination, not in the form of targeting black drivers with additional cruelty, but rather in excluding them from the relief afforded White drivers from a harsh system of rules.

This is an important distinction. In a system with gentle rules, the burden is placed upon the discretionary agent to ensure punishment is sufficient to the transgression. They have to bear the burden of what happens to the punished; they have to be the villain in that person’s story. When the rules are cruel and the system allows for sympathetic lenience, they get to be that person’s hero. Even for those humans with whom officers have less sympathy, it will still be easier for guilt averse officers to fail to be someone’s hero than opt to be their villain. Perhaps most importantly, it displaces accountability for punishment outcomes from the discretionary agent to the system as a whole. Few will ever be fired or shunned for failing to intervene on behalf of a transgressor, but those who opt to dispense additional punishment may be asked to defend their choice. If you want accountability, strictness has to be someone’s choice.

How did we end up with a variety of brutal punishments that we count on discretionary agents to protect us from? I can imagine a variety of origin stories. When Nixon sold White Southern voters on “Law and Order” it was by design a promise to lock away the Black men that White southerners were terrified of. White southerners had every reason to believe they, and more importantly their sons, would be protected from draconian drug laws by, what were then, almost exclusively White officers and judges. I also don’t think we should underestimate how the median American views the prospect of being arrested as something that happens to other people. Strict punishments are exactly what criminals deserve. In the unlikely event you interact with the system, the professionals in the system will quickly see their error or, at worse, will see you as someone who doesn’t deserve to be punished harshly. Discretion will save you.

Lastly, harsh punishments and discretionary lenience allows observers from the privileged group off the psychological hook with a simple bit of reasoning: “They broke the rules, that’s the punishment according to the rules. They made their choice.” But is that the line of reasoning you follow when you interact with an officer?

When you see red and blue flashing lights in your rearview, what runs through your mind? Do you plan your story– the job interview you’re rushing to, the bathroom emergency you’re in the midst of? Do you prime your system for the Stanislavskian production of tears? Or do you get out your license and registration, put them in your left hand, roll down your window, and place both hands squarely at the top of the steering wheel hoping desperately not to spook the officer you expect will unbutton their sidearm as soon as they see the color of your skin?

A post script

When racial discrimination and White privilege are levied as explanations of social phenomena, even though the two are, for all intents and purposes, outcome equivalent, I often can’t help but think that the wrong rhetorical option is chosen. If and when employers discriminate against Black job applicants, this privileges White applicants, but those White applicants don’t actually observe the discrimination first hand. To frame this as an example of White privilege is to tell them they don’t deserve the job they’ve worked hard to acquire– their resistance to the explanation maybe shouldn’t be so surprising. Discrimination, not privilege, is the easier rhetorical sell because you are telling them a story about something negative that happened to someone else that they had no direct part in– they don’t have to be the villain in the story, they simply have to accept the evidence put before them and sympathize with those being harmed.

Conversely, stories of positive discrimination, such as the criminal justice system extending greater lenience to White citizens, are precisely examples of privilege. No one should feel unjustly villainized simply because they are receiving additional benefits when they did in fact break the rules. Furthermore, the policy goal to be pursued here is not to eliminate the privilege of lenience enjoyed by one group, but to extend that lenience to everybody else.

When framed as such – that negative discrimination is something to be eliminated, while positive privilege is something to be expanded, it becomes easier to persuade people because you’re never asking them to give something up or confess to a transgression they don’t recall committing. You’re letting everyone remain a hero in the story they tell themselves everyday.

Unless, of course, they’re just racist and want to use the government and market institutions we live within to cause as much harm as possible to others. There’s no rhetorical fix for that; they’re going to fight the rest of us every step of the way no matter how much evidence is found or how it is presented. But then again, they don’t really matter in this story, do they? They’re just inframarginal obstacles in our quest to persuade the median voter to accept the evidence of positive and negative discrimination, and work together to make the world just a little better, one policy at a time.

Should student debt be dischargeable in bankruptcy?

mdmakowskyLeave a comment

I’m not an economist who studies education or bankruptcy, and I’m not 100% confident I spelled dischargeable correctly. I am, however, above average at highlighting the difficulty of a question when dissuading a grad student from attempting an impossible thesis question, so let’s dig into this one, which sounds pretty hard to me.

First of all, it is very difficult to discharge student debt during Chapter 7 or 13 bankruptcy, but I think you still can do it if you convince a judge that continued attempts at repayment would create undue hardship i.e. put you in a state of poverty in the wake of previous good faith efforts.

That said, maybe you shouldn’t have to face literal starvation to discharge student loans. That’s a reasonable idea, but what would the broader consequences be? This is tricky question to untangle because there are both welfare consequences and knock-on effects where we are put down different forking paths of politics and policy.

If debt is dischargable, then lenders will expect lower rates of repayment. This increase in lender risk and decrease in return on capital would likely have immediate consequences in the form of:

  1. Higher interest rates
  2. Lower rates of loan approval
  3. Greater dependence on loan collateral
  4. Greater lender interest in what the loaned funds will be applied towards.

Before we tackle those, we also have to consider the different policy environment paths lenders may have to anticipate:

  1. The government stops subsidizing loans. This would lower tuition, but also lower access for low income students.
  2. A loan forgiveness program. Great for people with outstanding debt, but changes how expectations are formed forever going forward.
  3. The government launches a massive “free college” program that covers tuition at state colleges and universities. This would have all kinds of consequences potentially.

But where this really leaves us is with a billion dollar question: will dischargeable students loans lead to lower costs of higher education? I am confident that the answer is a definitive, unassailable maybe.

Higher interest rates is a pretty straightforward prediction, but the consequences are less clear. Higher interest rates could lead to less college matriculation, greater barriers for lower income individuals, and higher expected rates of bankruptcy, in part because decisions are being made by young people who don’t know the future, their future, or, really, anything. Related to this, lenders will become more discerning regarding who they lend to, giving more money on more favorable terms to matriculants from wealthier backgrounds, in no small part because wealthy parents are filled to the brim with collateral, making for excellent co-signers and providers of high school graduation gifts nicer than any car I ever hope to drive.

That is all boring and moderately obvious. It’s 4) that I’m most curious about. If you get into medical school, there is no shortage of institutions eager to dump several hundred thousand dollars in the foyer of your home. Part of the reason for this is the expected future income of physicians and their high graduation rates from medical school thanks to rigorous admission screening. But what is underappreciated is the 100% rate at which medical school students study medicine.

Not so with undergraduate education. You might study electrical engineering with a minor in computer science. You also might study something a senior tells you is the easiest major at your school. You might major in something that sounds fun or interesting. You might study Miscelleneous Studies, where Miscelleneous is a subject that is likely interesting and possibly extremely important, but within which you can choose classes that facilitate your avoiding learning anything useful or applicable in the labor market.

Herein lies the problem. Lenders treat loans for consumption very differently than loans for investment. Nursing and statistics degrees are investments. Art History classes (for most people) are consumption. What’s going to happen to higher education when the lender tells you you can have $200K at 3% to study any STEM field or $75K at 6% to study anything in the humanities? Will the demand for humanities degrees drop? Will the supply of humanities education recede? Are humanities and STEM education complements or substitutes?1

Let me phrase it a different way? Are wealthy fine arts majors cross-subsidizing STEM majors pursuing the first college degrees in their family? Or are they driving up the price of tuition because heavily subsidized credit is facilitating pre-career retirement lifestyles for 4 years?

All of this leaves me with the suspicion that dischargeable student loans will lower tuition for some while raising it for others. This heterogeneity would likely shift the electoral popularity of free tuition programs while also shifting the nature of those program. Maybe “free college” turns into a means-tested program. Maybe “free college” becomes “free STEM college”. Maybe both.

We could speculate what this means for loan forgiveness or subsidies, but this post is too long already and, as should be already clear, we’re not going to solve anything today. My elegant and succinct point is this:

When you massively subsidize a [knowledge, signal] bundled good for so long that it transforms into a [knowledge, signal, 4-year luxury cruise with your peers] bundle, and to accommodate that subsidy you protect your poorly constructed macro-investment in human capital by exempting it from bankruptcy proceedings, and as a result of this weird landscape a bizarre higher education industry emerges that is both one of the greatest achievements in US history but also a trap that 19-year-olds fall into because, really, is there any trap we don’t fall into when we’re 19, and from which thousands of people never financially recover, but if you just fix one part of it no one knows what will happen, and if you try to fix all of it at once in the back of your mind you’re afraid it could turn into the US healthcare industry part deux, well then what you have is a real and important problem that I don’t know how we will solve but I remain confident that other people will be very confident that they know how to solve it and they will get extremely cross with me for not sharing their confidence.2

So maybe don’t try to solve that in your dissertation.3 Might be safer to just definitively estimate the natural rate of interest that underlines all monetary transactions. That’ll be easier.

1The answer is “Yes”.

2 This is, to be extremely clear, not me picking on Ms. Reisenwitz’s tweet which was good and interesting and left me thinking about student loans for two days when I should have been working on the research topics I have actual expertise in.

3 Of course, if you do find a natural experiment where huge chunks of student debt were accidentally made dischargeable in a state for 2 years because of a legislative SNAFU, you should write that dissertation and put me in the acknowledgements.

The Rise and Fall (?) of Bitcoin Price

Scott BuchananLeave a comment

Well, it has been a fun party. Here is a chart of Bitcoin prices over the last year or so. Folks that bought in before December were up X4 or more by April. Woo-hoo! But prices have dropped by half in the past two months. Many articles were published over the winter justifying ever greater heights for Bitcoin. It was to be the digital equivalent of gold as a store of value. Also, it is touted as being decentralized and free of government manipulation – – a global, privatized people’s currency. What happened?

Source: Seeking Alpha
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Academic Publishing: How I think we got here

mdmakowsky13 Comments

Fabio Ghironi, whom you should be following on twitter already, threaded the #econtwitter needle the other day, managing to write about the growing problems within academic economic publishing without falling victim to the sorts of whining and nihilism that discussions of publishing experiences often degenerate into. Below I’ve included a sample. Do go read the whole thing.

I don’t want to adjudicate the merits and flaws of the economic journal system. I have no idea how it would fare in a benefit-cost analysis or how to improve it, and I’m deeply skeptical of anything that has a whiff of “easy fix” for what is a very complex system of scientific incentives, social benefit, and academic sociology.

Instead, I’d like to discuss how I think we got here. A couple stylized facts about how research in economics has changed over the last 50 years, none of which I expect to be controversial

  1. There are a lot more people writing academic journal articles.
  2. There is a lot more well-executed economic research.
  3. The teams of co-authors on papers/projects have become much larger.
  4. The number of journals whose prestige is commensurate with a tenured position at an elite school has grown slower than the total faculty employed by elite schools.
  5. Economics research has become more expensive and labor intensive.

What is immediately obvious from 1-4 is the journal space squeeze, resulting in journals with vanishingly small acceptance rates. The American Economic Journal: Microeconomics (one of the very top journals that isn’t part of the holy Top-5, hallowed be thy names) managed to go an entire year without accepting a paper! Their editorial team, as any Murphy’s Law aficionado would have predicted, interpreted this as evidence they should publish fewer papers.

[Update: 6/2/21 A reader has pointed out that AEJ:Micro has over the past year managed a more than respectable turnaround time on submissions and eventually accepted 33 papers in 2019, 20 in 2020, yielding acceptance rates of 5 to 9%. Editors Report here]

One of the things that economics has become, and maybe always has been, obsessed with is “super stars”, and not just those who get medals. Within every subfield there are a handful of current researchers who are known to everyone else, whose papers are always top of the list in the best working paper series, who tour the country tirelessly promoting their latest papers. And they are often promoting multiple papers. How is it that they find the time to do so much research?

Well, first and foremost, they are incredibly conscientious, with work ethics bordering on obsessive. But a not distant second is the change in the nature of their jobs. They are not just working at a chalkboard by themselves or analyzing the latest batch of data. They are managing research teams. They are applying for grants that support grad students and post-docs. They are meeting for 3 hours each day with different teams of scholars, some at different institutions. They are coming up with their own ideas and refining the ideas of others, they are guiding the research of apprentices while also collaborating with equally experienced peers. They are the CEOs of miniature research empires.

Let’s assume that for a second that the number of super stars in the field has remained constant (it’s grown, but lets keep it simple). In 1950 the top 5 journals probably could have published every single full research paper written by super stars and still had room to spare. Nowadays I’m not sure the top 5 journals could handle the research output in a given year just from MIT. I don’t think the top 10 journals could handle all of the research from the Boston metropolitan area

Let’s visit the other side of the fence now. If you are a co-editor at one of the 5 elite journals in economics, you are allotted roughly 13 acceptances per year. These are fixed. For these slots you review roughly 200 papers. Let’s say 50 of those papers are trash and 50 are good but below the bar. These you desk reject. Of the remaining 100, another 25 are a bad match for the aesthetic or substantive targets laid out by the editor-in-chief(s). Another 25 are good, but the reviewers are, upon closer inspection, able to identify real problems that will undermine the impact of the paper, ruling it out for an elite journal such as yours.

That leaves you with 25 papers for 13 slots. That might not sound like a problem, but think about the process of elimination you just went through. These are really good papers that make important contributions to the field and you need to reject half of them. The discipline will not accept you flipping a coin. You need reasons to reject some of these papers. Well, let’s look at the co-authors. You don’t want to be a jerk, but you’re both desperate and don’t want to be remembered in your hallway at work as the person who rejected that massively influential paper that reinvented the field. You’d feel bad, but 20 of the papers have at least 1 superstar on them. Sorry, but status is a heuristic for a reason. You still need to reject 7 more.

Let’s go through those referee reports again. Was there anything questionable? Any possible source of bias speculatively hypothesized by a person who spent two days thinking about the paper that the people who worked on it for three years never thought of? Are they relying on econometrics that someone has recently posited might sometimes fail to calculate error terms optimally? Is it a theory without an application? Is it an application without a theory? Are the coefficients too small to be interesting or too large to be believable?

Now, let’s remember the single most important thing: everyone knows this is happening. This is not a secret process and academic researchers have responded accordingly. Superstars have responded by managing bigger teams, producing even more research, adding more and more layers of robustness checks, alternative specification designs, even entirely different research designs serving as papers within papers that put Hamlet to shame. At the same time comparably excellent, but perhaps slightly less famous, authors with outstanding research records are thrilled to work with a star, knowing that it will increase their odds at a top journal. When designing the research they know what is in vogue, what is falling out of favor, and how to shape their papers to fit the ambitions of current editors. Research designs are defensive from the start, anticipating as many angles of attack as possible. When the research is completed, it will go on the presentation circuit for a year or two, subject to the slings and arrows from the pool of economists where your future referees will be drawn from. It is from these comments that your appendix will grow. And grow. And grow. You must anticipate every attack, lest your paper’s shortcomings make the editor’s job easier.

Now try to imagine what the research lives of everyone start to look like. For the bulk of good researchers, this means working on 3-6 projects at all time, with each of those projects stretching out over 3 to 5 years. Even if you land a 2 year post-doc, submitting your tenure packet in the fall of your 6th year means you have 7 total years to get multiple papers through a process accepting less than 3-5% of submissions and, more importantly, less than half of all the objectively outstanding research. At the same time, superstars are stretching themselves impossibly thin, expected to meet impossible expectations and get papers accepted at journals with impossible standards knowing full well the careers of their co-authors depend on those acceptances. A faculty appointment should come with a free clonazepam prescription.

To sum up: academic economics has more star researchers, managing larger teams producing more high-quality papers than there is space in the elite journals which have been forced to invent impossible acceptance criteria to produce the singular output that journal editors absolutely cannot shirk: rejections.

And if you think the easy answer is to just increase the size of journals, you are missing the entire function of journals. Journals no longer function as disseminators of economic science.** Rather, they are criteria for tenure and promotion. There are a finite number of faculty slots and schools need reasons to keep/dismiss/promote/retain/recruit. If the number of elite journal articles published were to change, the prinipal effect would be to shift the threshold for success or failure in tenure and promotion.

Of course, increasing the number of publication slots in historically high prestige journals might still be a good thing. Going back to our editor’s dilemma, if they could accept the entire 12.5% of papers that our editor-under-truth-serum genuinely believes are significant contributions, then everyone’s CV would more accurately reflect the subjectively assessed merit of their work, and less their luck and ability to tirelessly play a zero-sum game. Sure, the high-low prestige bar would inflated upwards, but it would nonetheless increase the signal-to-noise ratio on everyone’s CV.

This, of course, would lower the value of every CV that already includes a Top-5 publication, but such is the struggle of every YIMBY vs NIMBY movement. Increasing the supply of elite journal publications won’t be a Pareto improvement (what is?), but it seems likely to me to be welfare improving. So I lied. I do think I know how to improve the system. Big shocker, an academic who thinks they can solve a complex system in one blog post.

** That role has been entirely usurped by the NBER and their working paper series. Now that I have tenure, I would literally rather receive an email permitting me to distribute my future work as NBER working papers than an acceptance at a Top 5 journal. It’s not even close, actually.

Composting Toilets May Help Save the World

Scott BuchananLeave a comment

A key discovery of nineteenth century science was that diseases can be transmitted via pathogens in human waste.  In regions of high population density, this can lead to epidemics if adequate sanitation facilities are not available. A milestone in epidemiology was the 1854 cholera outbreak in London. A physician named John Snow analyzed the incidence of the disease and concluded that the Broad Street public water pump was the source of infection. Even though he had no explanation in terms of germ theory at that time, he persuaded the authorities to remove the handle of that pump. This stopped the cholera epidemic. The well from which this pump drew had been dug a few feet away from an infected cesspool. A replica of this pump still stands in London:

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