A game of mirrors? Economists’ models of the labor market and the 1970s gender reckoning

Written with Cleo Chassonnery-Zaigouche and John Singleton

The underrepresentation of women in science is drawing increasing attention from scientists as well as from the media. For example, research examining glass ceilings, leaking or small pipelines, the influence of mentorship, biases in refereeing, recommendations, and styles of undergraduate education or textbooks are flourishing in STEM, engineering, social sciences, and the humanities. Economics is no exception, as a paper that drew widespread coverage by Alice Wu released in the summer of 2017 exemplified. One thing that nevertheless sets economics and (to greater and lesser extents) its cognate disciplines apart, however, is that research topics such as the gender wage gap, women’s labor supply, and labor market discrimination are phenomena that many researchers in these areas both experience and study. An obvious question raised, therefore, is how the theories, models, and empirical evidence that economists develop and produce in turn shape their understanding of gender issues within their profession. Early debates surrounding the foundation of the Committee on the Status of Women in the Economics Profession (CSWEP) in 1972 are revealing in this regard.

'Women Of The World Unite!'The foundation of CSWEP, which we briefly narrated here, stood at the crossroads of various historical and social trends. One was the growing public awareness of discrimination issues and an associated shift within the US legal context. The Equal Pay Act of 1963 and the last-minute inclusion of gender in the 1964 Civil Right Act brought about a stream of sex discrimination cases, including the famous Bell AT&T case, whose settlement benefitted 15,000 women and minority employees. Phyllis Wallace, a founding member of CSWEP, was the expert coordinator for the Equal Employment Opportunity Commission. Though the 1964 Act excluded employees of public bodies, including governmental and universities hires, legal battles at Ivy Leagues universities resulted in compliance rules and the 1972 Equal Employment Opportunity Act. Professional societies were no exception. Beginning in 1969, the American Historical Association and the American Sociological Association established committees on the status of women in their respective disciplines. Chairing the sociology committee was Elise Boulding, whose husband Kenneth later joined as a founding member of CSWEP. Kenneth Boulding would draft “Role Prejudice as an Economic Problem,” the first part of a paper introducing CSWEP’s first report, “Combatting Role Prejudice and Sex Discrimination.”

Many of the actions pursued by economists were indeed similar to (and inspired by) other professional and academic societies, such as making day care available at major conferences, creating mentorship programs, and developing a roster of women in every field in economics to chair and participate in conferences panels. But other issues were idiosyncratic to economics. In particular, the problems of gender bias in economics were viewed as economic issues from the beginning, as seen in Boulding’s 1973 article on sex Boulding explaining CSWEP creationdiscrimination within the profession (picture on the left). Early CSWEP reports routinely framed their organizational efforts as attempts to study and fix the “supply and demand for women economists,” that is, the labor market for economists. The framing applied in the reports echoes the objectives of the AEA Committee on Hiring Practices to establish better recruitment practices and the preceding work by the Committee on the Structure of the Economic Profession. The reports relied on the logic of basic econ 101 principles at times, but on other occasions, the CSWEP originators, most of whom were trained in labor economics, delved more deeply into ongoing debates on the interpretation of earnings differentials, the determinants of women’s labor supply, the extent of discrimination and causes of occupational segregation, and on ways to fix the labor market for economists. One particularly revealing occasion was a letter exchange between Carolyn Shaw Bell, usually hailed as the driving force behind the women’s caucus that led to CSWEP’s creation, and University of Chicago economist Milton Friedman.

Bell vs Friedman 

29shaw_190Carolyn Shaw Bell (1920-2006) had received her Ph.D in 1949 from the London School of Economics and would spend her academic career at Wellesley College. After war work at the Office of Price Administration with Galbraith, she later did empirical work on innovation and income distribution, and contributed to consumer economics. Bell was convinced to accept the inaugural chairpersonship of the Committee (rather than retire) after the American Economic Association voted to establish the CSWEP in 1971 and launch an annual survey of women economists. In the summer of 1973, she sought to organize session at the December ASSA meeting. She wanted to assemble a panel of economists from various, sometimes opposed, backgrounds to comment on the findings. She therefore asked Elizabeth Clayton, a specialist of Soviet economics at the University of Missouri, leftish labor economist David Gordon of the New School for Social Research, and Milton Friedman to participate. CSWEP members expected “out in the open” controversy from the panel.


In an August reply to Bell’s invitation, Friedman declined, as he was not planning to attend the meetings (he was to be replaced by George Stigler on the panel). He did so regretfully, he explained, because he held strong views on the CSWEP report. He especially disagreed with the statement that “every economics department shall actively encourage qualified women graduate students without regard to age, marital or family status.” Though he “sympathize[d] very much with the objective of eliminating extraneous considerations from any judgment of ability or performance potential,” Friedman confessed he “never believed in reverse discrimination whether for women or for Jews or for blacks.” To this list he later added discrimination against conservative scholars, which he believed was strong on college and university campuses.

Whether preferential treatment produced “reverse discrimination” against the majority groups was a key point of contention over affirmative action policies. The social context was politically charged. While ending some of the “Great Society” programs, the Nixon Administration also set up the first affirmative action policy in 1969: the “Philadelphia Plan,” required that federal contractors and unions meet targeted goals for minority hires. The Nixon policy was sold as “racial goals and timetables, not quotas,” but criticisms focused on de facto quotas and applicability. Though formal quotas in US universities did not exist for women and racial quotas were ruled out by a 1978 decision, formal and informal affirmative action were debated in similar ways: Does encouraging women and minority applicant discouraged white men to apply? Was the goal of equal opportunity equal representation? These were recurring questions.

Screen Shot 2018-03-06 at 11.59.32Friedman’s answer, elaborated in his reply to Bell, was straightforward: affirmative action is inefficient and unethical: “should we… encourage men age 65 to enter graduate study on a par with young men age 20?”, he asked “Surely training in advanced economics is a capital investment and is justified only if it can be expected that the yield from it will repay the cost… Individuals trained do not bear the full cost of their training. We have limited funds with which to subsidize such training; it is appropriate to use those funds in such way to maximize the yield for the purpose for which the funds were made available. In the main, those funds were made available to promote a discipline rather than to promote the objectives of particular groups,” he continued. “It is relevant to take into account the age of men or women, the marital or family status of men or women, and the sex of potential applicants insofar as that affects the likely yield from the investment in their training,” Friedman emphasized, in an argument that strongly echoed Becker’s human capital theory: prohibiting the use of criteria such as gender and race in investment decisions was inefficient if they contributed to correctly predicting returns.

Overall, Friedman concluded, equal opportunity would not yield equal representation or “balance”:

I have no doubt that there has been discrimination against women. I have no doubt that one of its results has been that those women who do manage to make their mark are much abler than their male colleagues. As a result, it has seemed to me that a justified impression has grown up that women are intellectually superior to men rather than the reverse. I realize this is small comfort to those women who have been denied opportunities, but I only urge you to consider the consequences of reverse discrimination in producing the opposite effect.

Bell outlined the reasons for her disagreement with Friedman in lengthy response. She insisted that CSWEP favored non-financial “encouragement” over “any preferential financial aid for women.” More generally, while she agreed that the “free market lessens the opportunities for discrimination inasmuch as competition gives paramount recognition to economic efficiency,” she contended that this reasoning only applied to goods, not to human beings. She agreed with Friedman regarding the criteria for investing in professional training, but objected that there was nothing “in [Friedman’s] statement, in the discipline per se or in the existence of scarce resources, to identify those recipients who will, in fact, contribute most to the field.” Instead, she argued, the recipients of investment were selected by those “controlling the awards who learned certain cultural patterns, including beliefs about sex roles.”

Bell went on to admonish economists to re-examine their own biases: like the employers and employees they studied, they had been “brainwashed”: “beginning in the cradle. children… learn over and over again that what is appropriate and relevant for boys is not necessarily appropriate and relevant for girls.” These societal norms were biasing market forces, in that they influenced both supply and the demand of labor, she explained. Career and family expectations, decisions of whether or not to invest in education and training, the choice of education and occupation, as well as the allocation of time are all distorted. “This means that the occupations followed by young men and women do not reflect market considerations,” she concluded, only to add that “until we have a society where little girls are not only able to become dentists and surveyors and readily as little boys but are expected to become dentists and surveyors as readily as little boys we cannot in all conscience rely on the dictates of economic efficiency to allocate human beings.”

In a rejoinder to Bell’s reply, Friedman reprised one of his most famous arguments: market solutions should be preferred because alternatives systematically lead to the tyranny of the majority:

Screen Shot 2018-03-06 at 12.18.38

In short, Bell was advocating for institutional changes to the professional training of and labor market for economists (procedures in a very concrete way, cf. premise of JOE), while Friedman was arguing political philosophy. In her final response, Bell rejected the notion that actively countering “the existing system of brainwashing” through affirmative action would be useless, arguing instead that present discrimination resulted in capital investment “which may reduce the mobility of other resources in the future” and therefore was inefficient. Finally, Bell insisted that the CSWEP report advocated for voluntary participation in affirmative action plans, and that the “mild suggestions” proposed were far from the “dictatorial imposition of power” that worried Friedman.


Conflicting models of the labor market

The exchange quoted above reveals how much thinking about the status of women in economics and what should be done about it was embedded in wider economic debates on how to model the role of women in the economy. The initial focus of Bell and Friedman’s exchange was the plan advanced by CSWEP. They both tacitly considered it a special case of the larger debate on whether affirmative action would advance the status of women in the US economy, the disagreement deriving from their respective visions of the labor market, of how agents make economic decisions, and the extent to which gaps in outcomes and other phenomena reflected discrimination. Moreover, the 1970s were a decade in which the field was pervaded with thorny debates, some which reflected rapid changes in US labor market themselves.

13342748403Friedman’s arguments drew on a vision of the labor market that was becoming dominant at that time and that he had contributed to shaping through his famous 301 Price Theory course at the University of Chicago. As he was jousting with Bell, Becker’s 1957 Economics of Discrimination had just been republished with a fanfare that contrasted sharply with the resistance the book had encountered 15 years earlier (Friedman had to put considerable pressure on Chicago University Press for them to publish his former student’s Ph.D. dissertation). The main thread of Becker’s work, one partly inspired by Friedman himself, was to model some employers as rational maximizers with a taste for discrimination. That is, they used “non-monetary considerations in deciding whether to hire, work with, or buy from an individual or group.” Those employers, he contended, were disadvantaged, as their taste acted as a tariff in a trade model. Discrimination was thus an inefficient behavior that would be pushed out of competitive markets in equilibrium. The notion that the labor market where employees, being rational about their human capital investment and their work/leisure tradeoff, meet cost-conscious employers, was efficient, pervades his exchange with Bell.

But Friedman’s vision exhibited an additional characteristic historical and political twist. The proof that markets were, in the long run, efficient was historical: they had brought improvements in the living conditions of Jews, African-Americans, and Irish people throughout decades and centuries. And the market did so by protecting them from the tyranny of the majority, so that any attempt to fiddle with the market to accelerate the transition was bound to failure. This argument had come to maturity in Capitalism and Freedom (1962). In the fifth chapter, Friedman took issue with Roosevelt’s 1941 Fair Employment Practice Committee (FEPC), tasked with banning discrimination in war-related industries. He wrote:

If it is appropriate for the state to say that individuals may not discriminate in employment because of color or race or religion, then it is equally appropriate for the state, provided a majority can be found to vote that way, to say that individuals must discriminate in employment on the basis of color, race or religion. The Hitler Nuremberg laws and the laws in the Southern states imposing special disabilities upon Negroes are both examples of laws similar in principle to FEPC.

Like Becker, Friedman believed this general framework applied to any kind of discrimination: against Jews, foreigners, women (his correspondence with Bell echoed Capitalism and Freedom almost verbatim), people with specific religious of political beliefs, and blacks. In a lengthy interview with Playboy the previous year, for instance, he again explained that “it’s precisely because the market is a system of proportional representation [as opposed to the majority rule in the political system] that it protects the interests of minorities. It’s for this reason that minorities like the blacks, like the Jews, like the Amish, like SDS [Student for Democratic Society], ought to be the strongest supporters of free-enterprise capitalism.

Bell’s vision of labor markets, on the other hand, was not a straightforward reflection of a stabilized research agenda. The field was buzzing with new approaches in these years and her work stood at the confluence of three of them: attempts to understand the consequences of imperfect information on labor supply and demand; new empirical evidence on the wage gap and on the composition, income, and occupation of American households; and the challenges brought to mainstream economic modeling by feminist economists.

For example, her letters and the solutions that she pushed to fight the poor representation of women in economics betray a concern with the consequences of imperfect information on access to employment opportunities, expectations, employers’ and employees’ behavior, and in the end, the efficiency of market outcomes. In this regard, some of her statements closely echoed Arrow’s theory of statistical discrimination, which he had elaborated in a paper given in Princeton in 1971. His idea was that employers use gender as a proxy for unobservable characteristics: beliefs on average characteristics of groups translate into discrimination against individual member of these groups. As Bell and Friedman were corresponding (a correspondence that Bell circulated to the other CSWEP members and to Arrow), Arrow was refining his screening theory, in which preferences were endogenous to dynamic interactions that may create self-selection, human capital underinvestment, segregation and self-fulfilling prophecies. Arrow’s awareness to information imperfection hadn’t prevented him from telling Bell that, as AEA president in charge of the 1971 conference program, he couldn’t find many qualified women to raise the number of female presenters and discussants. Bell quickly came up with 300 names, 150 of whom expressed interest in presenting a paper. Bell’s advocacy for formal procedures producing information on jobs but also on “qualified women” in economics contributed to the establishment of a CSWEP-sponsored roster of women economists and of the JOE soon afterwards.

Bell also participated in the flourishing attempts to document women and household behavior empirically. While there is no evidence that she was then aware of Blinder and Oaxaca’s attempts to use data from the Survey of Economic Opportunity (which eventually became the PSID) to decompose the wage gap, she was involved in commenting on the 1973 Economic Report to the President, in which the Council of Economic Advisors had included a chapter on “the economic role of women.” Her familiarity with the economic and sociological empirical literature on earnings differentials subsequently led Bell to gather a substantial body of statistics on US families. She summarized her results in “Let’s Get Rid of Families,” a 1977 article she decided to publish in Newsweek rather than in an academic journal. That she aimed to challenge the notion that the typical US family was built around a breadwinning father and a stay-at-home mother was already seen in her insistence that economists and citizens alike are “brainwashed” by social norms and beliefs.

Finally, Bell’s letters to Friedman suggest that she wasn’t merely looking for a microeconomic model alternative to the Beckerian theory of discrimination. Her whole contribution was embedded in a more radical theoretical criticism of economic theory, one she would later carefully outline in a 1974 paper on “Economics, sex and gender.” The way that economic decisions are modeled does not allow an accurate representation of how women make economics choices as producers and consumers, she argued. Agents are making a choice between work and leisure, yet “leisure” in fact covers many types of work between which women need to allocate their time. Likewise, women usually did not consume an income they had independently earned, as standard micro models assumed. Not taking into account this variety of decisions in fact reinforces the social model economists tend to take as given, in which women are primarily caregivers who don’t exercise any economic independent choice. “Both economic analysis and economic policy dealing with individuals, either in their roles as producers or consumers, have been evolved primarily by men,” she concluded.


Bell and Friedman’s divergent takes on which actions the newly-established CSWEP should implement were thus inextricably intertwined with their theoretically and empirically-informed views of the labor market. Their exchange further reveals that their views were also tied to their respective methodological beliefs and personal experiences. Their arguments exhibited different blends of principles and data, models and action. Friedman was primarily focused on foundational principles about markets and the free society and explicitly connected them to the discrimination he had experienced as a Jew and a conservative. When the first letter he had sent to Bell was reprinted in a 1998 JEP issue celebrating the 25th anniversary of CSWEP, he further explained that “the pendulum has probably swung too far so that men are the ones currently being discriminated against.” Bell, by contrast, grounded her defense of the CSWEP agenda in economics principles, economic facts, beliefs and prejudices found in American society, as well as in her interactions with AEA officials and decades at Wellesley of tirelessly mentoring women in economics.

Note: Permission to quote from the Friedman-bell correspondance was granted by the Hoover Institution

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Not going away: on Al Roth’s 2018 AEA Presidential Address and the ethical shyness of market designers

Screen Shot 2018-01-06 at 19.48.49Encountering Al Roth’s ideas has always been a “squaring the circle” experience to me. The man is the epitome of swag (as my students would say), his ideas the hype, and his past achievements ubiquitous in the media. He has become the antidote for post-2008 econ criticisms, the poster child for a science that is socially useful, that saves lives. And yet, as he proceeds to explain the major tenets of market design, I’m usually  left puzzled.

20180106_171323-001Yesterday’s presidential address was no exception (edit: here’s the webcast of his talk). Roth outlined many examples of how matching market design can improve citizens’ life, from making the economics job market thicker to avoiding domestic fights in pediatric surgeons’ households, to substantially raising the number of kidney transplants in the US, thereby effectively saving lives. Though the rules of each market differs, design principles are often identical. Repugnance, congestion or unraveling (people leaving the market because they have to accept job offers early or because they are put off by the matches proposed) threaten exchange, and market thickness is restored through implementing matching algorithms or signaling schemes (like expressing interest for a limited number of job openings). By the end of his talk, Roth nevertheless expressed some frustration. He wishes to do much more: raise kidney matching market thickness through allowing foreigners to participate into US kidney chains of exchange or organize large-scale refuge resettlement. Yet these more ambitious projects are however faced with greater legal challenges, opposition and ultimately repugnance, he lamented.



Screen Shot 2018-01-07 at 8.21.30As Roth’s presentation moved from mundane to life-saving achievements, his slides became loaded with ethical statements. Moneyless kidney exchange is “fair,” he argued. Global kidney markets shouldn’t be considered “exploitative.”  Yet he never saw fit to discuss the ethical underpinnings of the designs he advances. Is it because, as explained in his introduction, his address focuses on “practical” marketplace design rather than on the identification of the theoretical properties of mechanisms? Or because the underlying ethics is obvious – isn’t raising the number of kidney transplants a universally accepted policy end? Or because he believes that the opposition to his international kidney market scheme betrays an unwarranted sensitivity on repugnance? Elsewhere, he has argued that economists should not take for granted citizens’ repugnance to engage in some kind of transactions (money landing or prostitution are other historical examples). That society has banned markets for such transactions has sometimes harmed their welfare, and Roth believes it is possible to carefully design such markets in a way that commodification and coercion won’t happen.

My puzzlement is twofold. As a historian, I find economists’ contemporary reluctance to get their hands dirty with ethics (Roth is not alone is this) highly unusual. For, contra the popular received view, those economists usually considered the founders of contemporary economics like Paul Samuelson or Kenneth Arrow were constantly arguing about the ethical foundations of their discipline, in particular welfarism. And as an observer of a changing discipline, I fear that this ethical shyness may at best prevent them from communicating with their public, at worst backfire. Let me elaborate.


The Good, the Bad, and the Ugly

Once upon a time, economists were not shy of handling normative issues. Though the XVIIIth and XIXth centuries were largely about separating out positive from normative analysis (and preserving a space for the “art of economics”), both were considered equally important parts of “political economy.” Reflections on neutrality, objectivity and impartiality, dating back to Adam Smith, were carried out separately. Max Weber was, at the turn of the XXth century, one of the first to relate ethics to subjectivity, through his quest for a reconciliation between an ideal Wertfreiheit (value-freedom) and an inescapable Wertbeziehung (relation to values through relation to the world, aka human condition).

Screen Shot 2018-01-07 at 8.20.04In the next decades, as the Popperian positivist mindset gradually replaced the aristotelician hierarchy between ethics and science, economists began hunting for subjectivity, and in the process ended up pushing normative thinking outside the boundaries of their science. In his famous Essay on the Nature and Significance of Economic Science (1932), Lionel Robbins outlined a clear separation between ends and means, is and ought, ethics and economics and normative and positive analysis. He did so by combining these with the fact/value distinction. Science was concerned with the confrontation with facts, he hammered. Interpersonal utility comparisons, which required “elements of conventional evaluation,” therefore fell outside the realm of economics.

Robbins’s British colleagues attempted to construct a value-free welfare economics. One exemple is Nicholas Kaldor and John Hicks’s Paretian compensation criterion. These endeavors were met with considerable skepticism in America. US economists strived to make their discipline more scientific and objective through an endorsement of Popperian falsifiability (apparent in Friedman’s famous 1957’s methodological essay), mathematization, data collection and the refinement of empirical techniques aimed at purging economic theories and models from subjectivity, rather than by trying to avoid normative statements. Those were inescapable if the economist was to be of any help to policy makers, researchers concurred. New Welfare “cannot be used as a guide to social policy,” Arrow complained in his 1951 Social Choice and Individual Values PhD. “Concretely, the new welfare economics economics is supposed to be able to throw light on such questions as to whether the Corn Laws should have been repealed,” yet it “gives no real hue to action,” Samuelson likewise remarked in his 1947 Foundation of Economics Analysis.

Screen Shot 2018-01-07 at 8.24.17Samuelson and Arrow are usually credited with laying out the theoretical and epistemological foundations for contemporary “mainstream” economics, yet each spent an inordinate amount of time crafting out a space for normative analysis rather than getting rid of it. “Ethical conclusions cannot be derived in the same way that scientific hypotheses are inferred/verified… but it is not valid to conclude from this that there is no room in economics for what goes under the name of ‘welfare economics.’ It is a legitimate exercice of economic analysis to examine the consequences of various value judgments, whether or not they are shared by the theorist, just as the study of comparative ethics is itself a science like any other branch of sociology,” Samuelson warned in Foundations. In those years, Gunnar Myrdal was crafting a new epistemology whereby the economist was to identify societies’ value judgment, make his choice of a value set explicit, and import it into economic analysis. Georges Stigler likewise claimed that “the economist may … cultivate a second discipline, the determination of the ends of his society particularly relevant to economic policy.” Abram Bergson concurred that “the determination of prevailing values for a given community is… a proper and necessary task for the economist.” Richard Musgrave would, in his landmark 1959 Theory of Finance, later join the chorus: “I have reversed my original view … the theory of the revenue-expenditure process remains trivial unless [the social preferences] scales are determined,” he explained.

 Screen Shot 2018-01-07 at 8.20.37 The postwar was thus characterized by a large consensus that the economist should discuss the ethical underpinning of his models. Objectivity was ensured, not by the lack of normative analysis, but by the lack of subjective bias. The values were not the economist’s ones, but some he chose within society, usually resulting from a collective decision or a consensus. In any case, economists were tasked with making choices. Throughout the Cold War, economists did not shy away from arguing over the weights they chose for their cost-benefit analysis, for instance, or about how to define “social welfare” and embed it into one of economists’ favorite tools, the social welfare function. Though it was ordinal, it allowed interpersonal comparisons of “irrelevant alternatives” and was meant to allow any policy maker (or dictator) to aggregate the values of the citizens and use it to make policy decisions. “You seriously misunderstand me if you think I have ever believed that only Pareto-optimality is meaningful […] Vulgar Chicagoans sometimes do but their Screen Shot 2018-01-07 at 8.21.11vulgarities are not mine,” Samuelson later wrote to Suzumura. It was, Herrade Igersheim documents in a superb paper  his main bone of contention with Arrow. For 50 years, Arrow claimed that his impossibility theorem was a serious blow to Samuelson’s tireless promotion of the Bergson-Samuelson social welfare function. And for 50 years, Samuelson argued his construct was essentially different from Arrow’s one: “Arrow has said more than once that any theory of ethics boils down to how the individuals involved feel about ethics. I strongly disagree. I think every one of us as individuals knows that our orderings are imperfect. They are inconsistent; they are changeable; they come back […] People talk about paternalism as if we were bowing down to a dictator, but it is wrong in ethics to rule out imposition, and even dictatorship, because that is the essence of ethics,” he continued in his aforementioned letter to Suzumura (excerpted from Igersheim’s paper).

  Samuelson and Arrow both endorsed a welfarist and utilitarian ethics (policy outcomes should be judged according to their impact on economic agents’ welfare). Beginning in the early 1970s, a host of alternative approaches flourished. Arrow himself moved to Harvard with the explicit purpose of delving deeper into ethical and philosophical topics. He founded a joint workshop with Amartya Sen and John Rawls that explored the latter’s notions of fairness and justice. Alternative theories and measures of well-being and of inequality were developed. Joy, capabilities and envy were brought into the picture. And yet, it was in that period that, through benign neglect, ethical concerns were finally pushed to the side of the discipline. Economics remained untouched by the Kuhnian revolution, by ideas that scientists cannot abstract from metaphysics and that “pure facts” simply doesn’t exist (see Putnam’s work). Just the contrary. Though heterodoxies have constantly pointed to the ideological characters of some fundamental assumptions in macro and micro alike, economists now routinely considered their work has having no ethical underpinning worth their attention. The ‘empirical revolution’ – better and more data, more efficient computational devices, thus an improved ability to confront hypotheses with facts – is considered as a gatekeper. And economists have become increasingly shy to engage in ethical reflection. Nowhere is this state of mind more obvious than in theoretical mechanism and applied market design, a field that, as AEA president-elect Olivier Blanchard pointed out, is not merely concerned with analyzing markets but with actively shaping them.


Market designers, neutral, clean and shy since 1972

In their vibrant introduction to a recent journal issue showcasing the intellectual challenges and social benefits of market design, Scott Kominers and Alex Teytelboym  chose to put ethical concerns aside. They merely note that “the market designer’s job is to optimize the market outcome with respect to society’s preferred objective function, while “maintain[ing] an informed neutrality between reasonable ethical positions’ regarding the objective function itself.” “Of course,” they point in a footnote, “market design experts should – and do – play a crucial role in the public discourse about what the objective function and constraints ought to be.” A few references are provided which, with exception of Sandel and Helm, are at least 50 years old. Yet, as in Roth’s address, unspoken ethics is all over the place in their overview: market design allow for “equity” and other goals, they point, for instance, “ensuring that the public purse can benefit from the revenue raised in spectrum license reallocation.”

Their edited volume is especially interesting because it includes a separate paper on the ethics in market design, by Shengwu Li. It is one representative of how economists handle ethical foundations of mechanism design today: smart, clear and extremely cautious, constantly walking on eggshells. Li argues that (1) “the literature on market design does not, and should not, rely exclusively on preference,” BUT (2) since economists have no special ability to resolve ethical disagreement, “market designers should study the connection between designs and consequences, and should not attempt to resolve fundamental ethical questions.” In the end, (3) “the theory and practice of market design should maintain an informed neutrality between reasonable ethical positions.” The economist, in his view, is merely able to “formalize value judgment, such as whether a market is fair, transparent, increases welfare, and protects individual agency;” What he advocates is economists able to “investigate” a much larger set of values than preference utilitarism to evaluate design without solving fundamental ethical questions, so as both to guide policy and preserve their sancrosanct “neutrality”:

“To a policymaker concerned about designing a fair market, we could ask, ‘what kind of fairness do you mean?’ and offer a range of plausible definitions, along with results that relate fairness to other properties the policy-maker might care about, such as efficiency and incentives.”

Screen Shot 2018-01-07 at 8.38.08A similar sense of agnosticism pervades Matt Jackson’s recent piece of the past, present and future prospects of theory in mechanism design in an age of big data. Opening with a list of the metaphors economists have used to describe themselves in the past century, he charts a history of progress from the XIXth century view of economists as “artists and ethicists” to contemporary “schizophrenic economists.” “It is natural that economists’ practical ambitions have grown with available tools and data,” he explains. Economists’ shyness is however best displayed in Jean Tirole’s Economics from the Common Good, out this Fall. This, is spite of his effort to devote on of his first chapter to “The Morals Limits of the Market.” For the chapter’s purpose is to justify the lack of ethical discussion in the rest of the book by appealing to Rawls’s veil of ignorance, one Tirole seems to believe economists actively contribute to sew over and over:

It is possible, however, to eliminate some of the arbitrariness inherent in defining the common good… to abstract ourselves from our attributes and our position is society, to place ourselves « behind the veil of ignorance »… The individual interest and the common good interest diverge as soon as my free will clashes with your interests, but they converge in part behind the veil of ignorance. The quest for the common good takes as its starting point our well-being behind the veil of ignorance ….

Economics, like other human and social sciences, does not seek to usurp society’s role in defining the common good. But it can contribute in two ways. First, it can focus discussion of the ojectives embodied in the concept of the common good by distinguishing ends from means…. Second, and more important, once a definition of the common good has been agreed upon, economics can help develop tools that contribute to achieving it … In each [chapter], I analyze the role of public and private actors, and reflect on the institutions that might contribute to the convergence of individual and general interest – in short, to the common good.

What Tirole does here is reprising a theme Cold war economists faced with the difficulty of choosing ethical foundations for their work often relied on: the notion of a underlying social consensus. Needless to say, this is not enough to silence the reader’s ethical questions when walked through Tirole’s proposed policy to fix climate change, Europe’s failing labor markets or financial regulation, or to harness digital markets.


Historians and sociologists unchained

As expected, philosophers, historians and sociologist of mechanism and market design have been much less shy in commenting on the ethical foundations of the field. In the interest of keeping this already too long piece in acceptable boundaries (and attending a few ASSA sessions today), I’m merely providing an non-exhaustive list of suggested readings here. Philosopher Michael Sandel has confronted market designers’ constructs in his book on What Money Can’t Buy, economic philosophers Marc Fleurbaey and Emmanuel Picavet has provided extensive reflections on the moral foundations of the discipline, and Francesco Guala has masterfully excavated the epistemological underpinnings of the FCC auctions. Sociologists Kieran Healy, Dan Breslau and Juan Pardo-Guerra have investigated the ethics and politics of, respectively, organ transplants, electricity market design, and financial markets. There’s also the wealth of literature on performativity (by Donald Mckenzie, Fabian Muniesa, or Nicolas Brisset among many others). Munesia, for instance, disagrees with my shyness diagnostic. He rather see market designers as ethically disinhibited.

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Screen Shot 2018-01-07 at 8.40.36Neither is shyness to be found in the history of mechanism design published this Fall by Phil Mirowksi (who has extensively written on the history of information economics) and Eddie Nik-Kah (whose PhD was an archive-based investigation of the FCC auctions). The core of their book is a classification of the mechanism and market design literature in three trends, each reflecting a distinct approach to information. How economists view and design market is closely tied to their understanding of the role of agents’ knowledge, they explain. The first trend was the Walrasian school, architected at Cowles under the leadership of Arrow, Hurwicz, Reiter and the Marschaks (even Stiglitz and Akerlof to some extent). They considered information as a commodity to be priced and mechanism as a preferably decentralized information gathering process of the Walrasian tâtonnement kind. The Bayes-Nash school of mechanism design originates in Vickrey and Raiffa, and was spread by Bob Wilson who taught the Milgrom generation at Stanford. Information is distributed and manipulated, concealed and revealed. Designing mechanism is thus meant to help them make “no regret” decisions under asymmetric and imperfect information, and this can be achieved through auctions. The experimentalist school of design, including Smith, Plott, Rassenti and Roth is more focused on the algorithmic properties of the market. Information is not located within economic agents, but within the market.

            They offer several hypotheses to explain this transformation (changing notions of information in natural science, a changing vision of economic agents’ cognitive abilities, the growing stronghold of the Hayekian view that markets are information processors, the shifting politics of the profession). But they have a clear take on the result of this transformation: mechanism designers serve neoliberal interests, as exemplified by the FCC auction and TARP cases in which, they argued, economists worked for the commercial interests of the telecom or banking business rather than for the citizens. “Changes in economists’ attitudes toward agents’ knowledge brought forth changes in how economists viewed their own roles,” they conclude:

“Those who viewed individuals as possessing valuable knowledge about the economy generally conceived of themselves as assisting the government in collecting and utilizing it; those who viewed individuals as mistaken in their knowledge tasked themselves as assisting participants in inferring true knowledge; and finally, those who viewed people’s knowledge as irrelevant to the operation of markets tended to focus on building boutique markets.”

Ethics strikes back: economists as engineers in corporate economy

Mechanism/market designers, and economists more largely, thus believe ethical agnosticism is both desirable and attainable (see also Tim Scanlon’s remarks here). It is a belief Roth and Tirole inherited from the engineering culture they were trained into. The ‘economics as engineer’ reference is all over the place: in Roth’s address – he was the one who articulated this view in a famous 2002 article–, in Tirole’s book, in Li’s paper on ethics in mechanism design, which opens with the following quote by Sen: “it is, in fact, arguable that economics has had two rather different origins […] concerned respectively with ‘ethics’ on the one hand, and with what may be called ‘engineering’ on the other.” Li’s core question, therefore, becomes “How (if at all) should economic engineers think about ethics?”

This view is a bit light, and it might even backfire.

First, because as pointed out by Sandel to Roth here, agnosticism is itself a moral posture. Refusing to consider repugnance as a moral objection rather than a prejudice itself shows economists’ repugnance (my term) to engage with moral philosophy, Sandel argues.

Second, because the question of whose values drive the practices of market designers and economists more largely cannot be easily settled with an appeal to consensus and to “obvious ends.” That more lives should obviously be saved, that more citizens should obviously should be fed, that inequalities should obviously be fought (which wasn’t that obvious 20 years ago), that well-being should obviously be improved seems to dispense economists with further inquiry. Doesn’t everyone agree on that? Marc Fleurbay has  encouraged economists to think more explicitly about the concrete measures of wellbeing embodied in economic models and with question of envy and independent preferences. The utilitarianism that has shaped economic tools in the past century has been challenged in the past decade (see Mankiw’s comments here or Li’s paper), and that economists’ focus is currently shifting to re-emphasize wealth and income inequality as well as the role of race and gender in shaping economic outcomes in fact carries a set of collective moral judgments.

Third, because market designers’ tools have grown so powerful, there should be a reflection on what their aggregate effects on distribution, fairness and various conceptions of justice and well-being is/should be, and on who should be accountable for these effects. Economists have been held accountable for the 2008 financial collapse. What if a market they had contributed to design badly screw up? What if their powerful algorithms are used for bad purpose? When physicists, psychologists and engineers have sensed that their tools were powerful enough to manipulate people or launch nuclear wars, they have set up disciplinary ethics committees, gone into social activism and tried to educate decision makers and the public. How about economists?

Finally, the market designers’ rationale outlined above crucially depends on one key assumption: that the ends those designs are meant to fulfill reflect the common good, or a democratic consensus or at least a collective decision carried by a benevolent policy-maker. In Tirole’s book, the economist’s client is society. In Li’s paper, the market designer’s client always and only is “the policy-maker.” But there’s tons of research challenging the benevolence of policy-makers. And more fundamentally, what if the funding, institutional and incentive structure of the discipline, and of market design in particular, is shifting toward corporate interests? Historians have shown how Cold War economics has been shaped by the interests of the military, then the dominant patron. How acceptable is shaping markets on behalf of private clients such as IT firms?

If these questions are not going away, it because they are not deficiencies to be fixed through scientific progress, but choices to be made by economists, no matter how big their data and powerful their modeling tools. Unpacking the epistemological and ethical choice mechanism design make, the benefits they expect, but also the paths foregone is important.

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The making and dissemination of Milton Friedman’s 1967 AEA Presidential Address

Joint with Aurélien Goutsmedt

In a few weeks, the famous presidential address in which Milton Friedman is remembered to have introduced the notion of an equilibrium rate of unemployment and opposed the use of the Phillips curve in macroeconomic policy will turn 50. It has earned more that 8,000 citations, more than Arrow, Debreu and McKenzie’s proofs of the existence of a general equilibrium combined, more than Lucas’s 1976 critique. In one of the papers to be presented at the AEA anniversary session in January, Greg Mankiw and Ricardo Reis ask “what explains the huge influence of his work,” one they interpret as “a starting point for Dynamic Stochastic General Equilibrium Models.” Neither their paper nor Olivier Blanchard’s contribution, however, unpack how Friedman’s address captured macroeconomists’ minds. This is a task historians of economics – who are altogether absent from the anniversary session – are better equipped to perform, and as it happens, some recent historical research indeed sheds light on the making and dissemination of Friedman’s address.

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The making of Friedman’s presidential address

 On a December 1967 Friday evening, in the Washington Sheraton Hall, AEA president Milton Friedman began his presidential address:

 “There is wide agreement about the major goals of economic policy high employment stable prices and rapid growth. There is less agreement that these goals are mutually compatible, or, among those who regard them as incompatible, about the terms at which they can and should be substituted for one another. There is least agreement about the role that various instruments of policy can and should play in achieving the several goals. My topic for tonight is the role of one such instrument – monetary policy,”

 the published version reads. As explained by  James Forder, Friedman had been thinking about his address for at least 6 months. In July, he had written down a first draft, entitled “Can full employment be a criterion of monetary policy?” At that time, Friedman intended to debunk the notion that there existed a tradeoff between inflation and unemployment. That “full employment […] can be and should be a specific criterion of monetary policy – that the monetary authority should be ‘easy’ when unemployment is high […] is so much taken for granted that it will be hard for you to believe that […] this belief is wrong,” he wrote. One reason for this was that there is a “natural rate of unemployment […] the level that would be ground out by the Walrasian system of general equilibrium equations,” one that is difficult to target. He then proceeded to explain why there was, in fact, no long run tradeoff between inflation and unemployment.



Phillips’s 1958 curve

 Most of the argument was conducted without explicit reference to the “Phillips Curve,” whose discussion was restricted to a couple pages. Friedman, who has, while staying at LSE in 1952, thoroughly discussed inflation and expectations with William Phillips and Phillip Cagan among others, explained that the former’s conflation of real and nominal wages, while understandable in an era of stable prices, was now becoming problematic. Indeed, as inflation pushes real wages (and unemployment) downwards, expectations adapt: “there is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. The temporary trade-off comes not from inflation per se, but from unanticipated inflation, which generally means, from a rising rate of inflation,” he concluded.

In the end, however, the address Friedman gave in December covered much more ground. The address began with a demonstration that monetary policy cannot not peg interest rates, and the section on the natural rate of unemployment was supplemented with reflections on how monetary policy should be conducted. In line with what he had advocated since 1948, Friedman suggested that monetary authorities should abide by three principles; (1) do not make monetary policy a disturbing force; (2) target magnitudes authorities can control, and (3) avoid sharp swings. These 3 principles were best combined when “adopting publicly the policy of achieving a steady rate of growth like a precise monetary total,” which became known as Friedman’s “k% rule.”

The usual interpretation of Friedman’s address is the one conveyed by Mankiw and Reis, that is, a reaction to Samuelson and Solow’s 1960 presentation of the Phillips curve as “the menu of choice between different degrees of unemployment and price stability.” Mankiw and Reis assume that this interpretation, with the qualification that the tradeoff may vary across time, was so widespread that they consider Samuelson, Solow and their disciples as the only audience Friedman meant to address. Yet, Forder and Robert Leeson, among others, provide substantial evidence that macroeconomists then already exhibited a much more subtle approach to unemployment targeting in monetary policy. The nature of expectations and the shape of expectations was widely discussed in the US and UK alike. Samuelson, Phelps, Cagan, Hicks or Phillips had repeatedly and publicly explained, in academic publications as well as newspapers, that the idea of a tradeoff should be seriously qualified in theory, and should in any case not guide monetary policy in the late 1960s. Friedman himself had already devoted a whole 1966 Newsweek chronicle to explain why “there will be an inflationary recession.”

This intellectual environment, as well as the changing focus of the final draft of his address led Forder to conclude that “there is no evidence that Friedman wished to emphasize any argument about expectations or the Phillips curve and […] that he would not have thought such as argument novel, surprising or interesting.” We disagree. For a presidential address was a forum Friedman would certainly not have overlooked, especially at a moment both academic and policy discussion on monetary policy were gaining momentum. The day after the address, John Hopkins’s William Poole presented a paper on “Monetary Policy in an Uncertain World.” 6 months afterwards, the Boston Fed held a conference titled “Controlling Monetary Aggregates.” Meant as the first of a “proposed series covering a wide range of financial and monetary problems,” its purpose was to foster exchanges on “one of the most pressing of current policy issues – the role of money in economic activity.” It brought together Samuelson, David Meiselman, James Tobin, Alan Meltzer, John Kareken on “the Federal reserve’s Modus Operandi,” James Duesenberry on “Tactics and Targets of Monetary Policy,” and Board member Sherman Maisel on “Controlling Monetary aggregates.” Opening the conference, Samuelson proposed that “the central issue that is debated these days in connection with macro-economics is the doctrine of monetarism,” citing, not Friedman’s recent address, but his 1963 Monetary History with Anna Schwartz. That same year, the Journal of Money, Credit and Banking was established, followed by the Journal of Monetary Economics in 1973. Economists had assumed a larger role at the Fed since 1965, when Ando and Modigliani were entrusted with the development of a large macroeconometric model, and the Green and Blue books were established.


Reflecting on “The Role of Monetary Policy” at such a catalyzing moment, Friedman thus tried to engage variegated audiences. This resulted in an address that was theoretical, historical and policy-oriented at the same time, waving together several lines of arguments with the purpose of proposing a convincing package. What makes tracking its dissemination and understanding its influence tricky is precisely that, faced with evolving contexts and scientific debates, those different audiences retained, emphasized and naturalized different bits of the package.

Friedman’s address in the context of the 1970s

Academic dissemination

GordonFriedman’s most straightforward audience was academic macroeconomists. The canonical history (echoed by Mankiw and Reis) is that Friedman’s address paved the way for the decline of Keynesianism and the rise of New Classical economics, not to say DSGE. But some ongoing historical research carried by one of us (Aurélien) in collaboration with Goulven Rubin suggests that it was Keynesian economists –rather than New Classical ones –  who were instrumental in spreading the natural rate of unemployment (NRU) hypothesis. A key protagonist was Robert Gordon, who had just completed his dissertation on Problems in the Measurement of Real Investment in the U.S. Private Economy under Solow at MIT when Friedman gave his address. He initially rejected the NRU hypothesis, only to later nest it into what would become the core textbook New Keynesian model of the 1970s.

What changed his mind was not the theory. It was the empirics: in the Phillips curve with wage inflation driven by inflation expectations and unemployment he and Solow separately estimated in 1970, the parameter on inflation expectation was extremely small, which he believed dismissed Friedman’s accelerationist argument. Gordon therefore found the impact of the change in the age-sex labor force composition on the structural rate of unemployment, highlighted by George Perry, a better explanation for the growing inflation of the late 1960s. By 1973, the parameter had soared enough for the Keynesian economist to change his mind. He imported the NRU in a non-clearing model with imperfect competition and wage rigidities, which allowed for non-voluntary unemployment, and, most important, preserved the rationale for active monetary stabilization policies.

Gordon textbookThe 1978 textbook in which Gordon introduced his AS-AD framework exhibited a whole chapter on the Phillips curve, in which he explicitly relied on Friedman’s address to explain why the curve was assumed to be vertical on the long-run. Later editions kept referring to the NRU and the long run verticality, yet rather explained by imperfect competition and wage rigidity mechanisms. 1978 was also the year Stanley Fischer and Rudiger Dornbusch’s famed Macroeconomics (the blueprint for subsequent macro textbooks) came out. The pair alluded to a possible long run trade-off, but like Gordon, settled on a vertical long-run Phillips curve. Unlike Gordon though, they immediately endorsed “Keynesian” foundations.

At the same time, New Classical economists were going down a slightly different, yet  famous route. They labored to ‘improve’ Friedman’s claim by making it consistent with rational expectations, pointing out the theoretical consequence of this new class of models for monetary policy. In 1972, Robert Lucas made it clear that Friedman’s K-% rule is optimal in his rational expectation model with information asymmetry, and Thomas Sargent and Neil Wallace soon confirmed that “an X percent growth rule for the money supply is optimal in this model, from the point of view of minimizing the variance of real output”. Lucas’s 1976 critique additionally underscored the gap between the content of Keynesian structural macroeconometrics models of the kind the Fed was using and Friedman’s argument.

Policy Impact

Friedman Burns

Friedman and Burns

Several economists in the Washington Sheraton Hall, including Friedman himself, were soon tasked with assessing the relevance of the address for policy. Chairing the 1968 AEA session was Arthur Burns, the NBER business cycle researcher and Rutgers economist who convinced young Friedman to pursue an economic career. He walked out of the room convinced by Friedman’s view that inflation was driven by adaptive expectations. In a December 1969 confirmation hearing to the Congress, he declared: “I think the Phillips curve is a generalization, a very rough generalization, for short-run movements, and I think even for he short run the Phillips curve can be changed.” A few weeks afterwards, he was nominated federal board chairman. Edward Nelson documents how, to Friedman’s great dismay, Burns’ shifting views quickly led him to endorse Nixon’s proposed wage-price controls, implemented in August 1971. In reaction, monetarists Karl Brunner and Allan Meltzer founded the Shadow Open Market Committee in 1973. As Meltzer later explained, “Karl Brunner and I decided to organize a group to criticize the decision and point out the error in the claim that controls could stop inflation.”

Capture d_écran 2017-11-23 à 16.09.45While the price and wage controls were removed in 1974, the CPI index suddenly soared by 12% (following the October 1973 oil shock), at a moment unemployment was on the way to reach 9% in 1975. The double plague, which British politician Ian MacLeod had dubbed “stagflation” in 1965, deeply divided the country (as well as economists, as shown by the famous 1971 Time cover). What should be addressed first, unemployment or inflation? In 1975, Senator Proxmire, chairman of the Committee on Banking of the Senate, submitted a resolution that would force the Fed into coordinating with the Congress, taking into account production increase & “maximum employment” alongside stable prices in its goals, and disclosing “numerical ranges” of monetary growth. Friedman was called to testify, and the resulting Senate report strikingly echoed the “no long-term tradeoff” claim of the 1968 address:

“there appears to be no long-run trade-off. Therefore, there is no need to choose between unemployment and inflation. Rather, maximum employment and stable prices are compatible goals as a long-run matter provided stability is achieved in the growth of the monetary and credit aggregates commensurate with the growth of the economy’s productive potential.”

 If there was no long-term trade-off, then explicitly pursuing maximum employment wasn’t necessary. Price-stability would bring about employment, and Friedman’s policy program would be vindicated.

Capture d’écran 2017-11-28 à 01.03.04.pngThe resulting Concurrent Resolution 133 however did not prevent the Fed staff from undermining
congressional attempts at controlling monetary policy: their strategy was to present a confusing set of five different measure of monetary and credit aggregates. Meanwhile, other assaults on the Fed mandate were gaining strength. Employment activists, in particular those who, in the wake of Coretta Scott King, were pointing out that black workers were especially hit by mounting unemployment, were organizing protests after protests. In 1973, black California congressman Augustus Hawkins convened a UCLA symposium to draw the contours of “a full employment policy for America.” Participants were asked to discussed early drafts of a bill jointly submitted by Hawkins and Minnesota senator Hubert Humphrey, member of the Joint Economic Committee. Passed in 1978 as the “Full Employment ad Balanced Growth Act,” it enacted Congressional oversight of monetary policy. It required that the Fed formally report twice a year to Congress, and establish and follow a monetary policy rule that would term both inflation and unemployment. The consequences of the bill were hotly debated as soon as 1976 at the AEA, in the Journal of Monetary Economics, or in Challenge. The heat the bill generated contrasted with its effect on monetary policy, which, again, was minimal. The following year, Paul Volcker became Fed chairman, and in October, he abruptly announced that the Fed would set binding rules for reserve aggregate creation and let interests rates drift away if necessary.



A convoluted academia-policy pipeline?

The 1967 address thus initially circulated both in the academia and in public policy circles, with effects that Friedman did not always welcome. The natural rate of unemployment was adopted by some Keynesian economists because it seemed empirically robust, or at least useful, yet it was nested in models supporting active discretionary monetary policy. Monetary policy rules became gradually embedded in the legal framework presiding over the conduct of monetary policy, but this was with the purpose of reorienting the Fed toward the pursuit of maximum unemployment. Paradoxically, New Classical research, usually considered the key pipeline whereby the address was disseminated within and beyond economics, seemed only loosely connected to policy.

Capture d_écran 2017-11-21 à 00.45.26 Indeed, one has to read closely the seminal 1970s papers usually associated with the “New Classical Revolution” to find mentions of the troubled policy context. The framing of Finn Kydland and Edward Prescott’s “rule vs discretion” paper, in which the use of rational expectations raised credibility and time consistency issues, was altogether theoretical. It closed with the cryptic statement that “there could be institutional arrangements which make it a difficult and time-consuming process to change the policy rules in all but emergency situations. One possible institutional arrangement is for Congress to legislate monetary and fiscal policy rules and these rules become effective only after a 2-year delay. This would make discretionary policy all but impossible.” Likewise, Sargent and Wallace opened their “unpleasant monetarist arithmetic” 1981 paper with a discussion of Friedman’s presidential address, but quickly added that the paper was intended as a theoretical demonstration of the impossibility to control inflation. None of the institutional controversies were mentioned, but the author ended an earlier draft with this sentence: “we wrote this paper, not because we think that our assumption about the game played by the monetary and fiscal authorities describes the way monetary and fiscal policies should be coordinated, but out of a fear that it may describe the way the game is now being played.”

 Lucas was the only one to write a paper that explicitly discussed Friedman’s monetary program, and why it had ‘so limited an impact.” Presented at a 1978 NBER conference, he was asked to discuss “what policy should have been in 1973-1975,” but declined. The question was “ill-posed,” he wrote. The source of the 1970s economic mess, he continued, was to be found in the failure to build appropriate monetary and fiscal institutions, which he proceeded to discuss extensively. Mentioning the “tax revolt,” he praised the California Proposition 13 designed to limit property taxes. He then defended Resolution 133’s requirement that the Fed announces monetary growth targets in advance, hoping for a more binding extension.

 Capture d’écran 2017-11-28 à 00.49.03.pngThis collective distance contrasts with both Monetarist and Keynesian economists’ willingness to discuss existing US monetary institutional arrangements in academic writings and in the press alike. It is especially puzzling given that those economists were working within the eye of the (institutional) storm. Sargent, Wallace and Prescott were then in-house economists at the Minneapolis Fed, and the Sargent-Wallace paper mentioned above was published by the bank’s Quarterly Review. Though none of them seemed primarily concerned with policy debates, their intellectual influence was, on the other hand, evident from the Minneapolis board’s statements. Chairman Mark Willes, a former Columbia PhD student in monetary economics, was eager to preach the New Classical Gospel at the FOMC. “There is no tradeoff between inflation and unemployment,” he hammered in a 1977 lecture at the University of Minnesota. He later added that:

“it is of course primarily to the academic community and other research groups that we look for …if we are to have effective economic policy you must have a coherent theory of how the economy works…Friedman doesn’t seem completely convincing either. Perhaps the rational expectationists here …. Have the ultimate answer. At this point only Heaven, Neil Wallace, and Tom Sargent know for sure.”

 If debates were raging at the Minneapolis Fed as well as within the university of Minnesota’s boundaries, it was because the policies designed to reach maximum unemployment were designed by the Minnesota senator, Humphrey, himself advised by a famous colleague of Sargent and Wallace, Keynesian economist, former CEA chair and architect of the 1964 Kennedy tax cut Walter Heller.


The independent life of “Friedman 1968” in the 1980s and 1990s?

Friedman’s presidential address seem to have experienced a renewed citation pattern in the 1980s and 1990s, but this is yet an hypothesis that needs to be documented. Our bet is that macroeconomists came to re-read the address in the wake of the deterioration of economic conditions they associated with Volcker’s targeting. After the monetary targeting experience was discontinued in 1982, macroeconomists increasingly researched actual institutional arrangements and policy instruments. We believe that this shift is best reflected in John Taylor’s writings. Leeson recounts how, a senior student at the time Friedman pronounced his presidential address, Taylor’s research focused on the theory of monetary policy. His two stints as CEA economist got him obsessed with how to make monetary policy more tractable. He increasingly leaned toward including monetary “practices in the analysis, a process which culminated in the formulation of the Taylor rule in 1993 (a paper more cited that Friedman’s presidential address). Shifting academic interest, which can be interpreted as more in line with the spirit, if not the content, of Friedman’s address, were also seen in 1980s discussions of nominal income targets. Here, academic debates preceded policy reforms, with the Fed’s dual inflation/employment mandate being only appeared in a FOMC statement under Ben Bernanke in 2010, in the wake of the financial crisis (see this thread by Claudia Sahm). This late recognition may, again, provide a new readership to the 1968 AEA presidential address, an old lady whose charms appear timeless.


Friedman 1968 title

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Les économistes sont-ils sexistes?

Un pavé dans la mare des économistes

Sexisme: le mot est sur les bouches de tous les économistes américains depuis quelques semaines. Depuis que, le 8 Août, Justin Wolfers a attiré l’attention sur le mémoire de master rédigé par Alice Wu, étudiante à Berkeley (l’article de Wolfers est traduit ici par Martin Anota). Celle-ci a effectué du text-mining sur les millions de posts de l’Economic Job Market Rumors, un forum anonyme initialement conçu pour partager des informations sur le recrutement des économistes, et devenu depuis un lieu contesté, une machine a café virtuelle où toutes sortes de rumeurs et conseils techniques sont échangés, et où les principaux écrits des économistes Américains sont discutés. Grâce à des technique de machine learning, elle a identifié les mots qui predisent le mieux si chaque post traite d’un homme ou d’une femme.. Pour les premiers, ces mots sont en général associés à leur travail (même si on note la présente de termes tels qu’ « homosexuel») Pour ces dernières, la liste fait froid dans le dos, et une traduction n’est pas nécessaire :

hotter, lesbian, bb (internet speak for “baby”), sexism, tits, anal, marrying, feminazi, slut, hot, vagina, boobs, pregnant, pregnancy, cute, marry, levy, gorgeous, horny, crush, beautiful, secretary, dump, shopping, date, nonprofit, intentions, sexy, dated and prostitute.

 Les réactions, sur twitter, puis sur divers blogs d’économistes ne se sont pas fait attendre.

Une partie des discussions s’est focalisée sur ce qui justifie l’utilité d’un tel forum avant sa colonisation par des trolls, et sur le caractère néamoins minoritaire de telles dérives : l’asymétrie d’information, le caractère très hiérarchique de la discipline, l’anonymat : la totalité du forum était-elle bonne à jeter ? Fallait-il modérer, fermer, remplacer ? Même le nouveau président de l’American Economic Association, Olivier Blanchard, s’est exprimé sur le sujet. Mais parce que certains ont opposé qu’un tel forum anonyme ne saurait constituer un échantillon représentatif, les échanges se sont élargis : le sexisme ordinaire de la profession toute entière a été pointé du doigt, la dureté des séminaire, les remarques en entretien de recrutement, le manque de crédit accordé aux femmes économistes dans la presse, etc.

La faible féminisation de l’économie : un phénomène quantifié difficile à expliquer

Les conséquences de ce sexisme ont ensuite été abordées, en particulier la faible représentation des femmes en économie, et une tendance à la détérioration depuis les années 2000.   Les femmes représentent aujourd’hui aux Etats-Unis 31% des doctorants en économie, 23% des enseignants-chercheurs en tenure-track, 30% des professeurs assistants et 15% des professeurs C’est certes plus qu’en 1972 : les femmes représentaient alors 11% des doctorants, 6% des enseignants-chercheurs dont 2% de professeurs dans les 42 principaux départements du pays. Mais c’est moins que le nombre de femmes travaillant à des postes de direction dans la Silicon Valley (pourtant l’objet de nombreux scandales) ou qui votent dans les jurys décernant les oscars. Ces niveaux de féminisation sont très inférieurs aux autres sciences sociales, et classent l’économie parmi les disciplines les plus inégalitaires, avec les sciences de l’ingénieur et l’informatique. Surtout, le différentiel de salaire entre hommes et femmes assistant et full professor a explosé depuis 1995 (le salaire d’une professeure est passé de 95% de celui d’un homologue masculin à 75% aujourd’hui). Le phénomène est atypique. La source de ce déséquilibre l’est aussi. Alors que la majorité des sciences souffre d’un leaking pipeline, le nombre de femmes diminuant au fur et à mesure qu’elles passent du premier et second au troisième cycle puis évoluent dans la hiérarchie académique, l’économie peine aussi à attirer des étudiantes de premier cycle. Aux Etats-Unis, celles-ci constituent moins de 35% des étudiants de premier cycle ; l’économie est ainsi la seule discipline ou la proportion de docteures en économie (PhD) est supérieure au nombre d’étudiantes titulaires d’une licence (BA). La proportion de doctorantes a également chuté de 6 points depuis les années 1990.

La situation n’est pas meilleure en Grande Bretagne, où la proportion des femmes en premier cycle d’économie, inférieure à 30%, accuse elle aussi une baisse ces dernières années. Cette proportion semble fortement corrélée à celle du taux d’élèves étudiant l’économie dans le secondaire. En revanche, le pourcentage de femmes économistes au gouvernement est en constante augmentation. Seulement 19% des économistes enregistrés sur RePec – une base de données mondiale de plus de 50 000 économistes publiant dont on ne connaît pas la représentativité – sont des femmes. Soledad Zignago documente une forte différence entre les pays (de 4% à 50% de femmes) et entre les champs. Elle montre que les femmes sont encore moins représentées dans les « top 100 » que le site publie régulièrement. Il n’y a qu’une femme, Carmen Reinhart, dans les 100 économistes les plus cités aux Etats-Unis, 5 si on se limite aux 10 dernières années.

Cette faible féminisation n’est pas nécessairement liée au sexisme, qui, quoique rarement défini dans ces débats, semble perçu comme un facteur résiduel. Considéré comme une croyance infondée sur l’infériorité présumée d’un groupe d’humains, c’est-à-dire comme un biais, il constituerait la variable explicative vers laquelle se tourner une fois qu’on a pris en compte d’éventuelles différences d’aptitudes mathématiques, de préférences et d’arbitrage carrière/famille, de socialisation ou de productivité. Car la plupart des facteurs ci-dessous sont soit inexistants (les différences d’aptitude mathématiques), soit insuffisants pour expliquer la totalité des les inégalités de promotion et de salaire entre économistes hommes et femmes. Mais ce qui peut causer ces inégalités résiduelles appelées discrimination (et donc comment celles-ci peuvent être effectivement combattues) n’est pas clair pour autant. Sont invoqués des problèmes d’information imparfaite, de frictions, mais aussi de norme et de culture sexiste suffisamment importants pour altérer l’évaluation des travaux des femmes économistes et leur trajectoire professionnelle. Erin Hengel a par exemple montré que les femmes sont soumises à des exigences de lisibilité plus fortes pour publier dans la prestigieuse revue Econometrica, et que le processus de révision de leurs articles prend en moyenne six mois de plus que celui des hommes. Heather Sarsons a étudié les décisions de tenure (octroi d’un poste de professeur des université) effectuées par les comités de promotion américains, et a constaté que les femmes sont pénalisées quand elle co-signent leurs articles de recherche. Les hommes reçoivent une promotion 75% du temps, qu’ils écrivent seuls ou en équipe. En revanche, seuls les femmes publiant des articles en solo ont un taux de promotion équivalent. Pour celles qui choisissent de coécrire, ce taux chute à 50%

L’apport de l’analyse historique

            Une remise en perspective historique du statut des femmes économistes dans les pays anglo-saxons permet de formuler des hypothèses supplémentaires. Car les femmes ne sont pas absentes de l’histoire de l’économie. Elles rédigent jusqu’à 20% des thèses validées par l’American Economic Association dans les années 30, mais ce chiffre tombe à 4,5% en 1950. En cause, des règles universitaires qui interdisent au femmes de suivre des études doctorales dans nombre de département d’économie, la difficulté d’y trouver un poste, et les opportunités qui s’ouvrent à la même période dans les départements de travail social, d’économie domestique, et dans les agences d’un gouvernement en pleine révolution statistique. Quoiqu’effacées de l’histoire officielle, elles prennent une large part au développement de l’économie empirique. Le premier économiste à programmer un logiciel de régression se nomme Lucy Slater ; l’expert en simulation des années 1950, s’appelle Irma Adelman ; et la première expérimentation contrôlée sur l’impôt négatif est réalisé par Heather Ross. Ces évolutions ne sont pas sans rappeler celles, encore plus tranchées, qu’ont connu les sciences de l’informatique. Les historiens de l’informatique ont montré que la programmation était, après la Second Guerre mondiale, avant tout une affaire de femmes, et que celles-ci furent poussées à quitter ce champ au fur et à mesure que leur spécialité devenait plus scientifique, plus prestigieuse, et plus rentable. Les tests d’aptitude mis en place participèrent à la création d’une identité genrée – le bon programmeur est asocial, systématique, geek, etc. Comprendre comment le sort des femmes économistes est lié au développement de l’économie, et de l’économie appliquée en particulier, nécessite donc d’analyser, outre les inégalités de sexe, les identités de genre, mais aussi les hiérarchies entre sous-domaines d’une même discipline et la trajectoire de cette discipline dans la hiérarchie symbolique du champ scientifique.

            C’est enfin sur fond de troubles sociaux et de controverses théoriques et empiriques que les économistes américains commencèrent à s’intéresser aux problèmes de représentation féminine dans leurs rangs. Car la spécificité des économistes est que la discrimination n’est pas d’abord un problème expérimenté, mais un objet de travail. Cela crée un effet miroir intéressant à étudier. Le débats sur l’offre de travail des femmes du début des années 1970 opposaient les tenants d’une approche plutôt béckerienne  ( explication basée sur les préférences des choix de spécialisation effectués au sein d’un ménage) aux tenantes d’approches plus empiriques, marxistes ou féministes qui mettaient l’accent sur la ségrégation du marché du travail et soulignaient l’importance d’en étudier les institutions. Ce furent ces chercheuses qui dénoncèrent le plafond de verre et des difficultés rencontrées par les universitaires, organisèrent un caucus et obtinrent le vote d’une série de résolutions. Le résultat fut la création d’un marché de l’emploi (le fameux Job Market des économistes américains) et d’un Committee on the Status of Women in the Economic Profession (CSWEP) chargé d’une étude statistique annuelle. Cette démarche fut appuyée par le président de l’époque, Kenneth Arrow, qui, comme le montrent les travaux de Cleo Chassonery-Zaïgouche, travaillait lui aussi à une alternative à la théorie béckerienne : une théorie de la discrimination statistique mettant l’accent sur l’information imparfaite et les coûts de recrutement. Les archives de l’AEA montrent que dans l’esprit de tous ces protagonistes, les modèles utilisés pour comprendre les phénomènes de discrimination ne sont pas séparés des discussions sur le statut des femmes économistes.

Et les femmes économistes en France ?

En France, en revanche, le silence semble assourdissant. Il ne s’agit même pas de se demander si les économistes sont sexistes, mais en premier lieu de se demander quelle est la place des femmes dans la science économique, et si elles subissent des discriminations. Si la question n’est même pas posée, c’est parce qu’il n’existe quasiment aucune donnée sur ce sujet. Car si les causes et conséquences de la faible féminisation de la discipline sont aujourd’hui discutées aux Etats-Unis et en Grande-Bretagne, c’est bien grâce aux efforts d’accumulation des données réalisées par le CSWEP, la Royal Economic Society, où plus récemment, l’association des femmes en finance – le champ le moins féminisé de l’économie. Et de telles données n’existent tout simplement pas en France.

Les chiffres agrégés montrent que si plus de la moitié des étudiants de premier cycle, toutes disciplines confondues, sont des femmes, celles-ci ne forment plus que 40% des maitre de conférence et 20% des professeurs des Universités. Ce constat, complété par des recherches sur les concours de l’enseignement supérieur (qui révèlent une discrimination positive), sur les promotions universitaires, et sur la représentativité des femmes en science (voir cette synthèse de Thomas Breda) a donné lieu à un cycle de conférences gouvernementales et un plan d’action sur l’égalité hommes-femmes dans l’enseignement supérieur et la recherche. Par ailleurs, de nombreux économistes travaillent, en France, à une meilleure compréhension des mécanismes discriminatoires, comme en témoigne ce rapport du conseil d’analyse économique, ce numéro spécial de Regards Croisés sur l’Economie, le succès du programme PRESAGE commun à SciencesPo et l’OFCE, visant à coordonner les recherches et l’enseignement autour des problématiques de genre, ou cet ouvrage rédigé par Jézabel Couppey-Soubeyran et Marianne Rubinstein pour intéresser les femmes au raisonnement économique.

Ces programmes de recherche utilisent des méthodologies différentes, discutées par exemple dans cours dispensé par Hélène Périvier. Mais ces outils ne sont pas appliqués à l’étude du statut des femmes économistes. Celles-ci représentent 26% des économistes français enregistrés sur RePec, et 14 femmes font partie du top-100. Une étude menée par Clément Bosquet, Pierre-Philippe Combes et Cécilia Garcia-Penalosa a partir des données du concours de l’agrégation du supérieur en économie pour les postes de professeurs des universités (PU) et celles du concours de directeur de recherche CNRS (DR) montre que les femmes économistes ont une probabilité d’occuper un poste de PU inférieure de 22 points aux hommes (40 contre 18%), et une probabilité d’occuper un poste de DR CNRS inférieure de 27 points (45 contre 18). La probabilité de réussir le concours est sensiblement la même, la différence se situant au niveau des candidatures : la propension des femmes à postuler est inférieure de 37% à celle des hommes pour l’agrégation et de 45% pour le concours DR CNRS. 86% de ce différentiel est attribuable au sexe des candidats, toutes choses égales par ailleurs. Là encore, il est difficile de faire plus que d’émettre des hypothèses économiques, sociologiques ou psychologiques pour expliquer les sources de ce différentiel.

A ma connaissance (limitée), c’est a peu près tout. Aucune données n’est disponible sur les sites de l’AFSE et de l’AFEP, les deux principales associations d’économistes universitaires. Si la question n’est pas posée, c’est peut-être en raison de différences de tradition statistiques et de réponses institutionnelles aux phénomènes de discrimination entre la France et les pays Anglo-Saxons (cf le débat sur les statistiques ethniques). C’est peut-être aussi que la culture du monde universitaire français rend la question informulable, au risque d’être immédiatement étiqueté comme « la femme chiante qui bosse sur des trucs de femme » (risque dont j’ai cruellement conscience en écrivant ce post). Pourtant, la question de la représentation (statistique et symbolique) des femmes économistes en France est un sujet qui réclame la constitution de bases de données, une créativité théorique empruntant à d’autres sciences humaines, des défis empiriques, et qui ouvre, in fine, vers des possibilités d’amélioration d’allocation des ressources intellectuelles vers de nouvelles question de recherches et de nouvelles techniques : de quoi passionner tous les économistes.

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On sexism in economics

A recent paper by Alice Wu, publicized by Justin Wolfers is creating a stir on the econ-twittosphere. The paper uses machine learning assisted text mining and topic modeling to document the astonishing sexism on the Economic Job Market Rumors US student anonymous forum.

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Excerpt from Wu’s paper


In the last 24 hours, the paper has generated several layers of discussions online. Doubts about the representativity of EJMR users have been countered with broader denunciation of sexism within economics, attempts at better characterizing it (from open downgrading and irrelevant remarks about women economists’ bodies to subconscious biases and norms), calls to change this “sexist culture,” and suggestions on how to end the “EJMR cesspool” and how to fight sexism in economics more largely. There has however been less attempts to understand the roots and mechanisms of a sexism that seems comparatively higher than in other disciplines, the reasons why it hasn’t reach the top of economists’ agenda earlier, and its effects on women economists’ career and on the intellectual dynamics of the field. The existence of assholes might be impossible to explain, but why they are more numerous or louder than in most disciplines from physics to psychology (if so), and why they are given a free pass is definitely something to chew on. As for consequences, pervasive sexism has been tied to the low feminization of the  profession, which, as has been largely documented, is only matched by computer science and engineering, persisting wage gaps, full professorship glass ceilings and “small pipeline” issues (the problem is not female econ students’ drop off rate but their unwillingness to choose to purse econ undergrad studies in the first place). As for causes, Noah Smith has linked the persistence of EJMR and sexist behavior in the profession to a shift in economists’ political beliefs toward the left (and more gender-friendly attitudes), one that would generate reactions from a fringe of conservative angry men.

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Economics’s small pipeline (by Cecci, Ginther, Kahn and Williams)

One idea I’m toying with (without being convinced yet) is that the mix of sexism, discrimination and gender inequality that econ-twitter is all about now is tied to the tools and models economists use to study inequality and discrimination more generally. Let me be clear. I am not in any way implying that economists’ sexism derive from the use of some kind of “neoclassical” models or that economic modeling begets sexism. I’m simply suggesting that if your job is to study labor discrimination, wage inequality or female labor supply, how you believe these issues play out in your own profession and what should be done to fix it probably shapes, and is shaped by, the models you choose to deploy as an economist. This is what happened when economists initially turned their attention to sexism and discrimination in their community in the 1970s. The mounting protests against the glass ceiling and the pressures and hurdles female economists were experiencing were brought forward by women working on female labor supply and domestic labor. And archival record shows that they explicitly related theoretical and empirical controversies to social fights, as did those male economists who supported them. The “Domestic Labor debate” pitched proponents of Beckerian rational choice explanation for household specialization against the likes of Marianne Ferber, Barbara Bergmann, Francine Blau, Barbara Reagan or Myra Strober who used a whole range of models ranging for neoclassical to feminist and Marxist to emphasize how distorted and segregated the labor market and to promote a historical approach to labor institutions. As recently highlighted by Cleo Chassonery Zaïgouche, then AEA president Kenneth Arrow was forging yet another weapon against Becker’s taste-based model. His theory of statistical discrimination emphasized imperfect information and recruitment costs.


Capture d_écran 2017-03-31 à 03.26.44As I have explained here, the mix of theoretical and social debate resulted in the establishment of the Committee on the Status of Women in the Economic Profession (CSWEP) in 1972. In the CSWEP inaugural report, published in the AEA the following year, Kenneth Boulding introduced gender imbalance in economics as a economic problem in which the AEA was tasked with solving a “betterment production function” : “what are the inputs which produce this output, and particularly, what are those inputs that can be most easily expanded and that have the highest marginal productivity?,” he wrote. And therein might lie the explanation for diverse reactions to gender issues in economics. If you see the small rate female full professor as a result of their choices or productivity, then there is not much to be done. In a more sneaky way, if you don’t endorse Becker’s household economics but routinely write down models in which economic agents’ wages result from their choices and some brand of human capital, you might be gradually drawn to explain the status of your female colleague that way. But if you see an information asymmetry issue (and current debates suggest that EJMR was allowed to thrive and go off rail because of the otherwise privy job market information it provides), then the solution is to build another information structure (another website, new moderating rules, etc). Back in the 1970s, an annual survey on the status of women in economics was established, and an “open market,” the JOE, was set up. So maybe fighting sexism is economics is a market design issue? Or if that’s an expectation issue, try to change women’s expectations.  And if that’s a culture issue, then…change the AEA logo ?

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 This sketch, unearthed by John Singleton, is Kenneth Boulding’s 1975 proposal for a new AEA logo. Explanation reads: “Adam and Eve both pick the apple of the Tree of Knowledge which leads to mutual labor and economic product after expulsion from eden. The arms form supply and demand curves.” 

That the profession is ripe for a serious discussion of Wu’s article and the changes she advocates in her conclusion may reflect not only political shifts but also changes in economists’ approach to inequality, discrimination, norms, and culture. And raising the status of women in the profession might in turn improve  the visibility of women economists’ work, and shift the political leaning of the profession, as well as field and method hierarchies further. Enough to scare some.

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Why I tweet

Tweeting from scratch only requires a computer and an hour time. Set up an account, choose a name for your handle, read a few “how too” guides to get a sense of what the twitter etiquette is, how to use a #hashtag, how to ask a question and pursue a conversation, and you’re ready to put your thoughts, links and pictures online, and to read those by any other user. Those by the people you follow will appear on your screen in the order they are posted, creating a timeline. You can like a tweet (which is akin to bookmarking), retweet to make it visible to those who follow you, comment, reply and enter a discussion. You can see whatever a nations president, a journalist, a central banker, a blogger, a Nobel Prize recipient, a rockstar economist or a registered colleague sees fit to package in 140 characters and put online. You can also engage with any of them.

Capture d_écran 2017-07-25 à 02.58.11This is where most historians of economics might be tempted to quit reading. For what kind of scholarly idea can be expressed and circulated in 140 characters? Are years of research, construction of objects and subtle methodological distinctions reducible to a 15 words sentence? This social media thing  is total nonsense! The purpose of this post, therefore, is to convince the reader to rethink her resistance to using social network for scholarly purpose, by outlining the various functions twitter can serve in historical research. It is not intended as a “how to” guide or a set of warnings. First, because tutorials specifically designed for historians and discussions of twitter’s shortcomings – from trolling to abuse, limited impact, ephemeral attention, dopamine surge and fleeting illusion of mastery – already abound on the web. Second, because each platform aimed at creating and sharing content and networking has its own set of interaction rules and technological constraints. These rules are constantly transformed, and several platforms, including twitter, might not survive 2017. The present discussion therefore seek to emancipate from the institutional and technical constraints associated with tweeting to focus on the new practices and questions it generates, and their significance for historians of economics.

Capture d_écran 2017-07-25 à 03.14.25For tweeting is not merely about compressing an idea in 140 characters and sending it in the wild, though that exercise is interesting it itself. It allows the dissemination of working papers and professional news, and fosters the development of new objects such as a thread or a tweetstorm, a series of tweets which, taken together, introduce a more elaborated opinion, a narrative, a set of papers or a list of references. Writing a tweetstorm is an interesting writing exercise for a historian. It has to be consistent and organized enough so that the reader will want to read the next one to the bottom of the thread. 140 characters do not allow subtle logical articulation and transitions, so that overall consistency requires shaping a kind of flow, a simple yet compelling narrative arc, possibly a chronological one. Doing so forces the writer to weed her story until its spinal chord is excavated and strengthened.

 The most straightforward benefit of twitter is to improve scholarly communication, but this plays out differently depending on the state of each discipline. In history of economics specifically, it raises questions of objects and audiences. Less known, but equally promising, is how twitter can serve as a tool for researching and writing the history of economics. 

Communicating the history of economics

Our first readers are our colleagues. The gradual marginalization of the history of economics since the 1970s has made places where several historians can interact and trade ideas scarce. Our community is scattered, with members often working alone in an intellectual and institutional environment that is at best curious, sometimes hostile, often indifferent. Restoring a sense of community is momentarily achieved through disciplinary conferences, and such was the purpose for the establishment of the SHOE list in 1995 and of the young scholars’ Playground blog in 2007. As Adam Kotsko has noted in the early days of social media, blogging is “especially great for academics who would otherwise be quite isolated from other academics with similar interests.” I believe that twitter offers a less costly, more flexible and more permanent infrastructure to support an online community. It allows researchers from various locations, disciplinary and institutional background to share news, call for papers, working papers, Capture d_écran 2017-07-25 à 03.15.28publications, PhD defenses, hires. The History of Economic Society and the European Society for the History of Economic Thought have thus recently pooled together to set up a twitter account. It also allows conferences to be live-tweeted: if a paper is publicly available online, or if panelists feel confortable with social media, scholars in the audience tweet major ideas and most significant questions. This helps those who could not attend keep track of the reception of new research and of ongoing debates.

Twitter thus works as an online “faculty lounge.” Since exchanges are (1) public and (2) searchable, these virtual lounges are less closed and exclusive than physical ones. They escape disciplinary boundaries, which is especially fit for a discipline whose survival is predicated on the reaffirmation of an identity, yet not a disciplinary one. What unites the twitter community is its objects, not its institutional structure. It does not matter whether you come from an economics, history, history of science, sociology or anthropology Capture d_écran 2017-07-25 à 02.54.04department, or else. The online structure of scholarly twitter also eases bibliographic search and comparative study. When I work on how economics is classified, why the American Economic Association has set up a prize system after World War II, or on changing notions of what makes “good data,” I systematically wonder what the situation is in other sciences. Querying major history of science publication does not always yield a satisfactory outcome. Twitter allows to jump from account to account, from research program to research program, and to identify ongoing work on physics classification or on the social history of the Fields medal. It also eases the identification of those artifacts which stand in between big fundamental texts and archival traces of the daily lives of scientists, which happened to shape a generation’s approach without being set in stone: an American Economic Association presidential address that was not so much cited but influenced a generation of graduate students, how the Lucas critique was weaponized, which textbooks were in use during the 1980s, or some exchange in which the naming of a new generation of macroeconomic models generated meaningful disagreement.

Other audiences can be reached through twitter: students, journalists, citizens, and of course, economists. Here, the platform offers a new opportunity to solve a longstanding tension. On the one hand, historians of economics complain that their scholarship is largely ignored by economists, but on the other, dissemination is usually held as a separate, secondary and often lower kind of activity compared with research. The problem we face is not one of contempt of disinterest anymore. It’s one of invisibility. The 2017 economics graduate student or assistant professor does not hold history of economics in low esteem, she does not even know such scholarship exists, even less where to find it. Yet, the thirst for history has not disappeared. Students want to know why and how they discipline has become mathematized, how to define a model, or who this “Haavelmo” is. Twitter can be a substitute to those disappeared history courses, it allows economists’ attention to be hacked, hooked, and channeled to a piece of history that could become significant for her. “Social media platforms have disintermediated communication between scholars and publics,” Kieran Healy notes (It might not be true  though that economic twitter has no power structure. A new kind of structure, which does not mirror the tight hierarchy that characterizes academic economics but is hierarchized nonetheless has emerged).

Hacking attention however requires: (1) open, or at least easy access (time is scare, attention is fledging, it is often a matter of now or never, of immediately accessing a paper) and (2) articulated content, overarching stories and clear narrative arcs. Historians of economics are good at studying how Irving Fisher or Charles Kindleberger conceived debt, how Robert Solow produced its growth model or how Lawrence Klein thought individual behavior and macroeconomic aggregate related to one another. At providing broader narratives on how measurements, theories and models of growth have changed throughout centuries or how they have managed to predict in the last 100 years, much less so. There is little incentive to write surveys, to hook pieces of research together. Twitter allows putting reference together, discussing a set of paper together without the costs of writing a full-fledged survey.

            What twitter allows should however not be conceived as reconnecting to a lost audience. There are as many reasons to be interested in the history of economics as they are registered users on twitter. Predicting what topic will “work” and what will not is bound to failure –except Friedman and the Chicago School, always a hit. And altering research interest to please a fantasized audience is the surest path to loose our hard-won intellectual independence. A suggestion, then, is to adopt Corey Robin’s admonition: the public intellectual “is writing for an audience that does not yet exist […] she is writing for a reader she hopes to bring into being.” While Robin uses this idea to target fashionable and successful writers, it is also one useful as a guide for scholars working in a marginalized area: do not strive to regain a lost audience, but bring one into being. Because tweeting is to some extent shouting in the wild, it paradoxically dispenses the history with targeting a specific audience.

Researching the history of economics

 Economics, past and present

Social media platforms have enabled the observation, quantification and measurement all kind of social behaviors, interactions and engagements. Through its APIs, twitter data were initially largely accessible to social scientists, who have scrapped huge quantities of data, and the platform has quickly emerged as a valuable repository. Scrapping and visualizing data is becoming standard practices in some branches of sociology, and the word “digital ethnography” has been coined to designate a new set of practices whereby social behavior is being observed through twitter. Of course, contemporary economists’ behaviors and networks as measured through twitter and the ideas they trade online have not yet become history.  But it does not mean twitter data are not relevant material for historians. First, because they allow us to distinguish permanent from changing features in economists’ methods, discourses and practices. New storage, processing and real-time recording technologies and companies may have ushered economics in an age of big data, but the debates I witness are strikingly reminiscent of the Cowles vs NBER “Measurement Without Theory” controversy and the economics as an inductive vs deductive science question.

Second, the boundaries between the past and the present are unstabilized and permeable, in particular in contemporary history. Till Düppe defines the latter as dealing “with the past that is still remembers by some of those among us.” “Some” might be the former students or children of the economists we study. They might be those economists themselves, retired, or as we move toward present, still active. Twitter offers data which, with appropriate tooling up in sociological and ethnographic methods, harness some of the challenges Düppe highlights. First, observing economists’ exchanges highlights how they wield and weaponize their history, the canonical and the one we produce. Whose protagonists our narratives serve become clearer, and that economists cooperate with historians in part to influence them too. Even those projects which are not aimed at restoring credit alter the relationships of protagonists or communities with one another. By becoming historical objects, the sunspot literature, disequilibrium economics or contingent valuation, become worthy of attention, and, in the end, distinct, consistent and worthy scientific endeavors. Proponents of self-called “heterodox” approaches have long understood this; there are more histories of heterodox economics than mainstream ones.

Twitter offers the possibility of interacting directly with graduate students, government and think thank economists, academics, central bankers, and more. Yet doing so might change our practice as much as we may want to change theirs. At the very least, it makes tensions over purpose, methods and identities more salient. Over the past decades, we have evolved from being economists doing history to become historians studying economics. We have emancipated in terms of objects and methods. Archive oozing and interviews have spread, and the deployment of quantitative techniques more akin to digital humanities than econometrics or experiments are on the rise. Our disciplinary identity has expanded to the edges of sociology and history of science, sociology and intellectual history. Yet, in spite of calls to move to history departments, I suspect that history of economics contributors are still in majority located in economics departments, teach economics, are evaluated according to economics rankings, and define themselves as economists (that’s my case). Most important, we do write history with a purpose, however largely unconscious: changing economists’ theories and practices, providing facts to anchor current debates on the state of the dismal science, instilling more reflexivity into their intellectual and institutional practices, improving policy-makers, citizens and journalists’ ability to decipher and assess economists’ work. We may have diverse audiences in mind, but we want to be relevant, and twitter offers us the ability to get a better grasp at current debates and angst. Whether our research topics should be allowed to shift is a matter of debate, but twitter cues may help us pitch our chosen stories to improve our outreach.

From writing history for public uses to writing history “in public”

According to sociologist Kieran Healy, social media “tend to move the discipline from a situation where some people self-consciously do ‘public sociology’ to one where most sociologists unselfconsciously do sociology in public.” This, he explains, because “new social media platforms have made it easier to be seen,” creating “a distinctive field of public conversation, exchange and engagement.” Twitter does not merely enable historians of economics to trade reference, discuss alternative “modeling” practices of monetary theories or disagree on the influence of the Cold War or Civil Right movements on the objects and methods of economists. It requires them to do so in public. It is often considered as a shortcoming – being challenged in public might highlight some weakness in the analysis and create a reputation of sloppiness. Resistance to airing disciplinary dirty laundry online also derived from the notion that scientific credibility is tied to the ability to achieve and publicize some kind of disciplinary “consensus.

I don’t share this worry. Science is predicated on the belief that truth is not sui generis, involves puzzles, trials and errors. Doubting and arguing in public is a sign of individual soundness and disciplinary self-confidence. It is being comfortable with scientific method. Tweeting is “thinking in progress,” and it is recognized as such (though I have never seen formal guidelines, the etiquette seems to allow tweets to be quoted in blog posts, and blog posts to be quoted in academic papers.) Researching the history of economics in public is also a way to help other scholars relate to our practices. Laying out a puzzle –why have subfields who most benefited from computerization, such as large-scale macroeconometrics or, computational general equilibrium became marginalized as the PC spread –, posting an exchange between Paul Samuelson and Milton Friedman or a figure representing a principal component analysis, a co-citation network or the result of some Newsweek articles text-mining and arguing over interpretation allow to frame history as a process whereby some quantitative and Capture d_écran 2017-07-25 à 03.32.32qualitative data are gathered, exploited and interpreted. Rough data – qualitative and quantitative – are put on display, suggesting both commonalities and specificities in the methods historians need to use to make them speak. Finally, opening the narrative black box by writing history in public and circulating working papers allow fellow historians to engage in a sort of early online public referee process, and economists to react in a public and articulated way.

ICapture d_écran 2017-07-25 à 03.15.00n short, twitter is a tool for researching and communicating the history of economics. The latter can be done at little cost, with the uncertain yet real prospect of high spillovers effects. This is a good reason for all historians who like a good economics argument to give it a try, and join their some 50 colleagues already registered. Twitting also raises all sorts of questions on our research practices and audiences. It forces those who routinely eschew reflexive endeavors (such as the author) to articulate their perspective on the present state and future of their discipline. For writing the history of economics in public and disseminating it in the end requires a good deal of enthusiasm for the quality of what is being published and optimism in its possible social benefits.

Note: this is a draft paper for a historiography volume. Comments welcome. 

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Defining Excellence in economics: 70 Years of John Bates Clark Medals

clark_medal_front_smAndrej Svorenčík and I have a new working paper on the history of the John Bates Clark medal (SSRN  and SocArXiv links). We combine archival evidence on the establishment and early years of the award and quantitative analysis of the profiles of the laureates to study the intellectual and institutional determinants of “excellence” in economics: how economists disagreed on what count as a “fundamental contribution” in economics, how they handled topic, methods, institutional and gender diversity issues.

We are still struggling with how to interpret our data, so comments are very much welcome.

Below are excerpts from the introduction. There will be another post dealing with my unanswered questions, methodological struggles and findings on this project.

In 2017 the John Bates Clark Medal (JBC Medal) turned seventy, and the 39th medalist was selected for this prestigious award. Established in 1947 by the American Economic Association (AEA) to reward an American economist under the age of forty for “most significant contribution to economic thought and knowledge,” it has become a widely acknowledged professional and public marker of excellence in economics research. It is frequently dubbed the “baby Nobel Prize” as twelve awardees later went on to receive the Bank of Sweden Award in Economic Sciences in Honor of Alfred (hereafter Nobel Prize). It provides an excellent window into how economists define excellence because it is as much a recognition of the medalists’ achievements as it is a reflection what is considered to be the current state and prospects of the discipline. For the Committee on Honors and Awards (hereafter CHA) and the Executive Committee of the AEA, selecting a laureate involves identifying, evaluating and ranking new trends in economic research as they develop and are represented by young scholars under forty.

The Medal has become such a coveted prize commanding the attention of the entire economics profession and the public that it went from being awarded biennially to annually in 2009. It might thus seem surprising how little is known about the reasons for its establishment and about its tumultuous past. Even less is known about the debates that it provoked such as those pertaining to its selection criteria. After three first unanimous choices of laureates – Paul Samuelson (1947), Kenneth Boulding (1949), and Milton Friedman (1951) – the Medal was increasingly challenged. It was not awarded in 1953, then almost discontinued three times before it finally gained acceptance and stabilized during the 1960s.

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1947 ballots (Samuelson elected against Boulding and Stigler)

Our purpose, in this paper, is not to study the medal as an incentive, but as a signal for the changing definition of excellence in economics, as well as a marker of how merit and privilege are intertwined in scientific recognition. Indeed, Robert Friedman argues in his study of the history of the Nobel prizes, “excellence is not an unambiguous concept, not even in science” (2001, p. ix). The Nobel Prize has become the ultimate symbol of scientific excellence and a shorthand indicator for genius. But even though exceptional talent is a shared feature of scientists who become laureates, Friedman adds that “prizes, by definition, are political, are a form of governing marked as much by interests and intrigues as by insightful judgment” (2001, p. 1). His extensive survey of discussions surrounding the chemistry, physics and biology prizes show how some awards (or lack thereof) reflected the changing scientific, cultural, political and personal agendas of the members of the Swedish committee. The Nobel Prize in Economics was no exception. Offer and Söderberg 2016 and Mirowski 2016 relate how the prize was born out of the frustration of those economists at the Riksbank and their lack of independence in setting the Swedish monetary policy.

Michael Barany’s 2015 history of the Fields Medal likewise showcases a general point that myths surrounding prizes often conceal a messier reality, and that their history convey rich information about a discipline’s standards and identity. Barany argues that the Fields Medal was not established as a substitute for a missing Nobel Prize in mathematics, but as a way to unify a discipline riven with political and methodological divides in the 1930s. While “exceptional talent seems a prerequisite for a Fields Medal,” he argues, “so does being the right kind of person in the right place at the right time.” Acknowledging various types of contingencies “does not diminish the impressive feats of individual past medalists”. The laureates as a group represent “the products of societies and institutions in which mathematicians have not been mere bystanders” (p. 19).

It is such an approach that we want to follow in this paper in order to understand the evolving nature of excellence in economics. The archival evidence we have gathered shows that the establishment of the John Bates Clark Medal, and early disputes on what represents excellence in economics speaks volumes of the internal dynamics of economics and its situation among other sciences since the 1940s and 1950s. Further, both Barany and Friedman emphasize the lack of diversity both within selecting committees and among laureates in terms of gender, educational background and employment, yet they do not provide a thorough quantitative analysis of their claims about the missing diversity. In order to understand how the nature and diversity of “right person in the right place” have evolved across decades, we have supplemented our qualitative evidence with a quantitative analysis of the trajectories and characteristics of the 39 laureates.

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