Wednesday, October 17, 2012

The future of economics?

Ali Wyne at the blog "big think" asked eight notable young (under 40) economists about the future of their profession and key topics for future research. Their responses make for interesting but not really surprising reading. The research frontier, in their eyes, faces its key challenges in 1) understanding the nature of economic development and growth, and how the world's poor can be brought out of poverty, 2) learning how our growing understanding of human behavioral psychology can be used to replace the inadequate framework of rationality in economics, 3) gaining a much better perspective on macroeconomics, including bubble and herding phenomena, 4) building a new theoretical perspective to handle the vast influence of new information technology on human economic decisions and 5) learning to deal with massive data.

All in all, these seem like worthwhile goals and I'm encouraged that at least two of the economists make semi-explicit their view that economics dearly needs to explore new kinds of models going beyond the equilibrium framework.

I'm also struck, however, by something a little more depressing, which is the rather narrow, conservative scope expressed in their comments. Perhaps this is to be expected from young economists hoping to find stable jobs for coming decades, but not one of them even mentions the need for a deeper understanding of the nature and long term consequences of economic growth. Such growth is -- still -- simply assumed to be an absolute good to be pursued always and as rapidly as it can be. Given the alarming picture painted by studies such as this one -- in Nature a few months ago, it reviewed how human economic growth has significantly altered virtually all global biological and geophysical processes -- you might think that young economists would be scrambling to develop ideas about human society in a post-growth world, or at least one in which growth has to be strongly constrained and managed.

That seems to be a step too far. The idea of growth forever, unconstrained by any physical laws or biological realities, still seems to be a core belief even of the next generation of economists.