Whither academic economics?

A grad student in economics emails me his dismay about the field:

Prof. Mankiw,

I'm an avid reader of your blog and let me be one among the thousands who have probably already told you that it rocks!

I am doing my Masters in Economics here in the US and I recently went to a Graduate Economics Students Conference in my city. I sat through a whole day of paper presentations and the one thing that struck me was how incredibly technical, narrow and to a some extent pointless, some of the research was. It seemed like in a quest to do something original, a lot of graduate students in economics are diverting all their energy towards coming up with things that have absolutely no implications in this world. Most papers I saw were so narrow and simply forms of academic gymnastics that it seemed like the whole point of research in economics was lost (maybe that is the point of research in economics today).

So far I have been seriously considering doing a PhD in the subject, but after the conference I have started having my doubts. It seems like a lot of research in economics today is just churning out results that are primarily of no use to anyone and only a way of standing out in a crowd by showing that you have done something they have not, no matter how pointless. It saddens me to see this happen to the subject. It leaves me disappointed and discouraged. I'm left wondering if nowadays to be successful in a PhD program I must enjoy doing something very narrow and technical even though it might be bordering on real world irrelevance. I hope I am wrong.

Regards,
[name withheld]

I have a lot of sympathy for the letter writer. I often have a similar reaction after attending a conference. Let me make a few observations that may (or may not) be comforting.

1. Economics teaches that activities often run into diminishing returns. That may be true of research in economics. The early economists got the really great ideas (Smith on the invisible hand, Ricardo on comparative advantage, Pigou on corrective taxation, etc.). When we modern guys arrived on the scene, the juicy low-hanging fruit had already been taken.

2. A second issue is stock vs flow. The stock of economic knowledge based on centuries of thinking is great. The flow of new knowledge is meager. Your past coursework was based on the stock. Conferences are based on the flow. So conferences always seem thin cruel compared with well-run courses.

3. A related issue is selection. Courses are based on the best ideas of the past. When you go to a conference, however, you are getting a more random selection of new ideas. Most of these research papers will be forgotten, but a few will be judged by the profession to be important and will end up being incorporated into textbooks and courses in the future. Trying to find the needle in the haystack--and trying to be the author of that needle--is what the research game is all about. That task is difficult because the output of a research project is often unpredictable; even after a paper is finished and published, it can take years for the profession to judge whether its contribution is important.

4. You need to think about the motivation of researchers. An idealized view of academics is that they are motivated to improve the world by expanding knowledge. A more realistic view is that they are motivated to impress more senior academics in order to get good jobs at top universities. Expanding knowledge is the best way to impress the senior academics. Failing that, a second-best option is to write a technically demanding paper that proves how smart you are. Sadly, a lot of papers fall into the second category.

The most exciting course in economics I have ever taken was Principles of Microeconomics, taught by uber-teacher Harvey Rosen during my freshman year at Princeton. That course opened my eyes to a whole new way of viewing the world. No subsequent course or conference has ever yielded the degree of intellectual excitement I felt learning basic micro from Harvey. When I first recognized this fact, I was disappointed, much as the letter writer is. But, even so, I have enjoyed being a professional economist by coming to accept that I will not reach that pinnacle again. You might call it the "soft bigotry of low expectations."