A small group of elite universities holds an outsized influence over the field of economics, shaping research, policy, and the broader economic narrative. But is that concentration of power stifling innovation and reinforcing the status quo? This week, Harvard economist David Deming joins Nick and Goldy to discuss his recent Atlantic article, in which he argues that Big Econ functions like a monopoly—limiting competition, excluding diverse perspectives, and making it harder for new ideas to take hold.
David Deming is the Isabelle and Scott Black Professor of Political Economy at the Harvard Kennedy School. Deming is also a research associate at the National Bureau of Economic Research and Associate Editor of the Journal of Economic Perspectives.
Further reading:
DOGE Is Failing on Its Own Terms
David Deming’s Substack Forked Lightning
The Trouble With Macroeconomics
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
David Goldstein:
The last five decades of trickle-down economics haven’t worked, but what’s the alternative? Middle-out economics is the answer because the middle class is the source of growth, not its consequence.
Nick Hanauer:
That’s right.
David Deming:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
David Goldstein:
On today’s podcast, Nick, we’re going to be talking to a white male economist from Harvard, which really gets into the core topic of the conversation today.
Nick Hanauer:
Yeah, absolutely. We are going to talk to a white male, economist from Harvard, but our guest today is a swell guy named David-
David Goldstein:
Despite all that.
Nick Hanauer:
Despite all that.
David Goldstein:
You’re telling me.
Nick Hanauer:
David Deming, who joins this day, because he wrote an article recently in Atlantic, where he insists that big econ, much like corporate monopolies have become too concentrated, too centralized, stifling innovation, and it’s become a profession that rather than challenging the status quo, reinforces it. And we couldn’t agree more.
David Goldstein:
Well, we know this. We could ask Ashley and Freddie about this, our producers. We make an effort to try to have a diverse list of guests on this show, and it’s-
Nick Hanauer:
Yeah, it’s not easy.
David Goldstein:
… much easier if this was a physics-
Nick Hanauer:
Physics or chemistry, or any other science.
David Goldstein:
… or medical podcast, medical research podcast than it is with an economics podcast.
Nick Hanauer:
That’s right.
David Goldstein:
Because the profession is the least diverse, if you consider it a science. It’s the least diverse of the sciences and across the board in every aspect. And as David points out in his piece in The Atlantic, which I think is titled Break Up Big Econ, it’s concentrated, the leaders of the field are concentrated around a handful of elite universities. Harvard, where he is, being one of them.
Nick Hanauer:
Yeah, and I think there have definitely been some downsides of that. But with that, let’s talk to David and we’ll find out more.
David Deming:
My name is David Deming. I am the Isabelle and Scott Black Professor of Political Economy at the Harvard Kennedy School. I’m an economist. I study labor markets, skills, technology, education, future of work, AI, and all things in between.
David Goldstein:
You’re one of those Harvard economists, so that makes you a member of the concentrated elite, right?
David Deming:
I suppose it does. Yeah. I don’t feel that way, but that’s funny about something like this is, like many of us in these positions, I’m just kind of a regular guy who found himself here. So I don’t think very few people who are in the “elite” feel as though they are.
David Goldstein:
Yeah, we’re just three white men, not part of the elite, talking about economics on a podcast, yep.
Nick Hanauer:
If you follow our podcast at all, David, you know that we are pretty hard on the discipline of economics, or whatever orthodox, the orthodoxy anyway. But one of the really interesting angles that you take and that I suppose we had not really considered, is how concentrated it is, how dominated it is by a relatively few institutions and people, and in particular how different that is from the other sciences. So for our listeners, talk a little bit about that, and try to compare and contrast.
David Deming:
Sure. Well, I should say that one of the reasons that the economics discipline is concentrated, is because economists do research that’s increasingly empirical. And that was a topic of my column that we can maybe talk about later, but relative to let’s say an engineer or a hard scientist of any kind that has a lab and materials, economists work is much less capital intensive, and so it’s easier to move. So that’s one reason why economists are more concentrated, just to be, I think fair and transparent about that, is that you see a lot of patterns of people who start off in departments that are not at the very top, who show their ability to publish in top journals and get grants, and get cited and influence the field, and they end up moving to other departments. And so, all top econ departments have a few people who came from a place that wasn’t ranked very highly, and I think that’s more true in economics than in other disciplines.
Having said that, I think a main reason that the economics profession is relatively concentrated in my view, is that we in economics are much more of an interpretive field than we like to believe. By interpretive, I mean something like the humanities, which is an example of a field that is reinterpreting existing work or existing things about society in new ways for people. This is an important function, but it’s much more subjective than something that I would call purely empirical discipline.
If you think about physics or anything in the natural sciences, often the title of the paper is the finding. We Found this protein that did this. And you don’t see paper, one thing I love about economics is it’s kind of a bit of both. We uncover new facts about the world, but we also interpret them. And I think you see this pattern of greater concentration of major prizes in fields that are more interpretive. So in the humanities, you see much more concentration in art, in history. You see those scholars in those fields are much more likely to be in the very top departments, whereas the top scholars in let’s say engineering or physics are much more widely distributed, because if you have some great discovery, it’s just that’s the discovery, and you can win the Nobel Prize for that, even if you’re at Ohio State University.
Nick Hanauer:
And because they’re much more objective measures of whether it’s significant or not. If you invent the airplane, now people can fly.
David Deming:
Yeah. And I should say too, Nick, just to be clear, I mean I think that doesn’t necessarily mean that it’s anti-theoretical. So empiricism inferior, not opposites. It’s not that there’s anything wrong with being more theoretical, just you have to understand that it’s like whether a theory is true is Inherently more subjective than whether an empirical result is true.
Nick Hanauer:
I have to think about that. Is that true?
David Goldstein:
It kind of puts economics in a difficult position, because you can’t categorize it as a natural science, because it’s not really a science, at least most of what orthodox economics does, but you don’t want to classify it as humanity, because over the past 50 years, it’s largely been inhumane.
David Deming:
Well, I don’t know about… I mean, I’m not sure I agree with that.
David Goldstein:
Come on.
David Deming:
Good joke, good joke. But to be serious, I think it is, that’s one of the things I love about the field of economics and when it’s done right, is that it’s a combination of theory and empirics, a combination of interpretive and empirical. So that’s fun about it when it’s done right.
Nick Hanauer:
Can we just go back to this thing that you just said, which is really interesting, is that empirics is easier to examine than theory. What’s amazing about economic theory is how unaligned the theory is with the evidence, right? That’s the frustrating thing about economics, is that in theory, as you raise the minimum wage, you should have fewer jobs, as long as you assume a bunch of things, which are not true about the world.
David Deming:
So what I would say about that, Nick, is it just means the existing theory is incomplete. Not that theory per se is bad, right?
Nick Hanauer:
I’m not saying theory is bad, but theory should be connected to what actually happens in the real world, right?
David Deming:
I agree. I agree. And so, the right way to proceed as a science is to develop theories and then test them.
Nick Hanauer:
Yes.
David Deming:
And those are two sides of the same coin. But I think when you have scholars who are purely theorists and they’re theorizing about how to interpret the world, so like how should we think about big issues like, here, Karl Marx was a theorist, Adam Smith was a theorist. These are people who were the kind of titans of early economics before we could really touch data, before we could test a lot of the claims. Those are things that, where the way I decide how much I value that scholarship is much more subjective. It’s like, does it seem like it has the ring of truth? Is it internally consistent? Is it beautiful?
And so, economists have developed mathematical tools to develop theories that are sometimes beautiful, and sometimes they’re right. Auction theory was incredibly successful in the real world, but oftentimes those theories, people win prizes for those theories actually before they’re put to the test. And so, then what happens is if somebody writes a really good theory, everybody loves it. Everything else they write is brilliant too, because of the early developments they made in theory. And you see that in a lot of interpretive disciplines. Foucault, for example, once somebody establishes a reputation as a leader in their field, everything they write has the same halo effect to it. Whereas empirical work, it’s much more one by one. Did you discover some really important material compound? Did you discover? Did you make a new invention?
David Goldstein:
And when you do discover something empirically, that just invites a Nobel Prize winner to call you a camp following whore.
David Deming:
I don’t know what you’re referring to, but that sounds bad.
David Goldstein:
Oh, that’s the… Nick does. It’s the famous James Buchanan op-ed in the Wall Street Journal on the Kruger, the first minimum wage study to show that it, yeah.
David Deming:
But the minimum wage is a great example of, in my view, of how in the longer sweep of this, theory and empirical work can interact to develop something richer and more interesting. So we had these perfectly competitive, basically theories of perfect competition in labor markets, where information was perfect, but that doesn’t reflect the economic discipline today at all. And part of the reason is because people say, “Well, in this perfectly competitive economy, it must be that the minimum wage, increases in the minimum wage will lead to employment losses. We don’t find that, that must mean that maybe firms have market power. There’s some anopsy.” And so, there’s some of the most exciting recent work in economics is developing theories of monopsony power.
Nick Hanauer:
That’s right. And you can think of that as exciting, because I suppose what’s $50 trillion between friends, right?
David Goldstein:
79 trillion now.
Nick Hanauer:
Oh, is it $79 trillion now?
David Goldstein:
We’re up to 79 trillion.
Nick Hanauer:
I mean, because in the real world, that view that markets were perfectly efficient and all this stuff did lead to a $79 trillion transfer of income from the bottom nine deciles to the top 1% over the last 50 years. So these are pretty serious, these are pretty serious issues.
David Deming:
Nick, that’s quite a theory. Do you have any empirical work to test it?
Nick Hanauer:
We do. We do. Huge amounts. Huge amounts. Yeah, we’ll send it to you.
David Goldstein:
Well, it’s based on the original Rand report from a few years ago, but there’s an update coming that updates the numbers, the top line numbers on this, it’s due to rising inequality since 1975. Basically, it’s counterfactual how much the bottom 90% would have earned had income distributions remain constant across over the past 50 years.
David Deming:
Sorry, and you’re assigning 100% of the credit for that to-
David Goldstein:
Well, rising in-
David Deming:
Economics? [inaudible 00:11:46]
Nick Hanauer:
Well, who’s been guiding the economy for the past 50 years?
David Goldstein:
Yeah. I mean, look, the decisions were made, choices were made. It wasn’t inevitable that we were going to concentrate wealth and power at the top.
Nick Hanauer:
Yeah, and the consensus in the economics profession for decades was that there was basically a mechanical inverse correlation between the amount that you paid people at the bottom and the number of jobs in the economy. And I can tell you, because we do this work directly, 15 years ago when I went and started talking to people in the United States Senate, whether they were Democrats or Republicans, that consensus had completely shaped their view of policy. So it really wasn’t until 2012 when we cooked up the $15 minimum wage, that framework of thought began to get disrupted. But it was, I mean, that theory, which lives in academia totally captured the policymaking apparatus and resulted in the minimum wage not tracking productivity gains, basically stuck at 1980 levels. I mean, the $7.25 minimum wage today, $2.13 per hour for tipped workers is a byproduct of that consensus. That’s how we got that.
David Deming:
Well, I guess, obviously we can’t hash all this out. I taught a class for several years at the Kennedy School and the econ department here called the Causes and Consequences of Inequality. And part of what I did in that class was try to get students to apportion credit for different forces to the rise in inequality in the US and globally since the 1970s. And part of the point was-
Nick Hanauer:
Where did you guys-
David Deming:
Sorry, go ahead.
Nick Hanauer:
Where’d you guys come out? That’s really interesting.
David Deming:
Yeah. Yeah. So part of the point was to say whatever your favorite explanation is, it has to be, if it’s going to be monoclonal, if it’s going to be one thing, it has to be consistent with all the fact patterns. It has to explain, for example, why top incomes rose in all the OECD countries, even though the top marginal tax rate changed in different times at different rates in those countries. So it can’t just be taxes, it can’t just be immigration, because immigration flows were from different places.
And so, where we landed on that was not a quantitative number, because that would be too precise. But I was trying to teach students the skill of weighing a bunch of different explanations in their heads, all of which are contributing in some ways, but none of which are fully consistent with any set of facts. And so, I think that’s a useful exercise, and I would apply that here to say the economics profession surely deserves some blame for what’s happened in terms of inequality in the country since 1970. But I would say also a lot of it is political decisions too, is that the economic-
David Goldstein:
100%, but the political decisions are at least partially informed by the economics profession.
David Deming:
Of course.
Nick Hanauer:
All I can tell you is when lefty democratic senators deeply believe that if you raise the minimum wage, it will kill jobs. The chemistry department didn’t come up with that. The poetry department didn’t come up with that. It was the economics department that came up with that. And that to a certain extent has been the challenge of governing in the United States and in the west overall, because most of the west was sort dominated by the neoliberal, this sort of generalized neoliberal framework.
David Goldstein:
And getting back to actually the core topic of the piece you wrote in the Atlantic, it wasn’t just the economics department, it was the economics department at a handful of elite universities predominantly. If you could go into that idea, it’s what, eight schools? Is that what the number was? I can’t remember.
David Deming:
It was, something like eight schools, yeah. Although given our previous conversation, you might not be so excited about my prescription for that, which is to fund practical work, what I would think of as engineering work in economics at less elite departments. So I would say-
David Goldstein:
Yeah, yeah, 100%.
David Deming:
Okay. Okay, good. So I would say-
David Goldstein:
Yeah, no, we want more. This is economics equivalent of DEI. We’re going to have more diversity in…
David Deming:
Diversity is the core value. I’m not against that.
Nick Hanauer:
I mean, just because we are putting you on the spot a little bit doesn’t mean-
David Deming:
I like that. It’s fun, it’s enjoyable. I don’t mind that at all.
Nick Hanauer:
All right. Just because we’re going to put you on the spot a little bit, doesn’t mean we… We’re not trying to shoot the messenger or blame you for all of this. But-
David Deming:
Fire away, Nick. It’s all right.
Nick Hanauer:
But the other thing that I’ve always been puzzled by is the, hold on, let me back up and say that human societies are constructs that are held together by stories, right? By narratives. And for all of human history, those narratives generally are produced by and benefit elites. The stories are not necessarily true, but they are very good for the people in charge generally.
David Deming:
I mean, if they’re the ones telling them, then yes, people like to tell stories. Everyone’s the hero of their own story.
Nick Hanauer:
Yeah, exactly. So the economic narrative for the last 50 years has been massively biased towards the wealthy. Tax cuts for the rich create growth, deregulation-
David Deming:
In the US.
Nick Hanauer:
In the US, right. In particular.
David Deming:
Well, I would say it depends on what you mean by the past few centuries. I would say that was more true in the ’80s and ’90s than it’s been in the last two decades.
Nick Hanauer:
No, no, no, for sure. During that sort of neoliberal era, it really swung that way. And in the ’50s and ’60s and ’40s, it definitely wasn’t, right? Productivity and wages went the same way. And then we had this big thing that happened, where the academic consensus radically shifted. And the common story is it’s just a bunch of old, rich, white dudes who conspired to fuck over the poor in the economics profession. But I don’t think that that’s true. There was no conspiracy. But what’s your sense of why that happened? How did that happen?
David Goldstein:
And I just want to point out that the elites we’re talking about here, it’s largely old, rich, white dudes that dominate the profession.
David Deming:
So in my opinion, to try to understand this, I think you have to go back to the 1970s and think about what was happening in the country. Inflation was super high, the economy was stagnating, people were upset. And so, for better or worse, we were coming out of a time when the kind of centrally planned features of the economy and the kind of emphasis on over regulation, whatever. I’m just saying this is the perception at the time.
Nick Hanauer:
Yeah, yeah, for sure.
David Deming:
Was that people wanted something different. And Ronald Reagan in his time I think was really, and the Reagan administration was really what ushered this in. And it was in response to public demand. Part of it was want a sense of wanting to increase national competitive to win the Cold War. It was trying to see some economic benefit from the big investments we’ve made in the military industrial complex. And some of those technologies were the early days of technologies like the internet and computers, that were really transformative for society and kind of upended the winners and losers of the country. And so, I think in that time, some people would say it was needed, but it was certainly demanded. It was certainly requested.
And then, what happened was that led to some excesses. It was greed is good, and we had the movie Wall Street and we had soaring incomes. And then, I think what you’re seeing now is a backlash to that. So I think of it as actually, I mean, this is not going to be surprising. I’m the two-handed economist in the classic. I would like to have something in the middle of those two.
Nick Hanauer:
No, I agree.
David Deming:
I think that competition is one of the greatest forces, economic competition is one of the greatest forces for good in all of human society. And I think what you see oftentimes is the relatively well off insulating themselves from competition, crony capitalists. So actually for me, there’s something actually quite beautiful about neoclassical economics. I just think that what happens is people under the guise of neoclassical economics do things that isn’t very competitive, that end up benefiting rich people. So I see a lot of what the excesses of that age are as being actually non-competitive capturing of the economy.
Nick Hanauer:
100%, 100%, 100%. And we could have a multi hour conversation about this, but part of what led us there, I think are again, some of the underlying assumptions that make you want to believe those things. So for example, the idea that seeing the economy as a prey to optimal equilibrium, within which a thing like efficiency can be possible. Now, if you assume that, if you assume certain things, then other things become possible. If you don’t assume that it’s a prey to optimal equilibrium, if you think of it as an ecology in which the word efficiency actually doesn’t really apply, then you end up just in different places and different stuff. But let’s not go down that rat hole. Let’s talk a little bit more about David’s prescription for how to make the economics profession better. In your article, I thought you had really good ideas.
David Deming:
Well, thank you for saying that.
David Goldstein:
To be clear, it was written before the Trump administration started slashing funding, federal funding for research.
David Deming:
It was, it was. And I have since written another article for the Atlantic about the folly of cutting NIH funding. So I guess I’m on that beat. So my prescription was, look, if the problem, not problem, the state of the economics profession is that it’s a mix of humanistic, or interpretive and empirical, as I said earlier. And what you see is increasing concentration of major prizes and funding, and just kind of clubs in more interpretive fields. I think it’s not something anyone’s doing on purpose. To your point, Nick, it’s kind of inherent to the exercise.
Nick Hanauer:
Yeah, yeah, yeah. These are measures of what our favorite thing is in many cases, right?
David Deming:
Yeah. It’s more about trends, what’s hot.
Nick Hanauer:
Yeah, yeah. Right.
David Deming:
And so, my solution was to create, through a variety of incentives, which is classic economic point of view, is to create various incentives through a mix of government funding and kind of social status, and a program on both sides of valuing what I would call economic engineering more. So, solving practical problems using the tools of economics. And I think sometimes that involves using highbrow theory, mathematical theory. I gave the case, the example in the article of auction theory and how auction theory was used to auction off SEC broadband spectrum, and Paul Milgram and Bob Wilson won the Nobel Prize for that. That was literally save the government billions.
And so, it’s not about theory versus empirics. It’s really about valuing practical contributions and not just can you publish an elegant paper in a top journal, and have it be highly cited by your peers? It’s about an impact test in the world. My argument was the best way to do that is for agencies like the NIH and the NSF to fund impactful economic research, not to do things like give… Most of the NSF’s money in econ is given to early career awards. So finding the top people in the top departments and giving them unconditional money drops. And NSF doctoral fellowships, which is funding graduate students at the top departments.
And I’m not against any of that. I would like more, but if you pushed me and said, “You have to budget neutral.”
I would say, “Let’s do more funding of high-impact projects.” The bridge-building analogy, like how to create good markets that reward, that they blink buyers and sellers, how to have a more transparent monitoring system for the health of the economy, creating new data sets, all things that just provide public value, I would be funding those things. And I think that would make the profession more egalitarian, it would also make the world a better place.
Nick Hanauer:
Yeah, yeah. I mean, I’m often struck when I meet with economists sometimes how uninterested some of them are in what’s happening in the real world. And I’m like, “So how is this going to help the average American?”
And they’re like, “What?”
David Goldstein:
It’s so hard to mathematize that, Nick. You’ve put that into a model.
Nick Hanauer:
Should economists have to sign the same thing that doctors do about whatever, helping people or [inaudible 00:23:56].
David Deming:
And I think actually, so when I wrote this piece, I got a lot of, it obviously generated a lot of conversation in my profession. I got a lot of notes from people.
Nick Hanauer:
Did you get a lot hate mail?
David Deming:
No, no hate mail. Some people thinking I was wrong. They weren’t unkind about it. They were engaging. But the thing that I found very striking was that I got almost universal positive feedback from the more junior members of the discipline. And often they were people saying, “Hey, we’re doing this already.”
I do think people my age and a bit younger are much more into this way of work. And some of the work I’m most excited about in the economics profession is work happening among people who either graduated around the time I did or later, who are out there in the world doing really interesting things. So a lot of it’s already happening.
David Goldstein:
Yeah. You also, and I don’t think you used the word, but I think if I read the piece correctly, you also think we need to do something to change norms within the profession, particularly in terms of what you’re awarding, that there’s almost no awards in economics that are predicated on, I don’t know, improving people’s lives.
David Deming:
Yeah, or even just impact in the real world. So one example, I think it got cut from the piece for space, but the Society of Labor Economists, I’m a labor economist, so I know that well, has an award they just started called the Ed Lazier Award, and it’s an award for a mix of people who had, sorry, for people who had a mix of research impact and policy impact. And the first award went to John Aboud, who, I don’t know if you know John Aboud, but really distinguished labor economist who also has worked tirelessly for years to improve the census and has worked to improve data access to the census. So it’s like an award that says, “Look, you’re a scholar, but you’ve also made contributions in terms of public impact.” And I would just like to see more of that. It’s not that we have to do one or the other. It’s like, you should be rewarded explicitly and implicitly in terms of norms for taking your insights into the world and making it better.
David Goldstein:
And that’s very different than the Nobel Prizes for actual sciences, where you’re often rewarded for practical results.
David Deming:
Yes. I mean, well, part of it is inherent to the field itself. So if you discover, make some scientific discovery, regardless of what university you’re at, it’s just clearly valuable and it leads to downstream innovations. And so, there are lots of examples of that in the natural sciences and the physical sciences. And I actually think in economics we have that too. I do believe economics is a science, and I think we can make it more so by being a bit more systematic about our discoveries. I think you’re seeing a lot more of that. People taking replication much more seriously, making data sets public. It’s all part of a process that we’ve undergone in the profession, in response to criticisms such as yours, and I think are healthy and healthy and fair criticisms.
David Goldstein:
I made the DEI joke, but if you’re going to call economics a science, I mean, there’s various papers that show it that it is one of the least diverse. It is the most, in terms of gender equality, racial equality, and a more recent study on socio-economic equality that it draws people from higher income backgrounds.
Nick Hanauer:
Isn’t the woman that we interviewed on that a Harvard researcher too?
David Goldstein:
Probably, because they’re all these eight schools, Nick. And I’ll tell you, it’s been a struggle on this podcast as a couple of old white men trying to get guests who aren’t at the very least white men, we make an effort to try to keep our guests diverse. And it’s hard. I mean, we have to go out of our way to do it, when we’re interviewing economists, because the number outside of the profession, it’s a lot easier. But it is so dominated by white men of a certain socio-economic background.
David Deming:
So Goldy, I mean, I share your view that the profession should be more diverse and have done some work, and as many of us have to try to make that happen, I think that’s an important goal. I agree with it, but as far as, I don’t think that really speaks to whether economics is a science. To me, what a science is-
David Goldstein:
I’m not that, I’m saying, but I’m just comparing it to other sciences.
David Deming:
I see.
David Goldstein:
This is an apples-to-apples comparison. If you compare it to other scientific fields, those fields, the hard sciences in particular are really diverse. It’s a lot of first-generation Americans within the US. It’s coming from drawing from broader socio-economic backgrounds. It’s more gender diverse, it’s more racially and ethnically diverse. Whereas economics, if you’re comparing it as a science, it is the least diverse of the sciences.
David Deming:
Yeah. Well, I mean, again, I deplore that too. I just think those are separate issues. To me, the definition of a science isn’t based on who’s in it. It’s based on whether the profession moves forward a body of knowledge. So do we build on our discoveries? Do we learn from our mistakes? Do we update our theories and our empirical results? And I think no science is perfect, and economics is no exception to that. We’ve got a lot of work to do. The profession’s been wrong about a lot of things, but I think I feel like we know more in economics than we did 20 years ago, and we’re building a body of knowledge. And for that reason, I’d call it a science.
Nick Hanauer:
A couple of final questions. So the benevolent dictator question, if you were the king of economics.
David Deming:
Yeah.
David Goldstein:
If you were the Elon Musk of economics.
Nick Hanauer:
Yeah. If you were the Elon Musk of economics, and then we just subtract the sociopathic narcissism and assume that you’re not that, what would you do with the profession?
David Deming:
Yeah, I would influence all of the major professions in the organization. So that’s the NBR, the National Bureau Economic Research, the American Economic Association, and all of the other associations to basically spend all of their resources on providing public goods and encouraging other scholars to provide public goods. By that I mean the creation of new data sets and creating more incentives to do essential descriptive work about the economy. So I think we just, professionally, we have very little incentive. I’ll give you one example. I recently with a couple of co-authors, Alex Pickett and Blandon, produced what we think of as the first nationally representative survey of generative AI usage in the US. So it’s been cited a million times already. It’s incredibly high value work, but people have very, we are having trouble getting it published, to be honest, because it’s just simple descriptive work. What share of people are using AI, who’s using it, what are they using it for?
That kind of work is, in my view, horribly under provided in economics, because it’s hard to publish in a top five journal. And to me, that just demonstrates. Again, it’s not that, I’m tenured at Harvard. I don’t care if it gets published, and this is not me complaining about where it’s published. My point is there’s a lot of junior scholars out there who could collect important economic data and have very little incentive to do it. I would, if I could wave a magic wand, that’s the one thing I would change about the profession is, I would tweak the incentive so that everyone has a much stronger incentive to create data and to create basic insights about how the economy works to inform decision making. And I think we should be professionally rewarded for that. That’s a huge hole in the profession, in my view.
David Goldstein:
I don’t know. On the one hand, you have actual empirical data on how AI is being used, and on the other hand, you have Elon Musk telling you how it’s being used. Which is more authoritative?
David Deming:
Well, I think mine is, because he’s just one guy.
David Goldstein:
And yet he’s the one with all the rewards.
David Deming:
For now. For now.
Nick Hanauer:
Oh god. Yeah.
David Goldstein:
Okay. I’m sorry.
David Deming:
I mean, listen-
David Goldstein:
I’m in a mood today.
David Deming:
Yeah.
David Goldstein:
Remember Robespierre, that’s all I’ll say.
David Deming:
But actually, I think that that kind of change, not only would it make, I mean the primary value of it was it would make society better. We would make better decisions about things that really affect people’s livelihoods. But the other thing is I really do think it would make the economics profession more diverse, not just ethnically in terms of socioeconomic background, but just a wide variety of people would go into it. They would see the value of it. And so I think, it would in a way improve the public’s perception of economics, because we’d be providing something in more value.
David Goldstein:
That’s great.
David Deming:
That’s my magic wand.
Nick Hanauer:
One final question. Why do you do this work?
David Deming:
Because I love it. To me, this is a hobby more than a job. I just get excited about it. I mean, I really do. I wrote that piece, because I was hoping to influence the profession in a way that I think creates more value for the world. And I got into this job, because I felt like it was a way for me to use my, frankly, just data nerd skills to help people. And that’s why I’m doing this. And I still think it’s a really valuable thing to try and do.
Nick Hanauer:
That’s great. That’s great. Well, David, thank you so much for being with us. It’s really fun.
David Deming:
Oh yeah, my pleasure. It was fun.
Nick Hanauer:
I hope we will see you again on the podcast.
David Deming:
Me too.
Nick Hanauer:
Best of luck on your work. Thank you so much.
David Deming:
Hey, thanks a lot.
Nick Hanauer:
We weren’t that mean to David, but we did put him on the spot a little bit.
David Goldstein:
It was a dialectic, Nick.
Nick Hanauer:
But great guy. And I think really on to, I think, an important problem. I thought it was really interesting conversation, because it really did highlight some of the stuff that has emerged, but you don’t really think about the source of.
David Goldstein:
I think, Nick, we need to get into a little bit about why this is important. And that is, we’ve made this comparison to corporate America, how it’s monopolized by big, powerful corporations. And that reduces competition and innovation. And that’s a really important point, that there just isn’t a lot of competition within the econ field. Because if you want to make it in the econ field, if you want to be a prestigious economist, if you want to potentially win a major prize like the Nobel, or you want to be named to the Federal Reserve or the Treasury Department, or some top administration official, you need to go along to get along at these handful of elite universities. And so, you’re not incentivized to rock the boat in any way.
The other thing is, and this is something we haven’t talked about for a while on the podcast, but one of the core assumptions that we make in our own economics is that when I talk about diversity, and I brought that up a couple of times, it’s not about fairness. I mean, it is, but it’s not simply about fairness. It’s that this is where innovation comes from. You want cognitive diversity and you don’t get cognitive diversity if you, out of a set of institutions that don’t have socioeconomic, gender, racial, et cetera, diversity, you’re not going to get as much out of it.
So when you have a profession dominated by the same type of people working at the same type of institutions, you’re going to get less innovation, because you have less people, fewer people working at these problems, coming at it from different perspectives, which is where innovation comes from. And so, that has, I think, arguably led to stagnation within the field for a very long time. That’s why it’s important.
Nick Hanauer:
For sure.
David Goldstein:
And because it’s such an influential field in terms of politics and policy, you want that competition and diversity to be there.
Nick Hanauer:
Yeah. And the truth is that I don’t care if you’re a scientist or, I suppose the best scientists are better at, how do I put this? The thing about people is what we believe is rarely based on facts and evidence, it is what makes us feel good. And if you’re an old white, rich guy, an economic framework that privileges old, white, rich guys is just going to feel better than one that privileges people who are not like you. And so, if the profession had been more diverse over the last 50 years, socioeconomically, racially, gender, I think it’s likely that we wouldn’t have ended up with these works so much, because a lot of people who were in the field would’ve would’ve pushed back on them. They would’ve been like, “Tax cuts for the rich probably don’t create growth. That’s just a thing rich people say to poor people.”
David Goldstein:
Oh, you’re just a camp following whore, Nick.
Nick Hanauer:
I guess so, yeah.
David Goldstein:
I mean, you are challenging the core principle of economic science. I mean, I go back to that Paul Romer piece that I mentioned, the trouble with macroeconomics and a weirdly funny paper by an economist. But in his abstract, he compares the past 50 years of macroeconomics to string theory. He says, “A parallel with string theory from physics hints at a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth.”
And to some extent, Nick, this is what we’ve been pushing back here on this podcast for years, that there is scientific truth out there. And David’s not wrong, a lot of people in the profession understand this. They accept it. It’s talked about within the profession. It just doesn’t come through to the people making the decisions.
Nick Hanauer:
Correct. And that’s the big problem, is that you could still get away with saying that lower taxes for rich people will be good for the economy, or that raising the minimum wage would be bad for the economy, right?That’s the problem.
David Goldstein:
Which is why we’re about to get tax cuts for the rich and no increase in the minimum wage.
Nick Hanauer:
Yeah, absolutely. All right, well, that was fun.
David Goldstein:
Yeah. Again, if you want to read more from David, we will provide a link to his peace in the Atlantic. Break Up Big Econ.
Outro:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to follow, rate and review us wherever you get your podcasts. Find us on other platforms like Twitter, Facebook, Instagram and Threads at Pitchfork Economics. Nick’s on Twitter and Facebook as well, at Nick Hanauer. For more content from us, you can subscribe to our weekly newsletter, The Pitch over on Substack. And for links to everything we just mentioned, plus transcripts and more, visit our website PitchforkEconomics.com. As always, from our team at Civic Ventures. Thanks for listening. See you next week.