This week, Nick and Goldy are joined by MIT economist Anna Stansbury to discuss the troubling lack of socioeconomic diversity within the economics profession. Stansbury discusses her research from a paper she co-authored with Robert Schultz titled “The Economics Profession’s Socioeconomic Diversity Problem”, which reveals that a strikingly low percentage of economists come from less-advantaged backgrounds. They have a thoughtful discussion about how that lack of diversity affects the profession’s ability to address issues of power, inequality, and social problems, and they highlight the need for more diverse perspectives in the profession to ensure a more inclusive and equitable approach to economic analysis. They also point out that diversifying the field is not just a matter of equity but is crucial for fostering innovative solutions to economic challenges.
Anna Stansbury is an economist and Assistant Professor of Work and Organization Studies at MIT Sloan School of Management. She is also a nonresident senior fellow at the Peterson Institute for International Economics. Her research primarily focuses on labor economics, with a particular emphasis on wage inequality, labor market power, and the dynamics of worker power within organizations. She recently co-authored a paper with Robert Schutls, “Socioeconomic Diversity of Economics Ph.Ds,” published by the Journal of Economic Perspectives.
Twitter: @annastansbury
Further reading: Socioeconomic Diversity of Economics PhDs
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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.
Joe Biden:
It’s time to build our economy from the bottom up and from the middle out, not the top down.
Nick Hanauer:
Middle out economics is the answer.
Joe Biden:
Because Wall Street didn’t build this country. Great middle class built this country.
Nick Hanauer:
The more the middle class thrives, the better the economy is for everyone, even rich people like me.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
David “Goldy” Goldstein:
One of the things we struggle with on this pod, Nick, is, well, I don’t know how else to say it, but DEI, diversity, equity, and inclusion. This is an economics podcast and we like to have a lineup of guests who aren’t just a bunch of old white men, and it’s hard because the economics profession, if we’re talking to economists… And we don’t always talk to economists. We probably talk to economists less than most economics podcasts. It is a very non-diverse profession, academic economics. That has been our sense intuitively, but it turns out there’s actually some data on this.
Nick Hanauer:
That’s right. Yeah. It’s really interesting. Today, we’re going to talk to an economist who’s going to talk about other economists. I think I put that right. Anna Stansbury is an economist and assistant professor of work and organization studies at the MIT Sloan School of Management and she’s also a non-resident fellow at the Peterson Institute for International Economics. But her recent paper that she co-authored with Robert Schultz is Socioeconomic diversity of economics PhDs, and it’s a fascinating paper, Goldy, because you and I would’ve guessed and I think you don’t have to do an economics podcast to guess that most economists are likely to be wealthier and whiter than the typical-
David “Goldy” Goldstein:
And male-r.
Nick Hanauer:
Yeah. Yeah. Than the population. But her paper is shocking because she found the data to characterize this in a more quantitative way.
David “Goldy” Goldstein:
Yeah. And it’s not just less diverse in terms of gender and race. It turns out it’s less diverse in terms of socioeconomic background.
Nick Hanauer:
Right. In plain language, virtually all economists certainly in the United States are rich kids or come from… And that is a fascinating finding and explains so much-
David “Goldy” Goldstein:
Oh, so much, so much.
Nick Hanauer:
… about the blind spots that academic economics has had for the last 40 or 50 years. Anyway, it’s just a very interesting paper and I think it’ll be really interesting to talk to her to unpack some of this data.
Anna Stansbury:
I’m Anna Stansbury. I am an assistant professor at MIT Sloan and I’m a labor economist by training, so I study labor market inequality. And a recent paper I’ve written is a paper called the Economics Profession’s Socioeconomic Diversity Problem.
David “Goldy” Goldstein:
And as hosts of an economics podcast who have really struggled to put together a diverse lineup of guests, we are well aware of this diversity problem. Why don’t you just lay it out for us right from the top?
Anna Stansbury:
Yeah. Sure. I think it’s pretty well known, but still a problem that economics has a diversity problem with gender and also with race. Economics has a persistently low share of women that make it into the profession, either at PhD level or beyond, and a very low share, one of the lowest of any academic discipline in the US of underrepresented racial minorities. My work highlights a third dimension that I think until now has been pretty much ignored, which is the socioeconomic diversity dimension, and we show that economics also stands out as being particularly non-diverse in terms of its socioeconomic diversity, so its share of people who come from less advantaged backgrounds.
Nick Hanauer:
Without reading your paper, we would’ve guessed that, but the thing about your paper is the degree to which that is true is simply just shocking. So would you unpack that a little bit?
Anna Stansbury:
Yeah, and I agree with you. I started investigating this with the hypothesis that economics is maybe worse than average, but not that it’s by far the worst, so let me give some stats to kind of anchor our understanding.
What I do in the paper is I take data on all PhD recipients in the US. The National Science Foundation conveniently runs a census, so literally, everyone that gets a PhD in the US is in this data, and it asks everyone what the highest level of education attained by each of their parents is. So I use this as a proxy for the degree of advantage that you had in your background. It’s obviously not a perfect proxy, but it’s what we have, and I look at economics as compared to other fields. And I find that economics stands out as being the field with the lowest tier of first-generation college graduates and the highest tier of people who have a parent with a graduate degree. So to put some numbers on that, among all econ PhD recipients in the US in the last decade, less than one in four were first-generation college graduates and about half had a parent with a graduate degree, so that’s a PhD, an MD, a JD, an MBA, that kind of thing.
Nick Hanauer:
Yeah. Again, just to dimensionalize this, this is worse than art history.
Anna Stansbury:
Yes.
David “Goldy” Goldstein:
Right. You think if anybody could afford to be an art historian, it would be the child of well-off parents who can support them in that, and it turns out, no, it’s economists.
Nick Hanauer:
Yeah.
Anna Stansbury:
Yeah. That’s the one that really hits you over the head, right?
Nick Hanauer:
Yeah. You’re just like, “Wow.”
Anna Stansbury:
Yeah. We look at American PhDs and foreign PhDs separately because econ has a very high share of foreign PhDs. And among American PhDs, US-born PhDs, econ has a lower share than art history and than classics actually, which is another subject you’d think is very elite.
Nick Hanauer:
You need rich parents to study classics.
Anna Stansbury:
Yeah.
Nick Hanauer:
Yeah. It’s absolutely fascinating. Again, you would guess that it would be worse than average, but not this bad. So can you try to unpack why you think that is?
Anna Stansbury:
Yeah. I think it comes in a couple of blocks. Most of which are negative for economics. One of which is positive sort of unintended consequence. Let me start with the positive because that’s always nice. The positive is if you’re someone from a less advantaged background and you get something like an econ major in college, the econ major is one of the highest paid majors in terms of the kinds of jobs you can get after college. So I think to some extent, there’s a selection of people from less advantaged backgrounds out of pursuing further study in economics because they have great options in the private sector after their undergrad and more so than, say, if you did a major in sociology or even if you did a major in math, which are two subjects that are kind of close to economics from opposite sides. But my guess is that’s not the main reason that econ is not diverse and I think the other reasons are more problematic.
The two I’m going to focus on, number one is I think a lot of people don’t know what economics is and what it can do, and I think the way econ is taught even in undergrad, Econ 101, really kind of reinforces that. It makes it seem quite sterile. I think a lot of people think of economics as only about financial markets or people that want to be bankers, so you already lose a lot of people before they even come into econ. The econ major is already very non-diverse.
And then I think that economics as a discipline has a kind of set of norms and ways of talking about the world that are quite alienating and offensive and maybe disproportionately so to people from less advantaged backgrounds. Just to give one example, commonly used term is unskilled for the kind of work that doesn’t require a college degree. And I think if you’ve ever spent any time doing or working with people who are doing many of the kinds of jobs that don’t require a college degree, it’s very clear they’re not unskilled. And that kind of language may seem both offensive and inaccurate and therefore put people off the field.
Nick Hanauer:
Yeah. And if you turn that around, I mean, particularly neoliberal economics, it confirms the bias of people who come from advantage. In other words-
David “Goldy” Goldstein:
Meritocratic.
Nick Hanauer:
Yeah.
David “Goldy” Goldstein:
Meritocratic bias, the idea that, “Well, you’re coming from… It’s because you’re better.”
Nick Hanauer:
Yes. Right. I mean, for example, the whole notion that markets are efficient and therefore the rich deserve to be rich and the poor deserve to be poor. If this is what you’re going to school and being taught and you grew up in a less advantaged environment, that really has to be off-putting to the people who are not advantaged and music to the ears of the little white kids who grew up in Greenwich, Connecticut.
Anna Stansbury:
Yeah. I completely agree and I think that is true throughout the kind of school of thought in economics that thinks that way, and I think that’s also particularly true the way most people first encounter econ. I did my master’s in public policy at the Harvard Kennedy School and I saw people in the Econ 101 course who’d come from backgrounds that were less advantaged be really turned off by the kind of assumptions that were used when they were talking about who chooses to go to college or whether the minimum wage is efficient. Exactly what you were talking about.
Nick Hanauer:
Yeah. And the other thing that I know you explored or highlight is just how… I don’t know how to put it. I mean, we’re saying the same thing. But by the way, all of the problems that economics is supposed to solve have to do with the people at the bottom of the pyramid. Right? I’ve never thought about it before, but again, if you grew up in a working class family, it’s like you’re the lab rat in the lab that everybody else is talking about a little bit. Do you know what I mean? It would be kind of demeaning.
Anna Stansbury:
Yeah. I completely agree with that.
Nick Hanauer:
Right? I mean, I’ve never thought of it like that, but it just has to feel weird to be the poor kid in a class of rich white kids and have all this discussion and theory about efficient markets and all this stuff. And you’re like, “Well, actually, that’s just not my experience.” Right. Yeah.
Anna Stansbury:
I think that’s especially true to the extent that econ but also some of the social sciences sort of pathologize the behavior of poor working class people and asking questions, why is X person voting against their own economic interest? Or why is X person not responding efficiently to financial incentives or whatever it is? The framing of a lot of these things is fundamentally uncurious about the experience of the individual and coming from this perceptive of someone doing something wrong, which I think can also feel difficult.
David “Goldy” Goldstein:
I’m wondering also how much of this has to do with… I don’t know how to describe this other than pathological cultural norms within the profession. It’s not as much what they teach, but there seems to be a pathology in the culture of academic economics that tends to turn off. We know it tends to turn off women and minorities. It’s harder for them to advance within the profession, which is probably most of academics was like this 50 years ago, but it continues to survive within academic economics.
Anna Stansbury:
Yeah. I think that’s true and I think your point about economics being a place where it continues to survive also seems backed up by data. So if we look over time at how economics compares to other fields in terms of socioeconomic diversity, which is what I’m looking at, but also gender and also race, you see that economics has been among the bottom of the pack on all these fields, but has begun to stand out more and more over the last 20 years, particularly because the hard sciences have got better. The hard sciences were also kind of at the bottom of the pack, but math, computer science, physics, they’ve all started to get better on all these dimensions and economics has lagged behind, as if they’ve done some of the hard work on cultural change and mentoring and really improving access that we haven’t done properly in our field.
David “Goldy” Goldstein:
Okay. So those who complained about diversity and inclusion, they’ve got nothing to complain about with economics because it hasn’t gone there, the DEI stuff.
Anna Stansbury:
Not much. Not much. These things are changing slowly.
Nick Hanauer:
So let’s turn to why this is suboptimal because there’s a bunch of reasons. If your hope is that economics is a profession and economists will be useful to the world, why it’s not great that it’s so unreflective of the population as a whole, let’s talk about that.
Anna Stansbury:
Yeah. I think there are three reasons. Two of them apply to any field if you’re thinking about diversity and inclusion, and the third really applies to econ and other social sciences. The first two reasons are your classic efficiency and equity. Efficiency would be if you assume that talent is evenly distributed in the population, then if you’re only pulling from some segments of the population, you’re losing a whole bunch of talent. And that’s true if your recruiting economists or engineers or whatever, artists. Whatever field you’re looking at, you’re losing a bunch of talent.
Equity obviously, it would be socially optimal if people had the opportunities to fulfill their passions and their talents, but the third reason that I think it’s particularly important for economics is we are a social science, as you mentioned earlier, Nick, that is focused on trying to understand social problems, particularly issues and policies that disproportionately affect lower and middle income people. And we cannot possibly hope to understand these issues properly or develop the kind of correct answers if we don’t have representation from a very broad swathe of that population. I think there must be whole topics, nuances, answers, and potentially value systems that we’re missing, and that’s going to feed into policy recommendations. And I think that’s really the key reason that this matters.
And just to emphasize how unrepresentative we are compared to the general population, my estimates suggest that your average economics PhD recipient is about five times more likely to have a parent with a graduate degree than your average similar-aged person in the US, so it’s hugely disproportionately unrepresentative.
Nick Hanauer:
Yeah. As I read through your paper and interviews, I was just really struck by, again, just the sociology of this because I think it’s even deeper than finding the right answer to the question. It comes down to whether you’re asking the right questions or not, right? Because if it’s just a bunch of little white rich boys from Darien, Connecticut or wherever-
Anna Stansbury:
They’re always from Connecticut though, in your examples.
Nick Hanauer:
Well, I mean, I’m just-
David “Goldy” Goldstein:
Using that-
Nick Hanauer:
… I’m assuming that’s where Larry Summers grew up. He’s the-
David “Goldy” Goldstein:
Well, he’s the classic nepo baby of economics with two parents who were PhD economists.
Nick Hanauer:
Yeah. Whatever it is.
David “Goldy” Goldstein:
Wherever he came from.
Nick Hanauer:
You grew up in West Holly, in the Hollywood Hills, or Pasadena, or Greenwich, Connecticut, and you clawed your way into Hotchkiss and then went off to Stanford or Harvard or whatever it is, whatever that assembly line is. You are so unacquainted with the lived experience of the majority of citizens. And again, when you wrap that set of life experiences with all these neoclassical economic ideas about efficient markets and perfect information and homo economicus and the rest of it, which basically confers status on the people at the top of the pyramid and sort of dehumanizes everyone else, you’re left with a group of people who actually don’t really care or can empathize with or connect with the real problems facing the vast majority of citizens. So forget getting to the right answer. You don’t even ask the right questions if you’ve never experienced the challenges, I suspect. Look, economics went 50 years without ever addressing the questions of inequality, right? I mean, the profession didn’t-
David “Goldy” Goldstein:
Oh, Nick, there’s a big trade-off. Why would you want to explore that?
Nick Hanauer:
Yeah. Yeah. Yeah. Yeah. You have to account for that, right? You have to account for the fact that power disappeared from discussions about economics for 40 years, 50 years. It’s so unbelievable. Economics which can’t account for power is like a physics that can’t account for gravity. You are definitely missing one of the most important things. It’s pretty hard to just forget about it, unless you have never experienced the other side of it. Right?
Anna Stansbury:
Yeah. Literally, when I was thinking about what I was going to say today, I literally wrote down inequality and power as two of the key issues that we just didn’t think about, probably partly for this reason, so I completely agree. Yeah. I would say it’s not just about the answers and I would say it’s probably really about, if you think about the chain of, I don’t know, research from the germ of an idea all the way through to a policy recommendation, I think it comes at all the stages. It comes at what questions you look at, what topics you think are worth studying, and that could be, do you think inequality is important? Do you think power is important? But it could also be, do you even know that something exists?
I know on this podcast you’ve talked about non-compete agreements in the labor market before and I think economics has quite only recently really been studying non-competes and how they work in low and middle wage labor markets. And people like Evan Starr have done pioneering work on this, which has now translated into policy. But I think the reason we ignored it for so long is probably because basically no one had held a lower middle wage job and knew that many people were being asked to sign non-competes.
And I want to just be very clear here, I come from an advantaged background. My parents are lawyers. I’m very aware that I have these big blind spots and I’m just kind of doing this research to make sure that we’re all aware of this and trying to correct them. But I think it starts with the idea generation process, then it goes to what answers you find, and then it goes to how do you turn those empirical and theoretical answers using value judgments into policy recommendations because no piece of research becomes policy without the addition of value judgments, and I think that’s also really important.
David “Goldy” Goldstein:
Is there any data to look at subareas of the profession, whether it may be labor economists are more diverse than some other areas.
Anna Stansbury:
I would love to have that data and I don’t have it right now. In race and gender, you can see that and you do see that labor is more diverse. Health and education are probably more diverse still in terms of gender and racial composition.
Nick Hanauer:
Finance less.
Anna Stansbury:
Theory, econometrics, finance, and macro are the least diverse. Yeah. So I would guess this is also true for socioeconomic background, but we can’t see that yet.
David “Goldy” Goldstein:
Well, I mean, it’s rough, but race is often a good proxy for socioeconomic in the US.
Anna Stansbury:
It is and I think that’s really important to recognize. I also think it’s important to recognize that econ socioeconomic diversity problem exists within every racial group. So we’ve got the lowest share of first-gen college grads as compared to any other field, within white non-Hispanic PhDs, within African American non-Hispanic PhDs, and within Hispanic PhDs, and among the lowest within Asian American PhDs. So race and socioeconomic background are super correlated and indeed the intersection makes it even harder for people to succeed, but we’ve also got that problem when you’re thinking about non-minority racial groups and people from less advantaged backgrounds there.
Nick Hanauer:
Okay. So what should we do?
Anna Stansbury:
That’s the hard question, isn’t it? I mean, I think the ideal situation is obviously a situation where we have a much more diverse set of professional economists who are doing research and turning research into policy. Diverse along this socioeconomic metric, along race, along gender metrics, how do we get there is a big question. I would argue that there’s some low-hanging fruit and then there’s some kind of more substantive systemic change that needs to happen.
The low-hanging fruit is we’ve diverged from math and physics, not because math and physics and computer science are doing wildly, radically innovative things, but probably because they’re just doing more to do things like mentorship schemes, access initiatives, reaching out to students from low-income backgrounds and actively recruiting them. There’s a lot of tried-and-tested stuff you can do to increase diversity that is not rocket science and that we are just not systematically doing as a profession. But I think to make a big change, to make a big improvement, we need really a more radical change of approach to how we teach and think about these problems.
And I think that is happening to some extent in economic research. There’s a lot of economists now thinking about inequality, thinking about power, thinking about these questions from many different lenses, bringing in more perspectives, starting to do more interviews and surveys and qualitative work, alongside just looking at data, very divorced from people’s realities, but we need to do more of that. We need to change how we teach undergrad econ, bring more people into the subject early, think about rethinking our language, doing the kinds of things that you’re all doing here on this podcast.
Nick Hanauer:
When you discuss this with your colleagues, what’s the reaction you get?
Anna Stansbury:
I tend to get a pretty bimodal reaction. Either, “Oh, yeah, this sounds exactly right. I’m glad you’ve put numbers on it,” or, “No way. Why? That’s crazy.”
David “Goldy” Goldstein:
And let me guess, the “No way. Why? That’s crazy,” is coming from white men with well-educated parents.
Anna Stansbury:
Yeah. Unfortunately, I don’t poll my colleagues on their backgrounds, so I can’t tell that, but it doesn’t seem unlikely that that’s correlated. And I have had, since I put this paper out… I put the working paper out a while back. I’ve had a lot of people write to me privately about their experiences as someone from a first-gen background or a low-income background and just basically sharing how difficult it’s been, so I think those are the people who are less likely to be surprised. I think the bigger question that a lot of people have is, are you really sure that this affects our research? Why would it in some sense? And we’ve talked a little bit about it, but I think I like to give some more examples to try and get people on board with how it might help. I’m trying to do research on that topic as well, but I’ve come up with a whole list of examples now.
Nick Hanauer:
Yeah. I think that the really interesting part is the sociology of it. I think it feels like to me where the real ahas will go on for people will be when they… How do I put this? When they talk through with somebody who has these different life experiences, what it is like to talk about economics from their point of view like how the profession sort of… I think you used a good word, pathologizes. A lot of people who are disadvantaged are sort of pathologized and how that feels to in the profession and effectively be looked down on or have your life experience pathologized or looked down on. I think that there’s a lot of progress that could be made in helping people see and understand how off-putting that is and how that approach and those words and that language frame the questions and the discussions in ways that don’t lead to the right answers, or even worse, don’t lead to the right questions being asked and pursued. Right? I think that’s such an interesting thing to explore and I’m sure you’re doing it.
Anna Stansbury:
Yeah. I think you’re right and I think it’s a part of this starting assumption from which the interrogation proceeds. For example, for such a long time, the starting assumption from which interrogation of something like discrimination has proceeded is the Beckerians or Gary Becker model that basically discrimination is going to be outcompeted. So if you’re a theorist or an empiricist trying to demonstrate that there is discrimination, you’re proceeding from this null hypothesis and it’s taken decades to get to the point where the null hypothesis is not, there is no discrimination.
Another example would be, which I as a student of macroeconomics was always very annoyed by, is real business cycle macroeconomics, sort of one of the sets of models that was developed in the Freshwater School in the 1980s, basically didn’t have a way to generate involuntary unemployment. Involuntary unemployment being the idea that someone is unemployed and they want a job at the going wage but cannot find it. These whole set of models didn’t have a way to generate it. And I mean, it wasn’t just people from less advantaged backgrounds that thought this was crazy. There were lots of people that thought this was crazy from all backgrounds, but there was a whole period in macro where we went in circles trying to demonstrate that the Great Depression did actually have involuntary unemployment, and therefore, these models can’t explain it, which again it seems like you’re starting from that assumption and you’re someone who’s got a family member who’s experienced this. You think this is a waste of my time. Why should I be in this field?
Nick Hanauer:
Right. So interesting. Okay. A couple of final questions. First, why do you do this work?
Anna Stansbury:
Good question. I think as I said, I guess it’s not from my own personal background. I’m from a relatively advantaged background, but I think I’ve tried to be aware of the advantage and the privilege that’s given me. And I was doing some advocacy on gender, diversity, and economics when I was doing my PhD, and then came to believe that gender diversity is super important. We should keep working on it. But as a white British woman from an advantaged background who went to Cambridge for undergrad, I’m not particularly disadvantaged in this field and there’s a lot of people from other backgrounds who are more disadvantaged but may not fit in these brackets, and that’s basically why I started thinking about this. I thought no one was talking about it.
Nick Hanauer:
And the final question is the benevolent dictator question. If you were charge, what would you do?
Anna Stansbury:
If I would just snap my fingers, I would snap my fingers to bring a representative sample of people into the economics profession and train them as professional economists. That doesn’t seem super feasible, even as a dictator, so I think what I would do is I love the idea of citizens’ assemblies and citizens’ juries, and I wonder if you could bring in cross sections of people from all professions and all backgrounds basically to stress test economists’ ideas and get economists to have to present their ideas and their theories of how the world works to the people that are actually in those theories before we go.
Nick Hanauer:
That is a fun idea.
David “Goldy” Goldstein:
It’d turned out very poorly for economists, since-
Nick Hanauer:
That is a fun idea. I love that idea. In other words, present your paper not to a bunch of other economists, but have to present it to a hundred normal folks.
Anna Stansbury:
Exactly.
Nick Hanauer:
And justify that. Yeah. That would-
David “Goldy” Goldstein:
Because economists are clearly abnormal. We know that.
Nick Hanauer:
You’re not abnormal, Anna.
Anna Stansbury:
It’s okay. I’m abnormal. I accept it.
David “Goldy” Goldstein:
Thank you for adding a little gender and diversity to our podcast, if not economic or socioeconomic diversity.
Nick Hanauer:
Yeah. Yeah. Absolutely.
David “Goldy” Goldstein:
We’ll have to work a little harder there, obviously.
Nick Hanauer:
Yeah. Yeah. Thank you so much for your work and coming on. It’s really interesting.
Anna Stansbury:
Yeah. Thank you so much for having me. Thanks for taking an interest in this work. I really appreciate it.
David “Goldy” Goldstein:
We know the data, Nick. Not surprising. Academic economics, not very diverse, not very equitable, not very inclusive. Now, if you’re a Trumpist, you’re saying, “Who cares? It’s a meritocracy. Why are we putting all this effort in getting more diversity and inclusion into economics? We want the best and the brightest, right?” Let’s talk about why this is a really, really big problem, not just for the profession, but for policymaking and for the economy as a whole.
Nick Hanauer:
Yeah. Well, I had not thought about it carefully until I read Anna’s stuff, but I do really think that the sociology is really, really important. I think that an academic field that studies a thing that affects humans, where none of the humans who are studying it have had any of the life experiences that they’re studying is bad. Right?
David “Goldy” Goldstein:
Or that life experiences that they’re not studying because they don’t know that it’s something they need to study because they’re unaware of it because it’s outside of their realm of experience.
Nick Hanauer:
Yeah. Again, if you come from the top 1% and somebody tells you that markets are efficient and therefore the rich deserve to be rich and the poor deserve to be poor, the chances that you’re going to question that are very, very low. Right?
David “Goldy” Goldstein:
Why would you?
Nick Hanauer:
Why would you?
David “Goldy” Goldstein:
You’d like to think that you deserve what you’re getting.
Nick Hanauer:
Yes. A subject that pathologizes the lives or experiences of people at the bottom of the economic pyramid, that’s easy to do if you’ve never met any of those people or never had any of those life experiences.
David “Goldy” Goldstein:
Right. Or that, for example, says, “Oh, sure, we know that automation and offshoring, it’s going to affect individuals.” But in the aggregate over the long run, we’re so much better off because the economy is more efficient, and over the next 50 years, people will benefit from that. Well, it’s easy to ignore the individuals who are being shafted by this transformation without any help because, well, you don’t know any of them.
Nick Hanauer:
That’s right.
David “Goldy” Goldstein:
But I want to get into one of the things she touched on briefly is how inefficient this makes the economic profession. This gets to a core… I think one of the first things you had me read when I started working for you a decade ago was Scott Page’s stuff about cognitive diversity. And it’s this really important insight into how innovation works.
The example is if you fill a room with Harvard PhDs, the smartest people in the world allegedly, really well-educated, the type of people, by the way, who dominate the economics profession, and you give them a problem to solve. And then you have another room with a much more diverse group of people. Some of them might be Harvard PhDs. Some of them are from community college. Some of them are working people without a college education. But from all different backgrounds, different races, ethnicities, socioeconomic backgrounds, upbringings. And you take those two rooms. You have 20 of them in each room and you ask them to solve a problem, you’re going to solve that problem faster in the room with the more cognitively diverse room. And the reason is very simple. When you lack cognitive diversity, you have everybody approaching the problem at the same time in largely the same way. There’s not a lot of innovation there.
But when you have a cognitively diverse room of people trying to solve a problem, you’re going to get all these different paths towards the same solution, and you have a much higher chance of coming upon the actual solution, the most efficient solution to the problem. So cognitive diversity actually has always been America’s superpower because we are the most diverse economy on the planet because our population is so diverse because we are a country of immigrants. And people are coming at this, and while we have all types of problems in terms of including people, we do it better than most other places. And when you have a profession like economics, which lacks diversity, it totally explains why the profession has been so stagnant and unchanging and so resistant to new ideas and resistant to empirical data because it’s a bunch of people with shared experiences who generally think alike and that is set-
Nick Hanauer:
And who have benefited. And who have benefited
David “Goldy” Goldstein:
Right. But completely separate from their very understandable personal biases and experiences. They think the same, so they’re likely going to come to the same conclusion. So it blows their mind that 20 years of empirical data on the minimum wage that shows that in fact raising the minimum wage has little or no disemployment effect. In fact, it may have a positive employment effect and they can’t accept it. They just can’t because this is the way they were taught and they can’t think outside that box.
Nick Hanauer:
Yeah. Again, I think that this lack of socioeconomic diversity goes so far in explaining how economics could have not addressed issues of power and inequality for a generation. How do you get there?
David “Goldy” Goldstein:
Well, when it’s-
Nick Hanauer:
If you got a ton of power and you’re rich, it’s pretty easy to forget about those things.
David “Goldy” Goldstein:
Yeah. So this is important and explains so much about why we’re still teaching introductory economics the way we’re still teaching. I mean, time and again, Nick, our guests, again, largely non-diverse guests will come on and they will make this defense saying, “Oh, well, the profession is changing.” We know that these are just models, as Krugman says, “useful fictions,” that are good for kind of explaining the basics, but we know that it doesn’t actually work this way. Yet they teach it as if it actually works that way. And that’s how people come out of their Econ 101 class believing, “Well, anything we do to help the poor is just going to hurt them because it’s less efficient.” There’s always that big trade-off, Nick. And you get the inability to solve the homelessness crisis because we can’t view it as an economic… “Oh, it’s drug addiction and mental illness and people are making bad choices.” No. It’s a housing shortage.
Nick Hanauer:
Yeah. Exactly.
David “Goldy” Goldstein:
There’s the straight-up correlation between housing prices and homelessness. Where there’s a housing shortage, there’s more homelessness. And that’s why you have homelessness crises in wealthy cities like Seattle because everything is expensive here. But no, we need to solve crime and drug addiction,” and, “Oh, our social services, they’re just too generous that we’re providing free sandwiches to homeless people, and that’s why they’re coming here.” “Oh, it’s our weather because everybody enjoys sleeping out in the rain.”
Nick Hanauer:
45 degrees.
David “Goldy” Goldstein:
I mean, I think, again, it’s not the only reason, but the reason why the orthodoxy is so orthodox is that lack of diversity within the profession and it’s something that isn’t going to change until-
Nick Hanauer:
The profession changes.
David “Goldy” Goldstein:
… the profession changes. And it’s trailing behind the rest of academia. Again, if you want to read more on this, there is a link in the show notes to Anna’s paper, Socioeconomic diversity of economics PhDs. The spoiler alert, there’s not much.
Speaker 5:
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, @PitchforkEconomics. Nick’s on Twitter and Facebook as well @NickHanauer. 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 at pitchforkeconomics.com. As always, from our team at Civic Ventures, thanks for listening. See you next week.