The question in the title of this post - What Are Academics Good For? - was meant to be rhetorical. I took it for granted that as a collective academic economists did know rather more about economic policy than business leaders or city economists, and the point of my post was to ask why this often appeared not to be recognised by some journalists or some politicians. I included some quotes from a journalist suggesting otherwise because I found them rather shocking.
It serves me right of course. What I got almost universally in comments was a discussion of all things wrong with academic economists. Even the estimable Chris Dillow joined in. So what I should have done first is establish what academic economists are good for, and then complained about those who do not recognise this. But better to do things in the wrong order than not at all.
First a point on scope that I did make but is worth repeating. When it comes to short term macro forecasting, you are no better off asking academic economists. In fact you may be worse off, because most academics spend very little time looking at the latest indicators. The best macro forecasts, whoever makes them, are only marginally better than intelligent guesswork - this is a well established fact.
One area where academics typically have expertise relative to other people is on issues involving economic policy - for macroeconomics, for example, on issues involving monetary and fiscal policy. Issues like whether austerity is expansionary or contractionary. I took this for granted because academics spend a large amount of their time doing research on these issues. Much of this research involves assessing evidence. They do this in a highly competitive environment, constantly subject to peer review. In addition, they often compete for research grants, where the opinions of end users (like the Bank of England) can matter a lot.
Of course there are things that could be improved within academia, and as Chris notes I have not been shy of giving some of my own opinions about where this might be. But since economics first started being studied, we have accumulated a substantial body of knowledge which policymakers have found useful. Policymakers should never take advice uncritically, but they should and do treat academic advice as a bit more than just another opinion.
What evidence do I have for this claim? First, a lot of the time politicians and their civil servants do seek out and make use of this knowledge. Indeed I ventured that the previous UK government might have represented a high point in the influence of academic economics generally, including macro. I described the evaluation of the 5 tests over whether the UK should join the Euro as an exemplar of how the interaction between academics and policymakers should work.
You could also look at central banks. When it comes to issues of how best to conduct monetary policy, central banks predominantly look to academics (mainstream rather than heterodox) for ideas and analysis, rather than city economists or business leaders. The analysis they use in house is often based on techniques initially established by academics, and they hire new PhDs to undertake that analysis.
If you are not convinced by any of that, have a look at the simple test I described in that recent post. The assertion that the 2013 UK recovery validates 2010 austerity is not a complex issue or a matter of judgement – it’s a simple mistake. Most academics understood that, but only half of city economists did.
So that is why I found those quotes from a well known journalist shocking. As I suggested in that post, I think it reflects an anti-intellectual theme that affects other subjects as well. You will find this kind of thing on both sides of the political spectrum, although for whatever reason it seems to be more influential on the right than the left right now. I got sent today some correspondence about austerity involving an MP, where the MP said this. “You may come at this from an academic viewpoint - I come at it from a real world viewpoint and as someone who has worked in a sector where you have to earn money before you can spend it.” That statement is so wrong for many reasons, but it also illustrates a damaging contempt for academic knowledge.