“How a clergyman’s insights can answer panellists’ prayers” (Opinion, 19 September) by economists Andrew Oswald and Daniel Sgroi nicely illustrates what is wrong with economics today: a willingness to sacrifice real-world relevance to simplistic models.
Economics is in crisis because of this tendency. Its leading journals are full of articles that put forward simplistic (yet mathematically complicated) models of some analytical elegance but limited applicability, whose practical use requires substantial intellectual corner-cutting by eliminating anything that does not fit their assumptions. Government policies based on them are often ineffective or downright wrong, even dangerous – as the financial crash of 2008 and the continuing recession show.
The real question that will face the economics REF subpanel is whether it ignores the failure of this kind of fashionable economic thinking (for example, ideas sometimes called Zombie Economics – efficient market hypothesis, rational expectations theory, general equilibrium theory and so on) by applying a common-sense test of impact.
The other trouble with the unworldly Sgroi-Oswald methodology is that work criticising such failed thinking counts as a positive measure of its quality. Their own paper is published in a high-ranking title, The Economic Journal, so it starts with a good prior score. Any comments pointing out its limitations are counted as citations, which enhance its metrics-based score.