My new hobby: going around the department and photographing the cartoons that people have on their doors, cubicle walls, etc. Today’s installment:
Since my default nature is to be a brat, my first thought upon seeing this was “wow, so this is what happens when people who know nothing about economics make economics cartoons.” So allow me to ruin the joke…
My first year of grad school, I had a professor who, when discussing macroeconomic ideologies, would make a lot of statements beginning with “well, for those of us who can see water…” This was confusing to me for a while, in no small part because the professor was trying to differentiate between the Harvard/MIT/Berkeleys of the world and the Chicago School historically espoused by faculty members at, you guessed it, the University of Chicago, but he didn’t seem to get that Chicago was in fact on a lake. (I am willing to give him the benefit of the doubt based on the fact that he is from Italy.) Not surprisingly, this is where the more commonly heard freshwater/saltwater distinction came from, since, if my middle-school geography has served me well, the Great Lakes are freshwater lakes and oceans are full of saltwater.
The freshwater/saltwater characterization was re-popularized a bit around 2009, bolstered by a pretty thorough ideological history lesson from Paul Krugman:
But since then macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense.
Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work, a premise violated by the story of the baby-sitting co-op. As they see it, a general lack of sufficient demand isn’t possible, because prices always move to match supply with demand. If people want more baby-sitting coupons, the value of those coupons will rise, so that they’re worth, say, 40 minutes of baby-sitting rather than half an hour — or, equivalently, the cost of an hours’ baby-sitting would fall from 2 coupons to 1.5. And that would solve the problem: the purchasing power of the coupons in circulation would have risen, so that people would feel no need to hoard more, and there would be no recession.
You’ve probably noticed that the recurring relevant theme is that ideologies tend to cluster at particular schools, meaning of course that, if the cartoon were accurate, it would have all of the economists at the school pointing in the same direction but in a different direction from economists at other schools. Granted, this clumping has become less pronounced at some schools as of late- the first example that comes to mind is the fact that prominent behavioral economist Richard Thaler is employed by the University of Chicago. On the other hand, while it may be true that the freshwater/saltwater schools are converging a bit, it is still the case that aa good number of other schools- George Mason University, West Virginia University, University of Massachusetts Amherst, University of Missouri-Kansas City, among others- are still closely aligned with specific ideologies and schools of thought. (It’s also sort of a fun exercise to google these schools and see how long it takes to identify the associated ideology.) I am tempted to think that the scenario in the cartoon would actually be better for a school than what we more commonly see, since intellectual diversity can be an important driving force for better thinking and helps prevent a department of smart people to devolve into one big academic circle jerk.
While we’re on the subject of ideologies, here is a pretty thorough rundown of the ideologies of all Nobel Laureates up through 2012 as well as some discussion on ideological migration:
Although it is rare that someone changes his or her ideological outlook after the age of 25, it happens sometimes. This issue of Econ Journal Watch (download, .pdf) is given over to a special project that considers such changes as may have occurred among the 71 individuals who, through 2012, won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
Ideological profiles of all 71 laureates make up the bulk of the issue. The 71 profiles are bundled in a single large document that is equipped with handy links for internal navigation.
Ideological change is interpreted in terms of either growing more classical liberal or growing less classical liberal.
(For context, you can roughly think of “classical liberal” as a synonym for “libertarian.” Also, H/T to Marginal Revolution.) If this is any indicator, I am going to be waiting a long time for the mythical unicorn that is the ideology-free economist, but I guess that that is sort of a nice reminder that economists are people too.
Bonus Public Service Announcement: I am told that Alan Greenspan will be appearing on The Daily Show tonight.