DARPA, the NSF and the social benefits of economics: a comment on Cowen and Tabarrok

Tyler Cowen and Alex Tabarrok have a new piece in which they ironically note that economists are surprisingly shy when it comes to applying their tools to evaluate the efficiency of the NSF economics grant program. Their target is a companion JEP article in which Robert Moffitt defends the policy-relevance of economics against the last round of attacks on NSF’s social science budget, not least Senator Coburn’s 2011 list of wasteful federal spending. Cowen and Tabarrok criticize Moffitt’s use of the econ relevance poster child, Paul Milgrom’s research, which, legend says, has brought 60 billions $ to the US government through rounds of FCC spectrum auctions. This is a typical case of crowding-out effect, they argue, since private firms like Comcast, who also saved $1,2 billion in the process, had huge incentives in funding that research program anyway. Likewise, they note, the quest to raise revenue in sponsored search auctions led Google engineers to rediscover the Vickrey-Clarke-Groves mechanism. NSF funding should thus be shifted to high social benefits programs, for instance setting up a replication journal, supporting experimental projects with high fixed costs or –here they agree with Moffitt – deploying large publicly available datasets such as the Panel Study of Income Dynamics, which was specifically targeted by Coburn.

NSF grants are also biased toward research programs with high probability of success, already well established and published in top journals, they add. Such “normal science” is hardly groundbreaking. NSF should rather emulate DARPA and fund “high risk, high gain, and far out basic research” (which could include heterodox economics). They also suggest shifting from funding grants ex ante to giving prizes ex post (DARPA’s practice), because this creates competition between ideas. If an heterodox model provides better predictions than mainstream ones, then a NSF prize would signal its superiority.

The paper is challenging and, as always with the authors, unrivalled in its clever applications of economic tools. My problem is with:

1.their romanticized picture of DARPA

2. their lack of discussion of how the public “benefits” of economic research should be defined

 1. Should the NSF emulate DARPA?

department_mad_scientists_paperback-224x300 Cowen and Tabarrok’s suggestions are predicated on the impressive record of the Defense Advanced Research Projects Agency in promoting groundbreaking research, from hypersonic planes, driverless cars and the GPS to ARPANET and onion routing. This success is usually attributed to the philosophy and structure of the secretive defense institution founded in 1958 to “prevent technological surprise like the launch of Sputnik,” and later to “create technological surprise for US enemies.” Michael Belfiore, for instance, has described a “department of mad scientists” who profess to support “high risk, high gain, and far out basic research.” This is achieved through a flexible structure in which bureaucracy and red tape are avoided and the practical objectives of each project are carefully monitored. I have only skimmed Anne Jacobsen’s recent “uncensored” history of DARPA, but so far it does not seem to differ much from Belfiore’s idyllic picture. Yet digging into the history of specific projects yields a different picture. In his account of DARPA’s failed Strategic Computing program, Alex Roland explained that while the high-risk, high-gain tradition served as the default management scheme, the machine intelligence project was supervised by no less than 8 different managers with diverging agenda. Robert Kahn, the project’s godfather, believed that research was contingent and unpredictable and wanted to navigate by technology push, whereas his colleague Robert Cooper insisted on demand pull and imagined an AI development plan oriented toward innovations he could sell. Some viewed expert systems as crucial and other dismissed it, which changed what applications could be drawn from the program.

Roland’s research exemplified the difficulty of DARPA’s officials in agreeing over a representation of the scientific, technological and innovative process that would yield maximum benefits. And benefits were to be evaluated in terms of defense strategy, which the history of Cold War science has shows was far easier than to evaluate the benefits of social programs. From cost-benefit analysis to GDP, hedonic prices, contingent valuation, VSL or public economics, the expertise economists have developed is precisely about defining, quantifying and evaluating “benefits.” But the historical record also shows each of these quantifications have been fraught with controversy, and that when it comes to defining the social benefits of their science as a whole, economists are not even struggling with quantification yet. For the last 70 years, they have been stuck with negotiating a definition of “social,” “public” or “policy” benefits consistent with the specific kind of knowledge they produce with their patrons.

2. Fighting over “policy benefits”

Moffitt’s article is only the last instantiation of a series of attempts to reconcile economists’ peculiar culture of mathematical modeling with external pressures to produce useful research, their quest for independence and their need for relevance. This required a redefinition of the terms “pure,” “applied,” “theoretical,” or “basic,” and Moffit’s prose perfectly illustrates the difficulty and ambiguity of the endeavor:

The NSF Economics program provides support to basic research, although that term differs from its common usage in economics. Economists distinguish between “pure theory” and “applied theory,” between “pure econometrics” and “applied econometrics,” and between “microeconomic theory” and “applied microeconomics,” for example. But all these fields are basic in the sense used in government research funding, for even applied research in economics often does not concern specific programs (think of the vast literature on estimating the rate of return to education, for example, or the estimation of wage elasticities of labor supply). Nevertheless, much of the “basic” research funded by NSF has indeed concerned policy issues, which is not surprising since so much of the research in the discipline in general is policy-oriented and has become more so over time. Although most of that research has been empirical, there have been significant theoretical developments in policy areas like optimal taxation, market structure and antitrust, and school choice designs, to name only three.

 For Moffitt, in other words, the nub of the funding struggle is that both theoretical and applied economics are considered “basic” by funding agencies because they are only indirectly relevant to specific policy programs. Trying to convince patrons to fund “basic” or “theoretical” research was an issue even before the NSF opened its social science division in 1960. At that time, economics’ major patron was the Ford Foundation, whose representatives insisted on funding policy-relevant research. Mathematically-oriented economists like Jacob Marschak, Tjalling Koopmans, or Herbert Simon had a hard time convincing Thomas Carroll, head of the behavioral science division, that their mathematical models were relevant.

NSF’s economic funding remained minimal throughout the 1960s, and it climbed substantialy only after the establishment of the Research Applied to National Needs (RANN) office in the early 1970s. Tiago Mata and Tom Scheiding explain that RANN funded research on social indicators, data and evaluation methods for welfare programs. It however closed in 1977 after Herbert Simon issued a report emphasizing that the applied research funded was “highly variable in quality and, on the average, not impressive.” The NSF continued to fund research in econometric forecasting, game theory, experimentation and development of longitudinal data sets, but in 1981, Reagan made plan to slash the Social Sciences NSF budget by 75%, forcing economists to spell out the social benefits of their work more clearly. Lobbying was intense and difficult. Kyu Sang Lee relates how the market organization working group, led by Stanley Reiter, singled out a recent experiment involving the Walker mechanism for allocation a public good as the most promising example of policy-relevant economic research. Lawrence Klein, Kenneth Arrow and Zvi Griliches were asked to testify before the House of Representatives. The first highlighted the benefits of his macroeconometric models for the information industry, the second explained that economic tools were badly needed at a time when rising inflation and decreasing productivity needed remedy, and the third explained that

…the motivation for such selective cuts [could only be due to] vindictiveness, ignorance and arrogance: Vindictiveness, because many of the more extreme new economic proposals have found little support among established scientists. Because they have not flocked to support them, they are perceived as being captives of liberal left-wing ideologues; Ignorance, because this is just not so. It is ironic and sad that whoever came up with these cuts does not even recognize that most of the recent ‘‘conservative’’ ideas in economics – the importance of ‘‘rational expectations’’ and the impotency of conventional macro-economic policy, the disincentive effects of various income-support programs, the magnitude of the regulatory burden, and the arguments for deregulation – all originated in, or were provided with quantitative backing by NSF supported studies. And arrogance, in the sense that those suggesting these cuts do not seem to want to know what good economic policy can or should be. They do not need more research, they know the answers.

 31r2hG8wtzL._SY344_BO1,204,203,200_Sounds familiar? The ubiquity of Al Roth’s research on kidney matching in economists’ media statements, the proliferation of books such as Better Living Through Economics, Angus Deaton’s 2011 Letter from America, the 53 proposals by economists to rethink NSF future funding, and Moffitt’s article can all be interpreted as attempts to redefine the relationship between basic, applied and policy-relevant research and to provide a framework to assess the public benefits of economic research. They all exhibit tensions between publicizing benefits, and maintaining objectivity, independence and prestige. Reconciling these contradictory goals underwrite centuries of terminological chicanery. In 1883, physicist Henry Rowland delivered a “Peal for Pure Science” in an attempt to divorce his research from the corrupting influence of money and materialism on “applied” physics. In an effort to promote both scientists’ autonomy and their ability to foster profitable industries and strategic military applications, Vannevar Bush introduced the term “basic science” into his 1945 Endless Frontier report. And this is how Moffitt ended up straddling pure, applied, basic, practical, theoretical and empirical science. Economists nevertheless might be able to cut through these debates over the “policy benefits” of their science by turning it into a battle of indicators, as they successfully did with the concepts of growth and inequality.

Bonus question that no paper on NSF econ funding addresses. How has the NBER succeeded in monitoring 15% of NSF econ grants, and what are the consequences on the shape of econ research?

A few reads on (and for) Paul Romer, next World Bank chief economist

A few years ago, the World Bank sounded Paul Romer to fill its chief economist position, and he was not interested. It seems that, after several lives as academic, entrepreneur and urban thinker, he is now ready to become a “global intellectual leader.”

Capture d’écran 2016-07-24 à 19.10.22As a growth economist, Romer has earned fame by making the production of knowledge endogenous. This story has been masterfully narrated by David Warsh, though commentators disagree on what exactly made Romer’s 1990 paper a tour de force. For Warsh, it was that solving the 200 year-old Adam Smith paradox. The Scottish economist had emphasized both the importance of specialization and associated increasing returns to scale (the Pin Factory) and the importance of competition to produce wealth (the Invisible Hand). Yet, increasing returns to scale act toward concentration and the gradual suppression of competition. Romer’s contribution was not merely solving the puzzle, Warsh argues, but doing so formally. The notion that knowledge was not a standard private good and could yield increasing returns to scale had been around since Arrow, Johnson or Griliches at least. But models with increasing returns were technically difficult to solve, and, Warsh points out, the internal dynamics of the discipline requires that new intuitions be formally incorporated into economic models. Romer’s idea was to model knowledge as non-rival and non-excludable. Yet, according to Joshua Gans, Romer’s pathbreaking advance wasn’t so much how he put knowledge in the production function, but rather how he closed the model with a market for intellectual property derived through demand for new goods, and markets for skilled and unskilled labor.

Romer then left academia to engineer a teaching and grading plateform called Aplia. Around 2008, he thought more deeply about ways to foster development and came up with the idea to set up charter cities : wherever existing institutions and vested interests prevented the development of economic activities, he argued, new cities should be erected on land leased to foreign powers. The governance, institutions and sets of rules of those cities are thus imported.  As Sebastian Mallaby explains, his idea stem from the study of Hong-Kong and was unsuccessfully applied to Madagascar. Charter cities were met with considerable resistance in intellectual circles (see his debate with Chris Blattman or Mallaby’s characterization of the idea as “neo-medieval and neo-colonial”), but this did not deter Romer from setting up an urban institute at NYU. Last year, frustrated that economic scholarship on growth had not converged toward a consensus, he called his former PhD advisor Robert Lucas out for using mathematics to smuggle ideological assumption in his analysis (a sin he called ‘mathiness’).


Lauchlin Currie, Paul Romer


Le Corbusier’s plan for Bogota

In the post explaining his new career move, Romer writes about his attempts to build “a new academic field of inquiry based on ‘the city as a unit of analysis’” at NYU. In an interesting twist, he is joining an institution whose history shows that bringing together development and urban scholarship is nothing new.  Back in the 1940s, neither promoting growth nor managing cities were understood in terms of non-rival goods, scales, spillovers, etc. Yet both lines of thought laid at the heart of economists’ original reflection on the Bank’s strategy, as shown by the extensive research Michele Alacevich has conducted on the early years of the World Bank. In 1949, lacking the data to define a loan policy, the Bank sent Lauchlin Currie, former economic advisor to Roosevelt, to Colombia. Currie wanted a development plan that would stimulate the latent potential of specific sectors while simultaneously achieving social aims. This, he believed, could be achieved by supporting the labor-intensive housing sector in the sprawling city of Bogota. Developing a capital city district and reorganizing basic public services such as water and electricity delivery therefore laid at the heart of the Plan para Bogota he framed with Enrique Penalosa. In an attempt to gather data and expertise, Currie soon found himself working in close association with architects José Luis Sert and Paul Wiener. The latter had produced a distinct urban plan, blending Sert’s ‘organic city’ approach with the functional guidelines previously defined by Le Corbusier. The collaboration was abruptly interrupted by a coup, but at the Bank, the idea that investing in urban planning and in particular housing would foster economic and social development stuck around.




Le Corbusier, Sert and Weiner in Bogota (1950)


In these early years, though, being a bank lending money to individual profitable projects and being a development institution seemed irreconcilable. In the fight over the accurate way to define creditworthiness – through debt service ratio or through the ability to productively use loans to boost growth in the long term, a perspective favored by economist Paul Rosenstein-Rodan, Wall Street-trained top managers sided with the Loan Department. The project of giving social loans to improve housing conditions and city infrastructures was rejected, and the Economic Department was disbanded in 1952. A few economic advisors to the president remained, but the position had no operational responsibility and was staffed with figures who left little imprint, such as Irving Friedman. For more than a decade, Alacevich relates, the World Bank was thus estranged from development economics, which was developed in a few university bodies such as MIT’s Center for International Studies. Another hothouse for development ideas was the central and regional offices associated with the United Nations, where the likes of Gunnar Myrdal in Europe, or Raul Prebish is South America, forged theories centered on capital, investment, big push and path dependency (with a concern for institutions, learning-by-doing, already).


Robert MacNamara and Hollis Chenery


The Bank’s isolation ended in the mid-1960s. Faced with a stream of criticisms on the Bank’s results, newly-appointed president George Woods stated that “Gene Black [the previous president] is afraid of economists. I am not.” He reopened the Economic Department with the hope of turning the Bank into a “development agency” and of funding wider social projects. Woods’ reorientation was met with resistance, but by 1969 the department was staffed with 120 researchers and had launched projects involving, notably, Albert Hirschman. His vision was fulfilled by his successor, Robert McNamara, who dramatically increased the number and variety of loans. A cornerstone of McNamara’s  overhaul was the recrutment of development economist Hollis Chenery as advisor. Chenery adopted a long-term strategy based on the reduction of poverty, strengthened longstanding ties with the International Labor Organization and borrowed the basic needs approach from Paul Streeten’s group. Essential to McNamara’s reorientation, Alacevich notes, was also the establishment of an Urban Development Department and an Urban Poverty task group, again focused on housing. Within academia, some urban economists were also concerned with the tied between cities and development.

Capture d’écran 2016-07-24 à 19.43.07.png


As documented by Sarah Babb, the strategy of development banks has often been aligned with the US government’s ideology. Therefore, the replacement of McNamara and Chenery by Alden Clausen and Anne Krueger in 1982 shifted the Bank’s philosophy toward a “Washington Consensus” consistent with Reagan’s program. But Chenery’s long and influential term had created some intellectual and institutional space for economists at the Bank. It  stabilized the reliance upon economic and urban approaches to development, though it is not clear to me how much cross-fertilization between the two programs there was in the 70s. It was eventually two World-Bank researchers that Romer recruited in the 2000s to build his Marron Institute of Urban Management, and Alain Bertaud and Schlomo Angel‘s résumés illustrate how differently economics and urban planning insights are waved together by economists and urbanists.  Though Bertaud explicitly intends to bridge “the gap between urban economics and operational urban planning,” both researchers were trained as architects and define themselves as urban planners. The effects of Romer’s leadership on the Bank’s strategy and on the fields of development, urban economics, and urban planning will thus be interesting to see.

A virtual summer camp for historians with deadlines

The blog History of Economics Playground began in November 2007.  We were brought together as the youth of the history of economics. In a field that honors the discrete and collected elder, we wanted to brave new ground. We wanted to be serious about being playful. For 4 years, we debated, gossiped and expressed our feelings about life in scholarship. In 2011, we left the playground and went blogging @INET.

billwattersonNine years after, we’re hopefully still good-looking and enthusiastic, yet also swamped with deadlines. Some of us are writing habilitation theses, others are finishing a book,  revising some articles, preparing talks and lectures or applying for grants. This summer, we will be reading the same books and papers, and our topics will often intersect. We will research various protagonists embedded in similar contexts, yet we will disagree a good deal about what shaped economics as we know it today. We are therefore reopening our old playground for a couple of months, turning it into a summer bootcamp for historians with deadlines.

Pooling together for 2016 summer camp are Ivan BoldyrevBeatrice CherrierYann Giraud and Tiago Mata. Others will meet us by the beach at some point. If you’re interested in joining, just send an email to any of us.

Time to get a tan.


INET and reforming economic education: can history help?

One INET project is to “reconnect the teaching of economics with the working of the actual economy,” which is to begin with a reform of the undergraduate curriculum. For this purpose, a two-legged task force was established, with Robert Skidelsky chairing the British committee and Perry Mehrling the American one. Both committees reported on their progress at the Bretton Woods conference (see the videos of the sessions)

The purpose here is not to discuss the task force’s proposals. Nor is it to argue for the reintegration of history of economics to the curriculum. Some historians and economists alike have repeatedly advocated such reform since the current crisis broke out. The only problem being that the “history” economists have in mind doesn’t seem to be the “history” historians are writing. But I shall elaborate on this in future posts.

My concern is that, while I have something to say about reforming economic education as a former student and a teacher, I’m not sure what my contribution could be as a historian – assuming that economists need historical insights to devise their reforms.

Perry Mehrling began his Bretton Woods talk with the idea that “things (e.g. economic education) are the way they are for a historical reason and they stay the way they are for an institutional reason.” He then proceeded to a one-slide account of the development of american economic education as a methodological shift from the “T Ely” way of doing and teaching economics to the “Samuelson” way, before jumping to the present state of affairs and possible reforms. The task force seems to have a documented view of where we are (in the US, as well as in the UK), but very little notion of how we got there, and why. There are a few elements though that historians are – or rather, I’m afraid, should be – able to throw into the discussion.

On the idea of helping undergraduates grasp reality (with both hands, ten tentacles or a prehensile tail). What are the similarities and differences between our present situation (social and economic context, students’ demands, criticisms against the economic profession) and the crises economics have experienced over the past decades? In the seventies, for instance, introductory courses were substantially reformed in response to a demand for greater relevance emanating from students who, as it happened, remained worryingly illiterate at the end of their curriculum. This is what Jean-Baptiste Fleury relates in a recent paper on the origins of the “economics-made-fun” movement. “Relevant” meaning relevant for the then burning real world issues such as racial discrimination, the energy crisis, etc. He details economists’ reactions, from the institutionalization of the emerging field of economic education, through the creation of the Journal for Economic Education in 1969, to the decision to focus introductory courses on the application of a limited set of economic principles to relevant issues. Several textbooks illustrating this “issue-oriented approach” were published. In the eighties and nineties, professionals continued to complain that economics lacked relevance, e.g. lacked connection to observation and empiricism, and for students, lacked reference to situations of the everyday life. As the concentration of the publishing industry entailed a standardization of introductory textbook, pedagogical innovations flourished in the kind of popularization books which had already proved successful in other fields such as physics or biology. This “economics-made-fun” movement, which culminated with the publication of Freakonomics, was an inspiration for those economists who worried about the apparent decrease in the enrollment in economic major and who, by the end of the nineties, attempted to reform the curriculum again (rather unsuccessfully).

Today’s reformers may find some interest in a clear identification of what past challenges to undergraduate education and past responses have been. Though I’m not familiar with the JEE literature, I wonder whether a review of the knowledge produced in its issues would provide a sense of what the forces driving the evolution of economic education have been in the past thirty years. Finally, there’s no explicit mention of these pop-economics books in the current discussion. Is it because this literature is considered already integrated to undergraduate education? Or irrelevant?

→ One way to think about economic education is to identify the questions we want our students to answer at the end of our courses. In other words, what the appropriate exams and assignments should be like. Hence this question to historians: how did the form of econ exams evolve over time (and if you’re in a cynical mood, is economists’ claim that their science is progressive warranted, are today’s students able to answer an exam given by Marschak in the twenties, one given by Samuelson in the forties, or the tricky and much reality-based questions Friedman was used to asking in the fifties ad sixties.) A parallel set of questions deals with the practices of past education leaders, from Friedman to Solow. How did those famous economists teach? What made their success? During the INET session, Axel Leijonhufvud pointed to those economists who could not do or teach theory without history of thought, such as Jacob Viner. If there are any lectures notes in the archives, they might be worth studying.

→ Another important issue is that of textbooks/ teaching material. Some proposals have been made for the development of online material, videos, reading lists and text anthologies. And when Merhling mentions Samuelson as the one who changed the way economics was not only made but also taught, Economics pops up in our mind. Except that, as explained by Samuelson and contextualized by Yann Giraud, Economics was not written for an economic audience. In the late forties at MIT, most engineering and science students had Ec11 and Ec12 (introductory econ) on their curriculum. Made compulsory. They hated it, and Ralph Freeman, then chairman of the department of economics, asked Samuelson to write a textbook to correct this. Yann and Loïc Charles are currently investigating how, during the Great Depression, visuals such as Neurath pictorial statistics were used as a major vehicle to spread information and opinion on economics in textbooks, professional periodicals and by US administrations. Much more narratives of that kind is needed on how and why influential textbooks were written, and how they spread.

→ Finally, econ education everywhere in the Western world seems nowadays modeled on the curricula proposed by leading American econ departments, in particular MIT, Chicago and Harvard (unless you have an alternative narrative). Have historians anything to say about how economic education was developed at these leading institutions?

On Chicago, a quick search brought a much more meager harvest than I expected. A few reminiscences (for instance Deidre McCloskey’s remark that the undergraduate and graduate curricula were strictly separated), vague statements on the large number of students accepted in both programs, and on the thus large number of students failing exams. The importance of the graduate price theory course taught by Friedman, then Becker, then Friedman again, to socialize the Chicago graduate into the proper way of doing economics. Friedman as a teacher. And thanks to Ross Emmett, the role of the workshop system in ensuring that the right tools were used the right way in thesis writing and research. Fragments.

On MIT, I know a few stories. Some of which make sense to understand the current state of affairs.

At MIT, before 1965, there was no economic major. No undergraduate students in economics. Undergraduate students took 80% scientific or engineering courses, and 20% humanities courses, with a core humanities sequence during the first two years, and a major sequence in economics (or psychology, or political science, or literature or else) in the subsequent two years. A few dozens students enrolled in a course XIV, a sort of double major which allowed students to pursue a standard science or engineering curriculum AND an economic undergraduate major. 50%-50%. Three options were offered: general economics, labor relations, and quantitative economics (from statistics to Operation Research). According to the faculty reports, none of these students subsequently chose to specialize in economics. They either became engineers, OR specialists or worked for a trade union. Therefore, the curriculum economics undergraduates were presented with in the next decades, the lectures Lawrence Summers attended as an MIT student in 1973 or 1974 were designed to introduce physicists and engineers to social issues. The tools, the methods and the approach were designed for them.

The best way to get greater exposure to economics at MIT in the fifties an sixties may have been to go to the business school, where economists and business scientists were working hand in hand (they were located in the same building at the far end of the campus, away from other hard and social sciences): people at the Sloan business school were applying new methods for quality control and transportation optimization. They were obsessed with trading and they developed models to account for stock behavior. They also recruited Franco Modigliani.

At MIT in the sixties, elementary macro was taught before elementary micro. The order was reversed in 1974 when, in the context described above by Jean-Baptiste and in response to repeated students’ protests and petitions, introductory economics courses were reformed under the leadership of Peter Temin. It was decided that “micro will precede macro..so as to introduce economics through problems that are most apparent to the non economist and to the engineer in particular.”

At MIT, in the late sixties, the use of problem sets was developed. In 1968, the “Committee on the undergraduate economics program” chaired by Duncan Foley reported that :

“Students at the Institute seem to prefer subjects in which homework assignments are required to be turned in at frequent intervals. There is also some evidence that they work more consistently under such arrangement. Therefore, it seems desirable that “problem sets” be required frequently – probably every other week. Student reaction to the workbook has been negative for the most part.

It is important that these problem sets do not degenerate into routine mechanical algrebraic exercises. Some of the problem sets may well be manipulation of models, but others should be short essays on the sort of questions which are used for examination.”

Six years later, in his revision of introductory courses, Temin suggested that:

“The use of problem sets will be increased. While problems are used currently in 14.01 and 14.02, there are only a few problems sets given during each term. In the revised courses, there will be problem sets every week or two weeks. These problems will provide practice in the use of economics to analyze particular questions and an opportunity for the student to think about some of the problems raised in the readings outside of class time. They are the beginning of independent thought on economic problems.

….In general, 14.01 and 14.02 aim to introduce to the student a new way of looking at some aspects of his environment. The traditional way of accomplishing this end is through the examination of historical ideas. Considering the needs of MIT students, a different approach is suggested here. Through a sophisticated look at current economic concepts and problems, the student’s appreciation of his surroundings should be enhanced.”

I have been unable to decide how this evolution relates to Jean-Baptiste’s account of the implementation of the “issue-oriented approach.” Possibly because I don’t have the cultural background. Or because we don’t have enough material to understand exactly what these two pedagogical practices covered in the seventies.

 I don’t know any articulated account of the development of curricula at Harvard and other relevant places.

Thoughtful reforms of undergraduate education requires a knowledge of how economic education was shaped at least in the XXth century. It’s thus a pity (and a shame) that we, historians of economics, are unable to provide at least fragments of such history. Oh, but wait…. We’re busy debating -again- on “Adam Smith, the ‘Founding Father’ of Modern Economics?

Cartoon borrowed from techno converging zone blog.

INET-BW: Kindleberger, a new K-hero?

I was not in Bretton Woods this week. I followed the event throught the videos posted on the INET website and the exhilarating and exhausting experience of Benjamin, Floris and Tiago. And I found that something in the BW whisper curiously echoes my current interests.

Tiago reports abundant mentions to Keynes during the sessions. The old pipe gives the sweetest smoke, my google says the Irish say (The French would favor a wine analogy, I guess). But a new K-hero also seems to be emerging. From Larry Summers’s confession that the knowledge he found most useful in the face of the crisis was found in the “writings of Bagehot, Minsky, Kindleberger, and Eichengreen,” to Rogoff’s recollection that he was unengaged by Kindleberger’s teaching, from DeLong‘s ( repeated) mention of Kindleberger’s vision of financial crises, one triggered by one post’s headline by Mark Thoma, Kindleberger seem to be on every mouth at the INET conference. From the other side of the Atlantic, I’m thus left wondering to what extent what looks like a primary attempt to canonize the MIT economist derives from his long, exhaustive, and timely experience of The World in Depression, 1929-1939, Manias, panics and crashes, foreign trade, exchange rates, money matters and international economics at large (see his autobiography for more information, and take memories with caution, as always.) Or maybe his fame is also rooted in his his very idiosyncratic method, one he labelled “historical economics.” Historical economics was however left for dead in the wake of the generalization of the MIT-style economics Kindleberger’s colleagues spread and the rise of new economics history and cliometrics. But, in these times of tensions and challenges, it may look fashionable again.

Or maybe the rise of a new K-hero is a mere artifact of my interest in economics at MIT. After working at the NY Fed and architecting the Marshall Plan, Kindleberger was recruited in 1948 at the department of economics and social sciences at MIT by those few economists (including statistician Harold Freeman, chair Ralph Freeman, industrial economist Rupert McLaurin, and Samuelson) who set to turn the hitherto small service department of an engineering school into an elite department. He remained there until his last lectures in 1981 (?) and became a pillar of the department. How he fitted into in a community initially made up of economists, psychologists, sociologists and political scientists, which by the early sixties, had become the sanctuary of Samuelson and Solow’s “new economics” however remained a mystery to me. Last december, I intended to dig into the subject, but I did not have enough time to even lift the lid of his first archive box. My interest in Kindelberger subsequently wained because of the lack of material. I rather concentrated on the Samuelsons, Solows, Fishers, Diamonds and Foleys, whose then peculiar educational vision had brought MIT to the top of university rankings in the mid-sixties. For education, I soon discovered, was central to the rise of both economics at MIT and MIT economics. A viewpoint which put the visionary Solow and his dizzying list of PhD students at the center of my story (his students in the years 1966 and 1967 only included George Akerlof, Robert Gordon, Robert Hall, William Nordhaus, Eytan Sheshinski, Joseph Stiglitz, and Martin Weitzman).

Accordingly, the recent formal identification of Solow as the leading MIT graduate supervisor in the 50s to 70s (56 students) did not came as a revelation. More surprising was the endurance and importance of the role played by Kindleberger, ranking second. In that period, he supervised 48 graduate students, including Robert Mundell (PhD 56), Peter Temin (PhD 64), and Jagdish Bhagwati (PhD 67). Kindleberger taught international economics for a lifetime, and after the recruitment of Peter Temin in 1967, he opened a course in economic history with his former student. The INET whisper is another reminder that, in the dark basement of an East Coast University Library, dusty boxes await to be be open. And I’m curious to know whether Benjamin, Floris and Tiago also noted a crystallization over Kindleberger, or over any other hero of the past besides Keynes?

Shawmut Follies (1967)-Part I.


King Arthur: Frank Fisher

Merlin: Robert Bishop

Herald: Robert Eckaus

First peasant: Cary Brown

Second peasant : Tapley

Sir Lancelot: Peter Diamond

Sir Lionel : Paul Samuelson

Sir Sagamore: Pranab Bardhan

Sir Dinadan: Peter Temin

Messenger: John Harris

Excerpts from Scene 1.

A mythical kingdom in the East


Arthur: I’ve got it! I’ve got it! I know what the world needs!

Merlin: What, Arthur, what?

Arthur: A really great economics department! A new departure in economics department!

Merlin: You’ve got it, Arthur, bless you fine human instincts. Of course that’s what’s been missing.

Arthur: The world will be a better place for a great economic department. I’ll send recruiters to distant lands. We’ll raise every top man in existence.

Merlin: No, no, no, Arthur. That’s what’s been wrong up to now. This constant raiding, the escalation of salary offers, fringe benefits. The isn’t what the world needs.

Arthur: We’ll attract them by an idea and an exemple.


Arthur: We’ll gather all the young PhDs here and we’ll call it..

Merlin: Yes, Arthur?

Arthur: the M.I.T long Corridor.

Merlin: Splendid.


Excerpts from Scene 2

A provincial city named after an English philosopher

Herald: hear ye, hear ye. Come on, come all to hearken to the Grand Proclamation of King Arthur


Herald: Kind Arthur of MIT offers to all young knight of intellectual errantry the opportunity to join the select Long Corridor of economists sworn to uphold true theory, to rescue theorems from rape and pillage at the brutal hands of Midwestern PhDs, to form a fellowship of intellectual excellence and as much good cheer as can coexist with it.


Bystander 1: Who’s going to go and compete with those fierce eastern minds?

Bystander 2: Not me, man


Lancelot: I will

Bystander: Who? Who are you?

Lancelot: I am Lancelot du Bay, academic fencer par excellence. I will go.

Bystander 1: To MIT? Think twice, man.

(to be continued…..)

Note: These are excerpts from a play script written by Duncan Foley and Peter Temin in 1967, presumably for the MIT annual Christmas Party. Found in the MIT archives, Hayden Library.

When you do archive work, you always stumble upon this kind of material. You laugh, sometimes you make a copy of it, and then you burry it on a shelf. This time, I’d like to make more of it. I’ve been writing on how economics at MIT was shaped in the postwar period, who were the various protagonists, what were their visions, how did they interact and how did the institutional structures of the Institute (from engineering tradition to recruitment policies and curricula) influenced these interactions and in turn were altered by them. This play script conveys a wealth of information as to how MIT economists viewed themselves, other departments and the state of their science at that time. It also says much about the roles of each protagonist within the community (if only through who’s assigned which character of the Round Table myth). Yet, I’ve just finished a draft of my MIT project, and so far I haven’t mentioned this material in the narrative. The truth is that I don’t quite know how to interpret it, how to handle it. This information is conveyed and filtered by a “tone” that belongs to the realm of humor, derision, possibly caricature, and shouldn’t be taken literally. Any idea or reference on how to handle joke-material in history?