Meta-economics

Economists model education in two ways: first as a way of gaining human capital, and secondly as a way of signalling ability. Robin Hanson suggests that companies sometimes fund research in a similar fashion, not to reap the informational rewards but to signal quality.

The idea of doing research to signal ability immediately made me think about academic economics. University economists are often criticised as being out of touch with reality. Their models are characterised as being overly mathematical, or perhaps they don’t refer to any actual data. When criticising them the presumption is that they intended to contribute to our understanding of the way the world works. What if that was never their intention? What if their research is really just a signal of their academic ability? Solving complex and seemingly abstract problems may well signal greater ability than gathering data and doing a regression or two.

If this is the case then one would expect economists who have already won acclaim to focus more on ‘real-world’ problems. Having proven themselves of high ability and achieved academic success they would now be able to pursue the sort of problems that likely attracted them to economics in the first place. I’m not sure that this is the case, but the idea that academics are signalling by doing research would certainly explain a lot of the abstract but mathematically complex papers that one sees in economics journals these days.