The Economist recently had their Briefing article (October 23rd edition) on how economics is changing with ‘high frequency data’ and that there is a ‘Third-wave’ evident. They mention three changes to economic research.
- It accesses data that is abundant and relevant to real-world problems.
- Economists using the data are eager in influence government policy
- There is little theory involved as the data/evidence says it all
1970s – more than half of economics papers focused on theory alone,
2011 – purely theoretical papers accounted for only 19% of publications.
There were hints of an economics third wave before the pandemic. Some economists were finding new, extremely detailed streams of data, such as Visa and Square (free business expense card) record spending patterns, Apple and Google track movements, anonymous tax records, location information from mobile phones etc. Of the 20 economists with the most cited new work during the pandemic, three run industrial labs.
The Economist divided economists into three groups:
- lone wolves – who publish with less than one unique co-author per paper on average;
- collaborators – those who tend to work with more than one unique co-author per paper, usually two to four people; and
- lab leaders” – researchers who run a large team of dedicated assistants.
During the pandemic new economic papers increased markedly from 2019 – 2020 from the collaborators whilst the lone wolves were least evident. Large data sets benefit from the division of labour and the research was focused on the usefulness to business. Three of the top four authors during the pandemic compared with the year before—are all “collaborators” and use daily newspaper data to study markets. The concern about macro-economic research over the past few decades is that it has been too theoretical.
The downside is that consumers of fast-food academic research often treat it as if it is as rigorous as the slow-cooked sort—papers which comply with the old-fashioned publication process involving endless seminars and peer review.
Source: The Economist – ‘The real-time revolution’ – October 23rd 2021