The rise of econometrics ?

by Chris Auld

Bryan Caplan speculates on reasons for the decline of economic theory, an apparent reduction over the last two decades in the status of theory in economics. He wonders how to measure changes in the status of theory and, assuming theory has declined, why?

My casual empiricism agrees with Bryan’s. What does actual empiricism say? As a crude first pass, I counted the number of articles in Jstor economics journals that contain the word “regression.” Of course not all articles that contain that word are empirical, nor do all empirical papers contain that word, but it seems a reasonable signal of empirical content. The proportion over time (one observation per decade) looks like
which shows that in the sample of journals tracked by jstor (which changes over time, muddying interpretation) the proportion of empirical papers, or at least papers which for some reason mention regressions, has been steadily increasing, although the rate of increase seems to have been lower 1970-2000 than prior to 1970 or after 2000.

Surprisingly, the small and mostly dated literature I could find on the topic leans towards the opposite conclusion:

  • Oswald (1991) showed that the proportion of empirical papers in Economic Journal rose from 3% in 1959 to 20% three decades later, but almost all of that increase occurred by the mid 1970s. Oswald wondered if the discipline had been in an “equilibrium in which large numbers of researchers treat the subject as if were a kind of mathematical philosophy.”
  • Coelho and McClure (2005) reported that papers top general interest journals became more complex and less data-driven over the last several decades.
  • Morgan (1988) found that the proportion (about one-half) of empirical work in the mid 1980s in the AER was lower than the proportion of empirical work in political science (58%), sociology (78%), chemistry (100%), or physics (88%).
  • Bridges and Haywood (2003) found that the proportion of empirical papers in health economics journals declined from 70% to 60% between 1982 and 2001.

These papers give little support to the notion of econometrics ascendent.

However, a recent paper by Oswald and Ralsmark stongly suggests that empirical work currently dominates. The authors assessed the CVs of 109 assistant professors in top 10 U.S. departments. They find 20% of these researchers predominately write pure theory, which tells us that only a small proportion of the best and brightest are pure theorists, and that departments with their choice of freshly minted PhDs are overwhelmingly picking empirical people.

It would be interesting to see an updated version of the papers that came out circa 1990 studying the proportion of theory papers, and not just in the AER or other top general interest journals, which may not be representative (Figlio 1994 found that top journals were substantially less likely than second tier outlets to publish empirical papers, but also that as of that time convergence appeared to be occurring).

More questions: What is the optimal proportion of theory? How do improvements in hardware, software, and data availability affect the optimal proportion of theory?