This year's Nobel Prize is a wake-up call
This year's prize in economics is a wake-up call for the economics profession. The profession has started to make wrong turns, and the committees for our most prestigious prizes are the GPS telling us to recalculate our route.
Claudia Goldin, Economic historian
This year, the prize went to Claudia Golden for her work in understanding trends in women's labor market participation. She has been a clear favorite for years. In fact, I thought she was going to win 2 years ago when her book came out the first week of October, conveniently right before the prize is announced. If you want to learn more about that book, you can go ahead and watch my video right here.
There are plenty of good summaries of her work.
Economic Forces got up early to share some of her work
Marginal Revolution has featured Claudia several times, including some great videos
Tyler Cowen talked with Claudia when her book came out
Last year I wrote about some of the work on pay discrimination
We need to appreciate two of the amazingly difficult challenges she had to overcome. First, to get at trends in women’s labor force participation, you have to get historical data. And to get that, you have to do a lot of archival work. Looking through archives is tough, I can testify from personal experience. But I’m doing it at a time when we have electronic catalogs and digital archives. And she was doing that work at a time when archival work was much harder.
Her second big challenge was doing this incredibly difficult work at a time when it wasn’t valued. Labor economics had basically ignored the question of when women participate in the labor market. It was an anomaly. Then there were shifts in the market, and labor economists had to reevaluate its models. But that didn’t mean everyone was on board. Goldin had to fight against forces devaluing her work. Yet, modern labor economics would not be where it is today without trying to understand the themes of Goldin’s work.
As much as I want to praise her work, I want to now shift focus to why her prize is a wake-up call. It starts with how her prize relates to last year’s prize.
The connection between Goldin and Bernanke
Last year, Ben Bernanke won a share of the Nobel for his work on understanding the causes of the Great Depression. Bernanke’s work clarified the financial roots of the Great Depression, helping us understand how the financial system played a big role in not only the beginning of the Great Depression, but for why that depression spread.
At first glance, it seems like there is no reason to connect a prize for financial economics to a prize in labor economics. But there’s a huge reason we need to consider them together.
What these two prizes have in common is that they are both prizes in economic history.
This is not the first time that the Nobel Prize committee has awarded someone for their work in economic history. The 1993 prize went to Fogel and North for their work in economic history. And it's probably not going to be the last time. The strongest predictor of future Nobel laureates is the John Bates Clark Medal. In the last 20 years, many of the winners have been cited for their work in economic history: Daron Acemoglu was recognized for his work in institutions and economic development; Dave Donaldson won for his historical work on railroads in India; Melissa Dell was recognized for her work on how historical events have persistent effects; and even the most recent winner, Gabriel Zucman, was cited for his work in historical trends in income inequality, done with a previous winner, Emmanuel Saez.
Our most prestigious prizes in economics have consistently recognized work done in economic history.
The Disconnect
Yet, if you look at what gets rewarded in the profession today, economic history feels like it keeps getting pushed to the side. When I was a graduate student, I started expressing interest in economic history, several professors warned me it would be difficult to get a job following that path. Indeed, when I was on the job market, schools told me they would rather I do something like labor economics.
The big gossip at the latest Economic History Association was whether some of the top schools would be willing to hire an economic historian any time soon. It seems there’s a trend where card-carrying economic historians are losing their places among the top departments. Yes, you can find some, but few places have a critical mass to produce the next generation of students. (If you’re a student hoping to do economic history, my biggest recommendations right now are Princeton and Northwestern.) And from what I hear, the barrier has been that many other economists in the department don’t feel like economic historians are making big enough contributions.
This is confirmed by the trends in curriculum. My colleague Matt Jaremski surveyed schools on their economic history requirements. The results were not good.
Historically, there were a sizable number of Ph.D. programs that required students to take a course in economic history, but over time these requirements have been going away. Today, only eight top-50 graduate programs in the United States still require graduate students to take an economic history class and another two require graduate students to choose a class from a narrow set of options that includes economic history. Several authors have even hypothesized that economic history could cease to be offered as a field and instead historical components could be taught within the other field courses.
This is unfortunate, because there’s never been a better time to do economic history research. We have more data available than ever before. We have methods for learning more lessons. And we are expanding into countries that are severely under-researched. For example, fifty years it was inconceivable to do any serious, data-driven economic history work on Haiti. Today, I’ve built a whole literature on it.
There are so many reasons why this field should be going through a heyday. Indeed, in very many ways it is going through a heyday. Yet, it's being deemphasized by the profession.
What the top prizes are helping us see is that the profession values the type of work the economic historians are doing over their entire career. Yet it’s the type of work that hiring committees don’t value in the short run. This is a wake-up call to try and tell the profession that there are many interesting research avenues that take a long time to develop. Yet, when we focus on the easiest paths to tenure, we ignore the value of economic history, and we remove it from the curriculum.
My biggest takeaway from this year’s prize is the need to raise the status of economic history.