David A. Price serves as interlocutor for an interview: “Tyler Cowen: On credentialism, the new math of causation, and the lasting economic influence of youthful experiences” (Econ Focus: Federal Reserve Bank of Richmond, Second Quarter 2022). There are a wide range of topics, accompanied by thought-provoking insights. Here are a few:
Why are Americans moving less over the past few decades?
I think there are at least two major developments behind that change. The first is that we’re just much more of a service economy and continue to become more and more services based. Say you’re a dentist. You don’t really think, “Well, I’ll move from Dallas to Denver, because Denver is where the teeth are.” Right? That wouldn’t make sense. In services, for the most part, you just pick where you want to live and you can stay there just fine. …
I think the other factor is that people are just better informed, partly because of the internet. They can figure out where they want to live earlier in life and then just stay there. Staying put comes with definite upsides. But it’s also the case when a downturn comes, maybe your labor markets don’t adjust the way they used to because everywhere is stuck in the same predicament. If everywhere looks a bit like Columbus, Ohio, or for that matter, Richmond, Virginia, there’s less moving.
Qualms about co-authorship and consensus in economics
I think macro has become underrated. One good thing about macro is that it’s not obsessed with co-authored papers. Co-authored papers are fine; they’re often necessary. Yet there’s something inertial or status-quo-prejudiced with a co-authored paper. Everyone does have to agree, right? In macro, single-authored papers may also be in decline, but they’re still relatively more common than in micro. And there’s something more revolution-friendly about that. Einstein didn’t co-author the general theory of relativity.
One of my concerns about economics is we’re too consensus-oriented at the refereeing stage, at the editing stage, and even at the co-authoring stage. Again, I don’t know how to say co-authoring doesn’t make sense. Papers are harder to do than before, and you need all these different skills. But I think it’s a problem we should talk about more.
“We’re at a point where you can often believe the result of a paper.”
Several decades ago, a lot of econometrics papers were based on running correlations in various ways and of varying degrees of complexity. Then there’d be some part of the paper later on where you’d wave your hands and tell a story about causation or make some remarks about what you might do someday to address causation. But a lot of what was there was actually fairly lame. You didn’t really know what was causing what and things were taken on faith, or you would refer to your theoretical framework. You’d think things like, well, I’m a monetarist or I believe in rational expectations, so I’m going to superimpose this story on the data. A lot of the macro of the 1980s and even the 1990s was like that.
If you try to do that today in papers, maybe you can still publish them in a lesser journal, but they don’t become influential papers. You need to set things up in a way that you’re actually attempting to see which variable is causing which variable. You do difference-in-differences, for instance, and you see that minimum wage laws were imposed first on these counties before other counties, and you look at the differential effect that that had. It’s not quite proof of causality, but it’s way better than what we used to do. We’re at the point where you can often believe the result of the paper. That’s pretty good; not too long ago, we weren’t at that point. That, in a way, is a little scary.