By reprinting Joseph Stiglitz’s joke that economics is really a religion I did not mean to cast aspersions on the economic profession as a whole. This article by Simon Wren-Lewis in the London Review of Books introduces the helpful term mediamacro to refer to the phenomenon captured by Stiglitz’s joke.
‘Mediamacro’ is the term I [Wren-Lewis] use to describe macroeconomics as it is portrayed in the majority of the media. Mediamacro has a number of general features. It puts much more emphasis than conventional macroeconomics does on the financial markets, and on the views of participants in those markets. It prefers simple stories to more complex analysis. As part of this, it is fond of analogies between governments and individuals, even when those analogies are generally seen to be false by macroeconomists.
Wren-Lewis is thinking of the British media but I have no doubt that the description applies as well to the US media, not to mention the German press. And he lets most macroeconomists off the hook — 80% of them, to be precise, according to the last sentence of the following excerpt from his article.
when it comes to macroeconomics, the media seems to play by different rules. It continues to misrepresent economic ideas even though it has access to academic expertise. Why is this? It’s true that economists will always disagree, and there are some academic economists who will faithfully stick to a party political line. But there can be no doubt that at key points a clear majority of academic macroeconomists would dissent from mediamacro. For example, less than 20 per cent of academic economists surveyed by the Financial Times thought that the recovery of 2013 vindicated austerity, yet the paper’s leader took the line that it had.
Wren-Lewis’s proposed explanation also explains what this post is doing in a blog about mathematics:
Part of the explanation, I think, is that we have a particular problem with macroeconomics, which is the influence of economists working in the City. There are some wise and experienced City economists, but there are also many with limited expertise and sometimes fanciful views. Their main job is to keep their firm’s clients happy, and perhaps to help traders improve their predictions of what might happen in the markets in the next few days. Their views tend to reflect the economic arguments of those on the right: regulation is bad, top rates of tax should be low, the state is too large, and budget deficits are a serious and immediate concern.
Just as Chapter 4 of MWA argued that the mathematical profession should not be held responsible for the damage caused by traders in the City, or Wall Street, in their applications of models of financial mathematics, Wren-Lewis is making a distinction between the economic profession as a whole and how it is represented in “mediamacro,” as support for the political ends of the right. To the extent that our profession’s prestige is used to justify harmful practices — in the City, Wall Street, or elsewhere — mathematicians do have a responsibility to point this out, the more so because of the material benefits (“external goods”) we obtain by virtue of our association with these practices. In this respect economists are doing much better than mathematicians in facing up to their responsibilities. The Wren-Lewis article is a good illustration of that.