Topics in the History of Applied Economics

Objectif

Objectives & Assessment  The objective of this course is to help you understand the many ways in which economics has acquired its ‘applied’ identity throughout the XXth century. We will thus survey the development of tools whereby economic concepts, theories and models are confronted to facts. We will focus of the history of econometrics, of experimental economics, and on how economists have constructed data sets. The cultures of applications that economists have nurtured differ across fields. We will thus contrast the challenges microeconomists (for instance environmental economics) and macroeconomists face (we will discuss applied macro as it is done outside academia, for instance in central banks, and focus on the computational rather than theoretical challenges that economists have face in the last decades. That will include some histories of computers and econ software). Finally, We will also discuss examples of applications of economics concepts and models in the policies and business spheres (from tax policies to market design. And we will adress longstanding claims that economics is therefore "ideological").

The purpose of this course is to build reflexivity on the tools and models that you use in your own research. Assessment criteria are thus designed accordingly:

-final essay (baseline grade): it is a 5 to 10-pages essay historicizing a topic. It generally consists in tying your master thesis specific topic to the larger debates that have been running in your field or the discipline at large in the past decades. Usually, students historicize a key concept in their master thesis (exhorbitant priviledge, exchange rate, the gravity equation, quantitative easing, benefit take-up), or key contributor (Gary Becker and the origins of household economics, Easterlin and women’s participation to the labor market, Schelling and nuclear deterrence), key model (search and matching models in labor, IAMs in climate modeling),  literature (for instance on energy efficiency), or technique (how to quantify biodiversity, history of the uses of surveys in economics, history of IV, history of hedonics econometrics, the problem of selection bias in econometrics, history of experiments in game theory, etc.) Such writing exercise will, I hope, help you in devising introduction, grant applications or presentations of your research (such as your master or PhD defense or job market talks).  

Some students are however specifically interested in reconstructing the history of a workhorse model, a concept, a technique or a contribution that is not tied to their master thesis. So you can choose a separate new upon consulting me. Just send me an email so that we can discuss whether your topic is suitable.

Here is the process and deadlines for writing the final essay: I’ll ask to send me a short note (1/2 to 1 page max) describing your planned/ongoing master research by February 13. Better add the 3 or 4 key research articles you’re building on. On this basis, I’ll propose you some readings to help you craft your essay. We can then plan a separate individual exchange to 1 discuss your framing/narrative if you’re still hesitant about your angle and need to refine it. Final essays are due on May 4. If you’d like, you can send me a detailed outline or early version of your final essay by April 6, so that I can comment on it and make suggestions for improvement (since the point of the exercise is that you end with the most mature and useful rationale for how economists have handled/ignored your thesis topic across previous decades). Doing so is however not compulsory.

- participation in class (up to 2 additional points on grade/20): each session with begin with discussing a few papers offering case studies of the topic under investigation. Papers will be added to the Pamplemousse box a week in advance. Once during the semester, I would like you to present one of these paper (please select your target paper by putting your name on this google sheet (https://docs.google.com/spreadsheets/d/1QBNuX3Ln1vOQrB8VHq59mnAnc4jscjNjQvlXP2Lnsc/edit#gid=0 ). The presentation should be 7 min max for summary, with 3 additional minutes for opinion on today’s relevance and historical appeal. The goal is that each lecture is introduced by 2/3 short presented of related history papers, then a class discussion on issues raised by such and such techniques and models I’ll be telling the history of (experimental econ, quantification, econometrics, micro, macro, policy, etc). The weeks you’re not listed to present, please read at least one paper to be able to participate in group debates. The point of the exercise is to help you focus on a specific case study and develop your own opinion on the empirical techniques and practices of economists. Debates will be followed by a wrap up lecture in which I try to unpack larger trends in the development of such and such method and debate, so I won’t have time to examine specific case studies. Your reading work and the lectures thus complement each other.  

Exemples of essays from the previous year include:

-From Birds’ stomach to the Top-5: in search of an economic case for biodioversity

- a history of how machine learning affect the way econometricians think about causality

- historical perspective of Schelling’s contribution to economic analysis of nuclear deterrence

- Industrial policies since World War II: theory and empirics

- Theorizing the gravity equation in international trade

- A history of the notion of “exorbitant privilege” in international macro -Landmarks in the history of search models of the labor market

-The history of project STAR (teacher evaluation, 1970s, one of the first big field experiments in the US)

- The economists and the UI experience rating system in the United States: a long story 

Plan

Course schedule and readings  

Week 1: The transformation of economics in the XXth century: a chronology

Tools

Weeks 2&3 : History of econometrics: from inference to causality

Week 4 : History of data and observation in economics

Week 5 : History of experiments in economics  

2 Fields

Week 6 : Controversies in applied microeconomics: the case of environmental economics

Week 7 : Empirical debates and changing identities in macroeconomics (focus on central banks, computational challenges in economics) Policy & business applications

Week 8:  Have economists influenced economic policies and business practices in the postwar era? Is economics ‘ideological’?  

Note: I'm currently thinking of either extending the lecture on experimental economics to include some history of behavioral economics, or to replace it with a full history of how economics has been shaped and is shaping business (with some focus on the history of market design and corporate social responsibility). we'll see 

Références

Additional References I will put most of these sources in Pamplemousse as we get to discuss them weekly

General readings:  

Backhouse, R. 2024.The Ordinary Business of Life. Princeton University Press  (a short highly readable introduction to the history of economics from Aristotle to recent decades)  

Backhouse, Cherrier, 2017 (eds). “The age of the applied economist: the transformation of economics after 1970 ?” History of political economy, 49 (5) (a collection of papers on the “applied turn” in economics)

Backhouse, R. Tribe, K. 2017. The History of Economics: A course for Students and Teachers, Columbia University Press (25 chapters, each presenting a short introduction to a topic and providing a reading list)

History of econometrics  

Angrist & Jörn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics" Journal of Economic Perspectives  24(2)

Hoover, K. 2008. “Causality in Economics and Econometrics” Palgrave Dictionary of Economics https://papers.ssrn.com/sol3/papers.cfm?abstract_id=930739  

Morgan, Mary. 1990. The History of Econometric Ideas. Cambridge University Press.  

Panhans, M. Singleton, J. 2017. “The empirical economist's toolkit: From models to methods.” History of Political Economy 49 (Supp).

Qin, D. 2013. A History of Econometrics: the reformation from the 1970S. Oxford: Oxford University Press. 3

Qin, Duo. 1993. Formation of Econometrics: A historical perspective. Oxford: Oxford University Press.

Sims, C. 2010. "But economics is not an experimental science." Journal of Economic Perspectives  24(2)

Stock, J. Trebbi, F. 2003. “Who Invented Instrumental Variable Regression?” Journal of Economic Perspective,  17(3)

History of experimental economics

Svoren?ík, A. 2015. “The Experimental Turn in Economics: A History of Experimental Economics.” PhD diss., University https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2560026

History of data and Quantification  of Utrecht :

Hirschman, Dan. 2019; “Rediscovering the 1%: Knowledge Infrastructures and the Stylized Facts of Inequality”, working paper, https://osf.io/preprints/socarxiv/ea2hy  

Porter, T. M. 1996. Trust in Numbers: The Pursuit of Objectivity in Science and Public Life. Princeton, N.J.: Princeton University Press.

Stapleford, T. 2009. The Cost of Living in America. Cambridge: Cambridge University Press

History of applied macro

Duarte & Lima (eds) Microfoundations Reconsidered: The Relationship of Micro and Macroeconomics in Historical Perspective. Cheltenham, U.K.: Edward Elgar

Saidi, A. “How Saline Is the Solow Residual? Debating Real Business Cycles in the 1980s and 1990s,” History of Political Economy 51(3)  

Sergi, F. 2020.  “The Standard Narrative about DSGE Models in Central Banks’ Technical Reports.” European Journal of the History of Economic Though. 27(2):163-193.

History of applied micro  

Banzhaf, S. 2009. “Objective or Multi-Objective? Two Historically Competing Visions for BenefitCost Analysis.” Land Economics 85(1): 3-23

Biddle, J. 2012. “Retrospectives: The Introduction of the Cobb-Douglas Regression.” Journal of Economic Perspectives 26(2), 223-36.

 Cheng, C.T. “Guy H. Orcutt’s Engineering Microsimulation to reengineer Society.” History of Political Economy 52 (S1) 4

Panhans, M. 2018. “Health Economics: Scientific Expertise and Policymaking” Oeconomia 8(3) https://journals.openedition.org/oeconomia/3091?lang=en  

Maas, H., and A. Svoren?ík. 2017. “Fraught with Controversy: Organizing Expertise against Contingent Valuation.”

History of Political Economy

49 (2): 314–45 History of economics applied to policy, courts and business (lecture based on a quizz, not a set of reads) Chassonnery-Zaïgouche, C. 2020, (ed) “Symposium on Economists in court,” Journal of the History of Economic Thought 42(2) https://www.cambridge.org/core/journals/journal-of-the-history-ofeconomic-thought/economists-in-court  

Hirschman, Berman, 2014. “Do Economists make policies? On the political effects of economics,” Socio-Economic Review, 12(4)