On Innovation in Economics

Arnold Kling:

I believe that one of the biggest lessons of economics is the value of trial-and-error learning via entrepreneurial activity. That, incidentally, is one of the important ideas that is, for all practical purposes, outside of mainstream economics.

Economics as a discipline does not take much advantage of trial-and-error learning. We are like the French labor market--we can't "fire" ideas that have low productivity (Euler-equation macroeconomics, mathematical general equilibrium theory, regressions with lots of right-hand side variables), and we don't "hire" nearly enough new ideas on a trial basis.

Rather than operating in an entrepreneurial fashion, the institutional arrangements in academic economics lead it to behave more like a giant corporation, where everything requires buy-in from the top executives--in this case, journal editors and other members of the professional elite. In the corporate world, a lowly employee with a good idea can at least leave a company and start his or her own business. In economics, the best you can do is blog.