Academic economists have emphasized the “how it works” part of economics; in econometrics, for example, the focus is on hypothesis testing to determine which model of the economy is best, rather than on forecasting the future of the economy. Academic economists do evaluate policy proposals theoretically and empirically, and they do provide forecasts of the economy. But forecasting in particular is not the main focus of their efforts, , and they’ve all but ignored – even looked down their noses upon – forecasters and practitioners in the government and business communities...He is right about this topic and I believe right about development economists. I am the first to say that I am a fan of the work being done by Easterly, the randomistas, and the researchers at CGD. Maybe that is because there is a component of wanting to connect with practitioners, but there still remains a gap.
The medical profession would do much worse without connections between the practitioners in the field and the how-it-works types in the labs. The questions researchers ask, for example, are shaped by the needs of the practitioners trying to prevent and cure illness. What types of tests can doctors do in their offices and labs to quickly and reliably indicate the current health of a patient and to forecast future health problems? In economics, if reliable tests for bubbles had been available to business economists, that could have saved the economy from considerable losses.
Economics has lost the connection between the practitioners and the academics. This may have something to do with the desire among economists to become more of a science – a heavy focus on theory and math is the result. But no matter the cause, if we want to do all that we can to avoid big economic problems, and if we want to use the feedback from those testing economic ideas on real world applications as a way of better understanding how the economy works, then we must reestablish these ties.
What I would add to Thoma's argument is that the practitioners have to do their part as well. That does not mean that they should become academics, rather they should not so casually dismiss the research of economists. Coming towards the middle from both parties could lead to better collaboration, improved research and ultimately better interventions.