The author is at the Department of Economics and Finance, University of Texas–Pan American, Edinburg, TX 78539-2999; e-mail: email@example.com. An earlier version of this article was presented at the 2007 Association of Private Enterprise Education meetings in Cancun, Mexico. I thank Tyler Cowen and Laurence Moss for comments on an earlier draft.
The Market, the Firm, and the Economics Profession
Article first published online: 20 OCT 2009
© 2009 American Journal of Economics and Sociology, Inc.
American Journal of Economics and Sociology
Volume 68, Issue 5, pages 1041–1061, November 2009
How to Cite
Sutter, D. (2009), The Market, the Firm, and the Economics Profession. American Journal of Economics and Sociology, 68: 1041–1061. doi: 10.1111/j.1536-7150.2009.00652.x
- Issue published online: 20 OCT 2009
- Article first published online: 20 OCT 2009
The mathematical and statistical complexity of economic research increased remarkably over the past century. While criticisms of the trend abound, the “wisdom of crowds” argument creates a presumption that the profession's acceptance of increasing mathematical sophistication is a net improvement. I provide a contrasting “market failure” argument for the excessive mathematization of economics. Academic research is not a cash-based economy, and this limits economists' ability to contract for assistance with technical research. Consequently, production of mathematical and statistical research must use the firm—the department—instead of the market. This alters the composition of the faculty and ultimately the economics curriculum, and the resulting level of sophistication may be greater than optimal.