Piketty’s Payoff

Jordan Weissmann argues that whether the famed economist is ultimately right or wrong, he’s had a fundamental influence on how his field thinks about inequality:

Predictably, economists are split on the merits of Capital’s big idea—though the breakdown doesn’t fall neatly along liberal and conservative lines. Heavyweights like Krugman and Robert Solow, both Nobel Prize winners, have been supportive while others, including right-leaning figures like Cowen and left-of-center thinkers like former Harvard president, Treasury secretary, and Obama adviser Larry Summers, have been critical. When I asked Justin Wolfers, a plugged-in senior fellow at the Peterson Institute for International Economics, for an assessment, he told me that while Capital had unquestionably forced economists to grapple with inequality in new ways, Piketty’s theoretical framework hadn’t made much of an impact in the field. …

Yet in December, highly respected Stanford University professor Chad Jones released an entire working paper exploring how r>g relates to concepts in macroeconomics.

The field may not be going wild for the theory, as Wolfers suggests, but at least some researchers are engaging it outside the world of econ blogs. And in the end, it doesn’t matter if the academy gives Capital a gold star. What matters is that even its detractors are now considering wealth in a way economists haven’t in years—as more than income that’s been stowed away in a bank or brokerage account, as something that may have the power to shape the economy itself.

Clive Crook is less thrilled by the Frenchman’s big splash:

Even critics of “Capital” … are generous in praising Piketty for his industry and especially his ambition. Attention, social scientists. Don’t worry about being wrong, just be wrong in a big way. Be wrong because you over-reach. Be wrong the way Marx was wrong (but maybe hope for less collateral damage). Above all, admirers and critics alike pay tribute to “Capital” for drawing attention to inequality. I hadn’t noticed that it was lacking attention to begin with. The American left pays attention to little else. It was really the reverse: The obsession with inequality demanded, so to speak, an academic testament, and that’s what “Capital” provided. Piketty’s economics leaves a lot to be desired, but his timing was fantastic.

The Economist is perplexing a lot of people by putting Piketty at only #13 in its list of the world’s 25 most influential economists – and not one woman. The most glaring omission on that front is Fed Chair Janet Yellen, says Ben Casselman:

Now, there are lots of ways to gauge influence. Yellen’s academic work, for example, is respected but not groundbreaking. But The Economist’s rankings explicitly aim to track “clout outside the ivory tower,” as measured by media attention. How, by that measure, could Yellen not come out near, if not at, the top?

The answer: The Economist excluded “serving central bank governors.” That leads to some strange results, since the list includes not only former governors but also the presidents of the various regional Fed banks. There aren’t many contexts in which Philadelphia Fed President Charles Plosser is more influential than Yellen.

Still, one could argue that Yellen isn’t so much influential as flat-out powerful. So fine, leave her off the list. The rankings are still deeply strange. The top scorer, for example, is health care economist Jonathan Gruber, whose prominence in the media in recent months has been due almost entirely to the emergence of a video in which he said President Obama’s signature health care law passed in part due to the “stupidity of the American voter.” That isn’t influence — that’s a gaffe. Or take No. 25, San Francisco Fed President John Williams, an undeniably important economist but one who apparently scored higher because The Economist’s algorithm mixed him up with a discredited conspiracy theorist who happens to share his name.

Tyler Cowen made his own list and put Piketty at the top, adding:

e. There is no right-wing or center-right economist on the list.  See the EJW symposium on why there is no Milton Friedman today.  Krugman is probably the most politically conservative figure among the top five.

f. Behavioral economics as a whole is quite influential, but with no single dominant figure of influence.  In actuality Cass Sunstein (not formally an economist) and Richard Thaler might globally be #1 in the behavioral area, followed by Daniel Kahneman.