When I was trying to figure out if there was a housing bubble or not, the academic economists I had come to trust said no, the fundamentals explain this. Sometimes this was backed by econometric analysis. But many people outside of academics, or at least a few, said there was a bubble. This was often backed by logic, intuition, and simple charts rather than sophisticated econometrics based upon theoretical constructs. For the most part, I dismissed the people I should have listened to, especially if it contradicted what the academics were saying. Most of all, I relied too much on the experts in the academic community instead of listening to all the evidence and then thinking for myself.
One of the reasons I didn't listen is that until I started blogging, I was pretty arrogant about academic economists. As far as I was concerned, pretty much, academic economists knew more about everything related to economics than anyone else. But one thing I've learned from the wide array of voices in the blogosphere is that I was wrong. Academic economists have a lot to learn if they are willing to listen.
This column at Reuters is, in part, a mea culpa:
It's also a more explanation of why we need increased interaction between researchers and practitioners.
Update: Paul Krugman comments: Listening to Others.
Update: Dean Baker weighs in.
Update: More from Dean Baker: There's Zero Accountability in Economics.
Update: Paul Smalera: Krugman says Thoma’s right, except when he’s wrong.
Update: Larry Summers responds: Economic specialization is a feature, not a bug.
Update: Richard Green responds to Larry Summers.