Friday, May 25, 2018

If We Pay Football Players, Why Not Kidney Donors?

Here's a nice question to kick around the classroom or the lunch-table: "If we pay football players, why not kidney donors?" Philip J. Cook and Kimberly D. Krawiec argue that both should be paid in Regulation magazine (Spring 2018, pp. 12-17).

In the context of football, players receive compensation for actions that benefit others--specifically, those who enjoy watching for entertainment--but also impose risks of both short-term and long-term negative health outcomes. In the context of kidney donations, potential living donors are forbidden from receiving compensation for actions that can be literally life-saving for others--specifically, donating a kidney--on the grounds that it may increase a risk of poor health outcomes. The authors write: 
"Although living kidney donation is a common medical procedure and donors usually enjoy a full recovery, the loss of a kidney poses long-term health risks, in particular that of renal failure if the donor’s remaining kidney fails. In the United States and most every other country (with the notable exception of Iran), kidney donation is permitted but financial compensation for donors is prohibited. Not only is there no legal market for kidneys, donors in the United States are often not even reimbursed for their full out-of-pocket cost in making the donation. 
"The ban on compensation may protect potential donors from the temptation of easing their financial situation by giving up a kidney, a choice they may regret in later years. But this regulation has dire consequences. 
"The need for transplantable kidneys is great, far exceeding current availability from deceased and living donations. The official waiting list of Americans with renal failure is now approximately 100,000, with a typical wait time of five years or more. Those on the waiting list are kept alive by dialysis, which is both costly to taxpayers (because Medicare pays for a large percentage of the costs) and debilitating to the patients. Even with dialysis, thousands of renal-failure patients die each year for want of a suitable kidney. This wait could be largely eliminated by easing the current ban on compensation for donors. An adequate supply of living donors would be especially valuable because living donors tend to provide higher quality kidneys with greater opportunity for developing a close tissue match, thus reducing the chance of rejection ... 
"While the recent evidence on the long-term medical damage from concussion has caused widespread concern, there is no prominent voice calling for a ban on professional football. Indeed, a ban is unthinkable in the foreseeable future. That observation helps illustrate the importance of history, custom, and established  interests in shaping the debate over regulating risky activity. But if we could start fresh, the current configuration of activities for which compensation is banned would seem very odd. 
"If ethical concerns persuade thoughtful people that the “right” answer is to ban compensation for kidney donation, then the same logic would suggest that compensation should also be banned for participation in violent sports. If the “right” answer is to permit compensation for participation in violent sports, then compensation for kidney donation should also be permitted. We see no logical basis for the current combination of banning compensation for kidney donors while allowing compensation for football players and boxers."
Like a lot of useful analogies, the value of this question isn't to parse details about whether football and kidney donations are literally identical, but to use the question to explore attitudes about bodily risk, benefits, and monetary payments.  Cook and Krawiec also point out that annual revenues for the National Football League are about $13 billion, while one cost-benefit study of paying for kidney donation suggests that such a policy could save taxpayers about $12 billion per year in expenses for people with kidney disease awaiting a donation, in addition to saving thousands of lives and improving the quality of life for tens of thousands of those with severe kidney disease.

For some previous posts on paying kidney donors and on programs to facilitate kidney exchanges, see: 

Thursday, May 24, 2018

Why is Inflation Stuck so Low?

I suspect that I am like many economists, in that when I am asked about causes of inflation, I can almost see the words from a 1970 speech by Milton Friedman scrolling across my mind's eye:  "Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output." (It's from Friedman's 1970 lecture, The Counterrevolution in Monetary Theory.")

But this seemingly crystal-clear linkage from is gets cloudier when you recognize that the current problem is not to explain a surge of inflation, but rather the relative immobility of inflation. Friedman did not say: "The lack of inflation is always and everywhere a monetary phenomenon ..."

I've mulled over this subject before in "Mysteries of Modern Inflation" (October 26, 2017) and "Janet Yellen Doesn't Know What Determines Inflation" (November 21, 2016). In the most recent issue of the Regional Economist, published by the Federal Reserve Bank of St. Louis, Juan M. S├ínchez and Hee Sung Kim run through a list of the most commonly discussed reasons for "Why is Inflation So Low?" (First Quarter 2018, pp. 4-9). Some of the reasons seem more compelling than others, but here they are:

1) Technological Progress

It's easy to think of some ways that technological progress might help to hold down price increases: cheaper electronics and internet-related products; a rise of online shopping providing a higher level of price competition (the so-called "Amazon effect"); and the rise of the "sharing economy" firms like Airbnb and Uber holding down price increases in their industries. But it's also easy to think of industries like like health care and education where prices seem to be rising, rather than plummetting. Overall, one of the main concerns of the US economy is lack of sufficient productivity growth, not an excess of it. As the authors write about this explanation: "But why would inflation be low now if productivity has not grown faster than before?"

2) Demographic transitions

If you plot the countries of the world according to the share of elderly people, you find that countries with more older people tend to have lower inflation. Japan is a vivid example. For example, one study in Japan suggested that older workers suffer diminished skills, and thus end up competing with inexperienced workers for low-wage jobs in a way that holds down wage increases. Another possible explanation is that the elderly are often on tighter budgets, and thus are more value-oriented as consumers in a way that limits price increases. But how the broad validity of these kinds of explanations and how they apply to the US economy is not clear.

3) Globalization

A few countries have experienced high inflation rates in recent years, like Venezuela and Zimbabwe. But in most of the world, relatively low inflation is widespread. One possible explanation is that a surge in low-cost goods in global markets, especially as China entered global markets in force in the early 2000s, has helped to hold down price increases. But the authors point out that studies which have attempted to compare how global forces might affect inflation tend to find only small-sized effects.

4) Central bank actions

Maybe inflation is low because central banks all over the world have focused on keeping it low; indeed, perhaps central banks are even trying too hard to keep inflation low. As the authors write: "[T]he fact that inflation lower than the target is often considered better than inflation higher than the target may contribute to an inflation rate that, on average, is lower than the target."

5) Neo-Fisherism

Irving Fisher was a prominent American economist in the opening decades of the 20th century who pointed out that if you take the nominal interest rate and subtract the inflation rate, you get the real (that is, inflation-adjusted) interest rate. The most common use of this equation over time has been to point out that when inflation rises, the nominal interest rate also tends to go up. But the neo-Fisherian hypothesis is that if central banks are keeping the nominal interest rate low (to stimulate the economy), then the gap between the nominal and the real interest rate--which is the rate of inflation--must also be low. The implied policy suggestion is that raising nominal interest rates could also bring a rise in inflation. This hypothesis is counterintuitive for conventional macroeconomics, in which higher nominal interest rates should tend to slow down the economy and reduce inflation.

A final theory not emphasized here, but mentioned by Olivier Blanchard in a recent article, is that when inflation has been low for sustained period of time, people and businesses stop worrying about inflation in the same way. When the reality and risk of inflation isn't salient to economic decision-making, companies don't give semi-automatic pay raises to make up for inflation. Sellers don't semi-automatically raise prices to make up for inflation.

There doesn't have to be one right answer here. It can be a "Murder on the Orient Express" plotline where everyone contributes to the outcome. My own sense over the last couple of decades is that I no longer worry as much about rising inflation, or about inflation getting out of  hand. Instead, I worry about how buying power might manifest itself in asset price boom-and-bust cycles, like the dot-com boom of the late 1990s or the housing price boom before the Great Recession. Maybe inflation is so low in part because the economy has found other ways of blowing off steam.

Wednesday, May 23, 2018

Share of US Adults Without Health Insurance

One genuine accomplishment of the Patient Protection and Affordable Care Act of 2010 is that it reduced the share of Americans lacking health insurance. The National Center for Health Statistics has just published the most estimates for 2017 in "Health Insurance Coverage: Early Release of Estimates From the National Health Interview Survey, 2017," Robin A. Cohen, Emily P. Zammitti, and Michael E. Martinez (May 22, 2018). Here are a few snapshots:

Those over age 65 have health insurance through Medicare. Thus, it's conventional to focus on the health insurance status of those the age 64 and below  The percentage of adults age 18-64 without health insurance drops sharply right after the passage of the 2010 legislation, and has stayed lower since then.

For those under age 18, two patterns are readily apparent. The percentage of insured children has been falling steadily since 1997, tracing back to the passage of the State Children's Health Insurance Program (SCHIP) that year. At the same time, the share of children with private health insurance coverage has steadily declined, and the share with public coverage has risen. These long-term patterns are not much altered by the 2010 legislation.

Those who were poor and near-poor were most likely to see expanded health insurance coverage as a result of the 2010 legislation.

The first figure above shows that the share of those on public health insurance rises, like expanded Medicaid programs. The share of those having private insurance rises, too. However, those who purchase health insurance through the "exchanges" are counted in these statistics as having having private health insurance. This accounts for about 4 percentage points of the overall rise in health insurance coverage.

The benefits that the Affordable Care Act was likely to achieve in terms of expanding health insurance coverage were often oversold. If you read the fine print, even well before passage of the law, it was never projected to provide universal health insurance. It's also fair to note that the costs were often undersold. Unless you browse through Congressional Budget Office documents, you may not know that the expansion of health insurance coverage is costing about $110 billion annually.

As I've written before, there's no magic here. It was never any secret that if the federal government was willing to spend an additional $110 billion, it could expand health insurance coverage to an additional 20 million people. The  cost for the expanded health insurance coverage works out to about $5500 per person per year. Personally, I'm fine with spending the money for this expansion of  health insurance coverage, although I would have preferred to see the money raised by taxing some portion of employer-provided health insurance benefits as income.


Monday, May 21, 2018

China Now Has a Trade Deficit

A large share of the concern over China's effect on the world economy starts with large Chinese trade surpluses. But in the first few months of 2018, China's trade balance was negative(using the standard broad measure of the current account balance). That is, China had a trade deficit, not a trade surplus. For example, the Economist magazine reports: "China’s vanished current-account surplus will change the world economy" (May 17, 2018).  The South China Morning Post reports: "China’s first current account deficit for 17 years ‘could signal fundamental shift" (May 4, 2018).

Here's a figure showing China's pattern of trade imbalances since the late 1990s. Notice that although China's economic reforms and very rapid growth started in the late 1970s, its trade balance was fairly close to zero during late 1990s and early 2000s. Then China's trade surplus exploded in size before the Great Recession, fluctuated for a few years while gradually trending down, and then turns negative in early 2018.

China Current Account


There's a seasonal pattern in China's economy that exports tend to be lower in the early months of the year. Assuming the usual rise in China's exports later in the year, China may well end the year with a trade surplus, but it will be quite modest in size.

I have argued before that thinking of the trade balance as a measure of the unfairness of trade is economically illiterate. But if you are someone who holds that belief, then consider what it implies. You must believe that China was a fair trader in the late 1990s and into the early 2000s (near-zero trade deficit), then it exploded into large trade unfairness, and less but fluctuating trade unfairness, before now returning to trade fairness. Such an interpretation taxes credulity. But if China's trade surpluses are the rationale for imposing trade barriers on Chinese imports, that rationale does not presently exist.

It is vastly more plausible to explain China's trade balance patterns by looking at the entry of China to the World Trade Organization in 2001; the way a booming US economy sucked in Chinese imports before the Great Recession, but less so afterwards; how China's economy is shifting to higher imports of services; and a variety of other factors.

Friday, May 18, 2018

The Rising Number of US Teachers Leaving for Other Fields

The rate of US teachers leaving for other jobs is on the rise. Adam Grundy of the US Census Bureau reports in a short note (May 2018)
"Teachers are leaving their jobs for other careers at a rate that has grown steadily every year in the past three years. ... The majority of educators leaving Educational Services (NAICS Sector 61) are starting careers in the Healthcare and Social Assistance sector. ... For starters, some jobs in Healthcare and Social Assistance, which includes nurses, child care and family assistance services, often require some of the same skills. “Administrative Services,” which includes office workers, is another category that attracts many educators leaving the workforce. Moves to these industries are not surprising since they are two of the largest sectors of the economy. ... Educators aged 25-34 are the largest cohort of job-to-job movers."
For more details, a useful starting point is "Teacher Turnover:Why It Matters and What We Can Do About It," by  Desiree Carver-Thomas and Linda Darling-Hammond, published by the Learning Policy Institute (August 2017). They write: 
"The percentage of teachers leaving the profession—known as “leavers”—has increased substantially over the past two decades: 5.1% of public school teachers left the workforce in 1992, while 8.4% left in 2005. Attrition rates have continued to hover around 8% since then (see Figure 1).The 3% increase in attrition rates is not trivial: It amounts to about 90,000 additional teachers needing to be hired across the U.S. each year. In high-achieving school systems such as those in Finland, Singapore, and Ontario, Canada, annual teacher attrition rates typically average as low as 3% to 4%. If attrition rates in the U.S. could be reduced by half to be more comparable with these systems, the national teacher shortage could be virtually eliminated."

Here's some additional summary of the report by Carver-Thomas and Darling-Hammond:
About 90% of the nationwide annual demand for teachers is created when teachers leave the profession, with two-thirds of teachers leaving for reasons other than retirement. If school systems can address the factors that create high turnover, they can reduce the demand for teachers who are in short supply. 
Not only does turnover contribute to shortages, teacher movement out of schools and out of teaching creates costs for the schools they leave behind. Estimates exceed $20,000 to replace each teacher who leaves an urban school district.  Most importantly, high turnover rates reduce achievement for students whose classrooms are directly affected, as well as for other students in the school. Our analysis of nationally representative survey data from the 2012 Schools and Staffing Survey and the 2013 Teacher Follow-up Survey reveals that the severity of turnover varies markedly across the country: 
  • Total turnover rates are highest in the South (16.7%) and lowest in the Northeast (10.3%), where states tend to offer higher pay, support smaller class sizes, and make greater investments in education.
  • Teachers of mathematics, science, special education, English language development, and foreign languages are more likely to leave their school or the profession than those in other fields. These are teaching fields that experience shortages in most states across the country. 
  • Turnover rates are 50% higher for teachers in Title I schools, which serve more low-income students. Mathematics and science teacher turnover rates are nearly 70% greater in Title I schools than in non-Title I schools, and turnover rates for alternatively certified teachers are more than 80% higher. 
  • Turnover rates are 70% higher for teachers in schools serving the largest concentrations of students of color. These schools are staffed by teachers who have fewer years of experience and, often, significantly less training to teach. Teacher turnover rates are 90% higher in the top quartile of schools serving students of color than in the bottom quartile for mathematics and science teachers, 80% higher for special education teachers, and 150% higher for alternatively certified teachers. 
  • Teachers of color—who disproportionately teach in high-minority, low-income schools and who are also significantly more likely to enter teaching without having completed their training—have higher turnover rates than White teachers overall (about 19% versus about 15%). While they leave at higher rates than White teachers generally, their turnover rates are about the same as those of all other teachers in high-poverty and high-minority schools. 
Teachers cite a number of reasons for leaving their school or the profession. The most frequently cited reasons in 2012–13 were dissatisfactions with testing and accountability pressures (listed by 25% of those who left the profession); lack of administrative support; dissatisfactions with the teaching career, including lack of opportunities for advancement; and dissatisfaction with working conditions. These kinds of dissatisfactions were noted by 55% of those who left the profession and 66% of those who left their school to go to another school.
The authors offer a number of sensible suggestions for retaining teachers along the lines of higher pay, better administrative support and working conditions, and so on. I don't disagree. But it also seem to me that those low-performing schools which also serve high share of low-income students may in some cases need a bigger and perhaps even jolting set of changes, perhaps drawing on lessons about approaches to curriculum and teaching, along with intensive tutoring, used at successful charter schools. 

Wednesday, May 16, 2018

Both Sides of the Vaping Controversy

Could vaping and e-cigarettes reduce the toll of death and illness due to smoking conventional cigarettes? The most recent issue of the Annual Review of Public Health (April 2018) has a nice pro-and-con. On one side, David B. Abrams, Allison M. Glasser, Jennifer L. Pearson, Andrea C. Villanti, Lauren K. Collins, and Raymond S. Niaura have written "A Harm Minimization and Tobacco Control: Reframing Societal Views of Nicotine Use to Rapidly Save Lives" (pp. 193-213). They argue that e-cigarettes can be a useful part of a harm minimization strategy. On the other side, Stanton A. Glantz and David W. Bareham offer a more skeptical view about whether e-cigs will reduce the overall harms from tobacco use in "E-Cigarettes: Use, Effects on Smoking, Risks, and Policy Implications (pp. 215-235).

There's a readable short summary/overview of these two articles in the Knowable magazine (which summarizes results of articles that appear in the Annual Review journals). Viviane Callier has written "E-cigarettes: A win or loss for public health?," subtitled, "They’re less toxic than traditional cigarettes but still addictive and not without their own health risks. Researchers disagree on whether vaping can help or harm efforts to reduce tobacco use" (May 11, 2018). As she notes: "In 2006, e-cigarettes were introduced in Europe and the US. Uptake has been rapid among adults and youth alike. According to the Centers for Disease Control and Prevention, in 2016, more than 2 million US middle and high school students had used e-cigarettes in a 30-day period, and 3.2 percent of US adults (approximately 10.4 million) were current users."

What's the substance of the controversy? The Abrams et al. group frames the issue as an opportunity to reduce the harms of cigarette smoking. They write:
"Inhalation of the toxic smoke produced by combusting tobacco products, primarily cigarettes, is the overwhelming cause of tobacco-related disease and death in the United States and globally. A diverse class of alternative nicotine delivery systems (ANDS) has recently been developed that do not combust tobacco and are substantially less harmful than cigarettes. ANDS have the potential to disrupt the 120-year dominance of the cigarette and challenge the field on how the tobacco pandemic could be reversed if nicotine is decoupled from lethal inhaled smoke. ANDS may provide a means to compete with, and even replace, combusted cigarette use, saving more lives more rapidly than previously possible. ... A reframing of societal nicotine use through the lens of harm minimization is an extraordinary opportunity to enhance the impact of tobacco control efforts."
Here's a figure from their paper showing how they perceive the harms from e-cigarettes: that is, similar to other aids to quitting smoking like nicotine patches or nasal sprays, clearly lower than smokeless tobacco, and dramatically lower than combusted tobacco.





As Glantz and Bareham see it, most e-cig user are already smokers. The health gains from e-cigs over conventional smoking are probably real, but not all that large. So if e-cigs lead to increasing use of tobacco products (that is, conventional smoking and vaping combined), the overall result could be negative for public health. 

Here's a figure from their paper showing patterns of teens and e-cigarettes. Notice that conventional smoking has dropped faster than expected since the arrival of vaping, but the overall downward trend--combining smoking and vaping--maybe altering.


Callier sums up these patterns in the overview essay for Knowable:
In a meta-analysis of 20 studies, Glantz and his UCSF colleague Sara Kalkhoran found that the odds of quitting cigarettes were 28 percent lower for smokers who used e-cigarettes than for those who did not. In the real world, many e-cigarette users take them up with an intention to quit tobacco. But others use them without such an aim, perhaps to get a nicotine fix in areas with smoking restrictions. “Importantly, most adults who use e-cigarettes continue to smoke conventional cigarettes (referred to as dual users),” Glantz and David Bareham of Lincolnshire Community Health Services in the UK wrote in the 2018 Annual Review of Public Health. “In 2014 in the United States, 93 percent of e-cigarette users continued to smoke cigarettes, 83 percent in France, and 60 percent in the United Kingdom.”
In terms of health issued, Glantz and Kalkhoran cite studies that raise concerns over whether vaping reduced the health consequences for hearts and lungs: in particular, they raise questions over whether ultrafine particles created by vaping may pose health risks.

For yet another perspective, the British Medical Association published "E-cigarettes: Balancing risks and opportunities"  (August 2017). This study writes: 
"Survey data from the charity ASH (Action on Smoking and Health) indicates that the vast majority of e-cigarette users in the UK are either ex-smokers or current smokers,5 and regular use among ‘never smokers’ remains very low, at less than one per cent.3,5 The level of e-cigarette use by children also remains low ..."
On the health issue, the BMA writes that also the evidence on vaping is still accumulating (especially evidence on long-term effects), the weight of the evidence at present is that nicotine alone is substantially better than nicotine-and-smoke. Moreover, vaping has become the most popular method of trying to quit smoking. The report argues (footnotes omitted):
"For example, though long-term inhalation of nicotine vapour is associated with some level of risk, and there continues to be debate over the precise level of this risk, several reviews have concluded that it is substantially lower than inhaling tobacco smoke.While NICE guidance states that smokers should always be advised that stopping smoking in one step is the best approach, it also recommends advising those who do not want, are not ready or are unable to stop smoking in one step, to consider a harm-reduction approach.It is the tar and other toxins in tobacco smoke, rather than nicotine, that are responsible for most of the harm associated with smoking. ... 
"In a 2016 consensus statement coordinated by PHE (Public Health England) a range of health organisations together stated that “the evidence suggests that the health risks posed by e-cigarettes are relatively small by comparison” [to smoking]. Similarly, a 2017 consensus statement from NHS Health Scotland – endorsed by a range of health organisations – stated that e-cigarettes are “definitely less harmful than smoking tobacco”.Although there is consensus that e-cigarettes are less harmful than smoking, and that any risks associated with their use are likely to be significantly lower than tobacco, quantifying the precise level of this risk is complex. The most widely cited estimate of relative risk is from PHE’s 2015 e-cigarette evidence review – which concluded that it would be reasonable to estimate that e-cigarette use is likely to be around 95% safer than smoking. This figure was endorsed by the RCP (Royal College of Physicians) in their 2016 report Nicotine without smoke: Tobacco harm reduction, which concluded that “…the hazard to health arising from long-term vapour inhalation is unlikely to exceed 5% of the harm from smoking tobacco smoke” ...
"Significant numbers of smokers are now using e-cigarettes in attempts to stop smoking. The most recent data from the smoking toolkit study indicates that 34% of people trying to stop smoking use an e-cigarette, and e-cigarettes are the most popular device used in attempts to quit smoking. ... Overall – while there is a lack of high-quality research into their effectiveness as a cessation aid – most reported studies demonstrate a positive relationship between e-cigarette use and smoking cessation."
It's hard for an outsider like me, without training in medicine and epidemiology, to evaluate these controversies. On one side, there is a danger that vaping could lead to an increase in tobacco use, and to  health harms that are not yet understood. On the other hand, there is a danger that sharp restrictions on vaping would lead more people to continue with conventional cigarettes, with health harms that are very well understood.

For what it's worth, my reading of the evidence comes down somewhat in favor of a belief that vaping will disrupt the cigarette industry, and that the probabilities are in favor of believing that this change will benefit public health. To put it another way, efforts to treat vaping as if it is fully equivalent to conventional cigarettes run a real risk of costing lives.

For some previous posts on smoking and vaping, see: 

Monday, May 14, 2018

Interview Bonanza: Dow, Harcourt, Goodhart, Lawson, Nelson, Chang

Some people, like me, like reading and listening to interviews with economists. It's energizing, invigorating, exhilarating. On the suspicion that readers of this blog might have a higher-than-average propensity to share this preference, I commend to your attention an interview project ongoing at Goldsmiths, University of London, run by Ivano Cardinale and Constantinos Repapis. They have posted interviews with six prominent economists who, in different ways, would classify themselves as being out of the mainstream of the profession: Sheila Dow, Geoff Harcourt, Charles Goodhart, Tony Lawson, Julie Nelson, and Ha-Joon Chang. The interviews include nice video and full transcripts. The first three interviews were done in 2016; the last three in 2017. Here are some samples:

Sheila Dow discusses pluralism in economics.
"Economics took a different turn in the last few decades of the 20th Century so that there’s a much greater focus on models as providing the full argument. People were lulled into a sense of security by what’s called the great moderation, which was a long period of stability, steady growth. Various people were making statements “We’ve got it cracked. No more issues to be addressed,” so the crisis was a huge, huge shock. Even though people were starting to say that risk pricing was going awry in financial markets, nevertheless, there was this confidence… I mean, because that framework is based on a notion of equilibrium and markets being able always to bring situations back to equilibrium, there seemed to be this blind confidence that the same would happen again. Okay, there’s a bit of mispricing, we have to deal with that, but equilibrium will be restored. ... 
"The crisis itself was regarded as a problem of mispricing due to impediments to market forces. So all the solutions now coming from mainstream economics are couched in these terms – how to reconfigure incentives, how to reconfigure constraints on destabilising activity, how to make information more transparent so markets can make decisions better. A lot of the thinking that’s gone into bank regulation has been very constructive but the underlying thought processes are still in line with what went before and the expectation is we can sort this so that it won’t happen again. ...
"What’s required is what I would call a pluralist approach to teaching, which is recognising that there are other ways of addressing economics. This could start at a very simple level of just making it clear that there is an other. ... [W]hat I’m talking about is economics but doing economics differently. This is even prior to questions of which is better, which is worse, whether it’s possible to say one is wrong. That’s something else. I’m just talking at the level of the fact that there are different approaches to economics and it seems to me it’s crucial for educating future economists, whether practitioners or academics, that they be aware of the possibilities and be given the equipment to make their own choices about how to approach the subject....
"One example would be that New Keynesians focus on market imperfections and that provides the justification for intervention. But the implication is that without those imperfections we would be in the perfect general equilibrium world and intervention wouldn’t be required. So, it’s great that they are focusing on limitations of markets and therefore proposing policies which often would be supported by Post-Keynesians. But Post-Keynesians would approach the question very differently; the rationale for intervention, and the starting point in other words would not be an ideal general equilibrium world. This is difficult to talk about because the differences are so profound. A Post-Keynesian would start with a historical understanding of a particular context, not seek a universal solution; understand ways in which the market economy does not ensure full employment (the principle of effective demand is a core principle within the Post-Keynesian approach); look at the role of money; look at the way in which financial markets create instability and through financial instability create economic and monetary instability."
Geoffrey Harcourt discusses his views on Keynesian and Post-Keynesian economics.
"A Keynesian economist means a number of things. Keynes, in particular, put aggregate demand alongside aggregate supply in producing a new theory of the determination of level of employment and activity. And he claimed that Thomas Robert Malthus, whom he called the first of the Cambridge economists, had this idea, but was defeated in his debates with Ricardo, and so the whole concept of aggregate demand vanished for 100 years, and Keynes brought it back when he was thinking about: "How do I explain these prolonged and terrible levels of unemployment?" Both in the 20s, and even more so in the 30s. And he developed his new theory around the interplay of aggregate demand and aggregate supply, and resurrected the term that Malthus, amongst others, used, effective demand, where effective demand was the point where aggregate demand and aggregate supply were equalised, in the short period. ...
"[L]ying behind proper Keynesian analysis is the assumption that all important decision makers are doing it in an environment of fundamental uncertainty, so that expectations - both short-term expectations and long-term expectations - have a central role to play. It's in the light of people's expectations, and then the total outcome of what they do, we see whether expectations are realised or not. If they're not, then in Keynes's analysis there are a variety of different stories of how the decision makers react to the signals that are given out by the initial non-realisation of expectations. ...
"But as far as positive attributes [of Post-Keynesian economics] are concerned, the way of defining particular functions, like the consumption function, the investment function, putting in how you model exports, how you model the demand for imports, how you model the government's behaviour, they are all peculiarly post-Keynesian because they are based on observations rather than on axiomatic assumptions."
Charles Goodhart discusses his practice of bringing different ompare different traditions or theories in economic thought as a way to identify and discuss key issues in monetary theory and policy
"Very rarely is there any single, clear answer in economics, which is actually why I found it so enjoyable to do economics, because at school we were always taught that there was one right answer. Even in subjects such as history, there was the correct answer and then everything else was incorrect. When one came up to university to do economics, one soon discovered that actually there wasn't a single answer, and I found that was enormously relieving and it was like being freed from shackles, so that one could think for oneself rather than try and memorise what one was told was the correct answer. ...
"When I specialised at school, I specialised in history. Again, I think that economics is a splendid subject. Not only because there isn’t one correct answer to most of the questions that we get asked, but also because I think it’s a very good mixture of history, of knowing what has happened in the past and how we got where we are at the moment and much more rigorous mathematical analysis. I think that the combination of history and mathematics is a very good, very valid one, and in a sense puts us apart from some of the other social sciences. Now, having said that, I think that the subject from time to time varies too much in one direction. ... I think that in recent years it’s been very upsetting for me that history has been downgraded, and indeed that economic history is no longer required as part of the undergraduate economics syllabus, but also that the whole thrust of the subject has gone far too mathematical, with far too little reference and under-appreciation of historical evolution. ....
"If there had been greater reliance on history, I think there would have been a greater appreciation that a combination of a housing boom and credit expansion was highly dangerous. What happened, to a degree, was that in the US there were wonderful data on housing – all aspects of the housing market – which went back to the early 1950s. For 50 years you had monthly data on housing prices and all that. During these 50 years, if you held a diversified portfolio of houses across all the States in the US, there was only I think one or two quarters where housing prices overall on average fell. There were crises in New England at one stage and then the oil-producing states at another, but if you diversified you seemed to be safe.
"If you took these 50 years, and ignored history elsewhere, and you ran your econometric analysis and assumed that the future was going to be like the past of those 50 years, it actually came about that you reckoned that a decline in housing prices over the whole of the United States of more than about four or five percent was an almost unimaginable event. It was basically on that premise that people went into, for example, all the sub-prime stuff, because it didn't matter if you were lending to poor people or people who are likely to get ill, who were on the fringes of the labour market and so on, because if they couldn’t repay you, for one reason or another, if housing prices didn't go down you could foreclose and you would still be safe, because you wouldn't lose any money, whereas you could sell.
"The whole of the sub-prime exercise and the rest of it, which initially was done for the best of intentions, and it was to try and get the disadvantaged of America into the housing market. If you could rely on ever rising housing prices, it would have worked, but you couldn’t and history would have shown you that. So certainly I would want to start by reinstating history to a far greater extent into the syllabus; history not only of one country, because again any country has a sort of particularity. You want to have a history of two or three countries.  ...
Tony Lawson argues against the mainstream use of mathematical methods in economics, and instead advocates an ontological approach.
"The mainstream is defined in principle by an emphasis on applying a narrow set of methods, those of mathematical modelling, whatever the context. In accepting this principle its advocates are forced into working with a particular ontology, whether they recognise it or not: to presupposing worlds of isolated atoms. Thereafter they are reduced to focusing on theories, or formulations of theories, that can be transformed into the world of isolated atoms. In essence, human beings have to be turned into atoms. The obvious assumption to use in order to effect this is that we humans are all super-rational; we don't make mistakes. Situations are devised wherein, relative to the notion of rationality specified, there is a unique optimum, and the presumption is that any model agents, being rational, would ‘end up’ there.
"Heterodoxy is something else. Its participants put much more emphasis on at least seeking to be realistic. I do think underpinning most of the different schools within heterodoxy are more realistic ontological presuppositions; these, if not always explicitly made clear are usually close to the surface. Another difference is that even when heterodox economists use mathematical modelling, they’re far more pluralistic about it. They are willing to engage with people who don't. They’re willing to say it’s one method amongst others. So, pluralism of method is essential to heterodoxy. ...

"My assessment is that most heterodox groups are each best identified or distinguished through a tradition-specific focus on issues that fairly clearly reflect ontological presuppositions and concerns, and indeed a shared set. Institutionalists, following Veblen, are very interested in both evolutionary change, and things like institutions that bring stability within change. So, in evolutionary economics a focus on process and stability is fundamental. Post-Keynesians are very interested in uncertainty. Uncertainty basically derives from the openness of social reality. So, it’s an ontological presupposition of openness that conditions their focus. Feminists are especially interested, I believe, in relationships. Relations of care, oppression, exploitation, etc. It is an ontological orientation of relationality that is fundamental here. Marxian economists focus on the relational totality in motion that is capitalism. So, ontological categories like relationality, openness, process, totalities are key to identifying the various heterodox traditions.

"I believe the just noted ontological categories are everywhere relevant, each being fundamental features of all social phenomena. So, I see the separate heterodox traditions each as a division of labour looking at the same basic social reality from a particular perspective. Implicitly at least, they agree more or less on the nature of social reality, and are divisions of labour within the study of it."
Julie Nelson is interviewed on the subject of feminist economics, which she once defined as "work having to do with the economic roles of men of women that has a liberatory bent ... and work on the definition and methodology of economics that shows the gender biases there."
"My research during the last couple of years looked at phrases like ‘women are more risk-averse than men’. Philosophy and linguistics tell us that they’re considered to be generic statements about categorical differences, like ‘ducks lay eggs.’ Actually, only a minority of ducks lay eggs--only the mature females! Most ducks don’t lay eggs. So when people hear ‘Women are more risk-averse’, people tend to think of that as categorical--women over here, men over there. In my meta-analysis, I looked back at the statistical data on which this claim was based and the two distributions are almost entirely overlapping. There is at least 80%, sometimes 90 or 96% overlap between the men’s and women’s distributions. There may also be tiny, perhaps statistically significant differences in the means of the distributions, but men and women are really a lot more similar than different. Yet, if you read the titles of certain books or articles, you would be getting a big misperception. ...

"When I teach my students I always ask them to start with a definition of ‘feminist’ and ask them whether a man can be a feminist, etc. So, to me, feminism is not treating women as second-class citizens, as there to help and entertain men. And then more my methodological work has been about the biases that have been built into economics by choosing only the masculine-associated parts of life and techniques and banishing the feminine-associated ones. In my own life, I’m quite comfortable in both economics and feminist camps. I find when I give talks I get interesting labels. When I talk to a group of relatively mainstream economists I’m a wild-eyed radical leftist feminist nutcase. But because I’m an economist, when I talk to a lot of gender and women’s studies groups, and I don’t talk about the evils of global corporate capitalism and I don’t have a certain line that I take on the economy, I’m considered a right-wing apologist for capitalism. And I’m quite comfortable balancing those two. ...

"I think of the feminist analysis as a particular way in ... The gender aspect, along with explanations coming from economic power and class, I think, together explain a lot of the power of the mainstream in economics. That is, the mainstream is supported in part because it kind of throws a smokescreen over inequalities which we would rather not look at. For example, in the US, these ridiculous CEO salaries, some people spout a free market sort of thing to justify that. But then also I think there is a psychological dimension to the power of the mainstream. It seems to be more macho, more rigorous, somehow more scientific, and builds this big barrier of math: ‘Well, you don’t understand the policy because you can’t read this journal article’. I think this is rather silly and that the more we reveal that the emperor has no clothes, maybe, the easier it will be to knock down."
Ha-Joon Chang discusses the development economics, contrasting the neoclassical view with a productivist view.
"People have debated about the definition [of development economics] for ages. Now, broadly, there are, I think, two-and-a-half definitions, if I may say so. The first definition is basically conflating economic development with economic growth. So as output per capita grows, there is economic development. This view is adopted by most neoclassical economists, who form the vast majority of the economic profession today. But then there is another definition, which has roots from the classical school and the Marxist school and also what I call the developmentalist tradition, people like Alexander Hamilton, Friedrich List, and the development economists of the 1950s and ‘60s, people like Simon Kuznets, Albert Hirschman and so on. In these alternative traditions, economic development is defined not purely in terms of quantitative growth but qualitative change.
"This definition is based on the understanding of the economy mainly as something based in the sphere of production. So, for these people, economic development happens only when there is fundamental structural transformation in the productive structure of the economy and also the underlying capabilities that make that productive transformation possible. It’s a much more nuanced and qualitative definition of economic development. For example, Equatorial Guinea, which is actually, at the moment, the richest country in Africa, because of oil, grew from an economy with $350 per capita income in the early ‘90s to a country with something like $22,000 per capita income. The standard neoclassical definition will classify this as economic development but there are people like Albert Hirschman or Friedrich List who would say, ‘No. That’s not development. That’s just quantitative growth.’

"Then I said two-and-a-half definitions because there has been more recently a variant of the neoclassical definition, which is apparently more progressive, but in the end even less forward-looking than the standard neoclassical definition. This is a definition that more or less equates economic development with poverty reduction. ... So it has a progressive element, but, on the other hand, this is a vision of the economy as something that is almost static. You don't need structural transformation. You don't need growth in productive capabilities. All you need is to generate more income and, more importantly, redistribute it more fairly so that we eliminate abject poverty, which is usually defined as $2 a day. So that is a very narrow defensive kind of definition. ...
"It is not just academic theoretical differences because they give very different policy implications. So if you take what I call the productivist view, the view that economic development is in the transformation of the productive sphere, yes, then you will necessarily recommend economic policies that will encourage the accumulation of new technologies, acquisition of new skills by workers, transformation of the social arrangements to back those. So the most famous policy recommendation in this tradition is the so-called infant industry argument. The argument that governments of economically-backward nations need to provide trade protectionism, subsidies and other supports to young industries so that they can have the space to develop their productive capabilities and eventually catch up with the more advanced producers from abroad.
Now, for this to happen, you would need to provide tariff protection. You might even need to ban the imports of certain foreign products. You might put restrictions on foreign direct investment. You might set up state-owned enterprises in the large capital-intensive sectors with high risk because, typically, in developing countries, there are no large capitalists that can take such risks in the beginning. So you recommend these kinds of policies. 
"If you took the neoclassical view, then, basically, economic growth happens ultimately as a consequence of people trading. So as people want to buy better things then they are ready to offer higher prices and entrepreneurs will spot the opportunity, produce new things. In that world, you also assume that technologies are freely available, and therefore everyone has equal productive capability. ...At most, you would provide some public goods like infrastructure and basic education, but, beyond that, you don't really have to do anything other than keeping competition alive by opening your borders, by deregulating businesses. ... If you keep the markets open and free, economic development naturally follows.
"From these two different visions of how the economy works and develops in the long run especially, you’d come up with completely different sets of economic policies. ...
I studied economics in the early 1980s in South Korea. Most of our professors were neoclassical economists, although, compared to today’s neoclassical economists, they were much milder. But the reason why I started looking at other approaches was because I just couldn't reconcile what I was taught in the classroom with what was happening around me. At the time, South Korea was going through its miracle growth period. The economy was growing at 8, 10, 12% every year, massive social transformation, positive and negative, and huge conflicts. Workers going on strike, students going on demonstration, riot police coming in to bash people. Huge conflict, and then in the classroom, the professors were saying, ‘All changes are marginal. Everything is in equilibrium.’ I couldn't take it seriously."