Being Good Vs Being Popular

Over the course of time, Russ Roberts, the host of EconTalk, has interviewed three Nobel Laureates in Economics whose work was not immediately accepted. The economists are Milton Friedman, Gary Becker, and Vernon Smith. You can listen to the interviews by following the links inserted on their names. All sciences have an established body of work, and these economists challenged the prior beliefs of their professions embody by that work. It is proper and fitting that great effort should be necessary to move the center of economic belief. It is also proper and fitting that their ideas, given empirical support eventually won out, and their contributions are now widely recognized.

In short, Friedman opposed what was then the dominant economic belief that markets were unstable, and that government intervention was needed in the form of fiscal policy to stabilize markets. He argued that markets were inherently stable, and that through sound monetary policy involving a rule, a constant rate of growth in the money supply, government could best maintain economic growth. He was a Monetarist in a Keynesian world. Much of his work is now incorporated into the two dominant schools of Macroeconomics that followed his academic career, New Classical and New Keynesian economics.

Gary Becker extended economic research into nontraditional areas began in 1955 with the economics of discrimination, and followed by human capital, the allocation of time, crime, and the family. Other economists, particularly older ones, tended not to notice Becker’s contributions because they were nontraditional. He missed job opportunities, and the recognition that lesser economists received. By the middle of the 1970s Becker noticed that young economists greatly admired his work, and furthered his research.

Vernon Smith introduced experimental economics to the profession. In 1955, with a new Ph.D. from Harvard he began to teach at Perdue University. He soon realized that he did not understand the connection between how people operated in markets and the theory of supply and demand. The conventional stories did not explain how market reached equilibrium.

He began experimenting on students, and gained great insight into how markets reached equilibrium. His work demonstrated that markets were more efficient than traditional models demonstrated--economic agents did not need perfect information, and the number of agents did not need to be large. He attempted to publish his work in the Journal of Political Economy, a journal that was generally pro-market. His paper work was not accepted for publication.

In his interview on EconTalk, Smith quips,

Why did I send it to the JPE? Why that's a University of Chicago journal, and I thought, what have I shown? I've shown that markets really work quite well, better than I anticipated, and better than the...conventional wisdom as we taught it in economics. So I said, I'll send it to the JPE because those guys in Chicago have a reputation for believing in markets so they'll like this. Well that was wrong. I think it became evident why it was wrong. If you believe in markets you don't necessarily need evidence.

Smith describes in some detail his travails in publishing his work. He submitted his paper twice, and both times the referees rejected the paper. Eventually, Harry Johnson took over as new editor and asked Smith to submit yet another revised version. Ultimately the paper was published and Smith quotes Johnson as saying,

I haven't been at this job very long and I've learned a lot. I've discovered that you have to keep evaluating everybody, including yourself. I have to confess that I was one of the original referees (that was negative on the paper), but you've convinced me.

Good work, hard work paid off, and acclaim followed.