Tuesday, March 1, 2016

Economics looks more like physics than a social science

This week I saw two graphs that summarize quite well how economics have changed in recent times. The first one seen in Bloomberg View, but originally from this paper, is about the trend in economic academic journals to publish more and more empirical and data intensive papers instead of theoretical ones. The trend has been observed since the 80’s but today is much more evident. The twist here is that in the last decade or so, empirical papers using own data instead of borrowed data (i.e. data from IMF or World Bank…) are now a majority. Field experiment plus own data empirical papers represent 42% of the total. Only 20 years ago they were barely 11%.

That shows the major change economics has been through, from a theoretical field to an empirical one. Economics has become a social science based on experiments and data with the likes of biology and natural sciences.

Obviously, a field that uses data and experiments requires a good amount of statistics and mathematics. The use of those in economics has increased dramatically and as a consequence it is a prerequisite for any economic student-to-be. The second chart points in that direction, it shows the results of the GRE quantitative test by field of study. GRE is a standardized test that is an admissions requirement for most graduate schools. For those who doesn’t know a graduate school is a school that awards advanced academic degrees (i.e. master's and doctoral degrees).

   Source: Julie Posselt Twitter account

The GRE scores distribution of economics students is closer to those of physics than to any of the other social science subfields.