Beatrice Cherrier

Rationalizing Human Organization in an Uncertain World: Jacob Marschak, from Ukrainian Prisons to Behavioral Science Laboratories

Jacob Marschak (1898–1977) had an enormous impact on the development of postwar economics, both as an intellectual mentor of Nobel Prize winners such as Kenneth Arrow and Franco Modigliani and as forerunner and institutional organizer of several research programs, most famously at the Cowles Commission. Nevertheless, he remains understudied by historians. This article uncovers the salient characteristics of his scientific vision in the forties and fifties, at the apex of his influence on the profession: his definition of economics as the science of rational choice; his emphasis on mathematization, experimentation, and interdisciplinarity as the proper methodology; his view of uncertainty as the main characteristic of the social environment; and his claim that economists should be “social engineers.” The development of such a vision is studied against the background of Marschaks biography and of his understanding of the vicissitudes of the twentieth century, in particular his socialist beliefs and his repeated experience of emigration.

The age of the applied economist: the transformation of economics since the 1970s

It is widely accepted that economics has changed significantly since the 1970s with the development of new data sources, new methods of analysis and the computer. This paper argues that this transformation of the discipline involves more than just a rise of empirical work: it involves a new understanding of the relationship between theoretical and applied work, which raised the prestige of the latter. The meaning of economic theory and applied work and the boundaries between them changed as theory and empirical work alike became more applied in the sense that they were brought to bear on specific social issues, often with a policy orientation. Drawing on an analysis of John Bates Clark medal winners and on papers published in a special volume of History of Political Economy, to which which this is an introduction, we then discuss reasons for this transformation. It resulted from new modeling strategies, data sets and technologies as as well as the changing influence of public and private patrons.

Becoming Applied: The Transformation of Economics after 1970

This paper conjectures that economics has changed profoundly since the 1970s and that these changes involve a new understanding of the relationship between theoretical and applied work. Drawing on an analysis of John Bates Clark medal winners, it is suggested that the discipline became more applied, applied work being accorded a higher status in relation to pure theory than was previously the case. Discussing new types of applied work, the changing context of applied work, and new sites for applied work, the paper outlines a research agenda that will test the conjecture that there has been a changed understanding of the nature of applied work and hence of economics itself.

The Indeterminate Fate of Sunspots in Economics

In this paper, we use archival sources, interviews and bibliometrics to trace the development of a loose community interested in indeterminacy and sunspots, and we propose several explanations for this indeterminate fate of their models. Sunspots were initially developed by Cass and Shell in reaction to some perceived inconsistencies they found in Lucas’s 1972 model. The idea that extrinsic beliefs matter in the context of indeterminacy was then spread by a set of researchers associated with the Center for Analytical Research in Economics and the Social Sciences (CARESS), at the University of Pennsylvania, and the Centre pour la Recherche Economique et ses Applications (CEPREMAP) in France, though by adopting distinct modeling strategies and vocabulary. By the mid-1980s, several theorists understood that they were interested in common topics – fluctuations, indeterminacy and coordination failures and attempted to draw connections between OLGs, general equilibrium, non-linear dynamics and game theory models. We explain how this convergence was counterbalanced by several fragmenting forces, and we outline several explanations for the marginalization of these models within economics: they were perceived by macroeconomists to be ultra-sophisticated limit cases devoid of practical relevance, they had no empirical dimension, and they were neglected by policy-makers, in particular central bankers. Finally, we quickly describe efforts by the second generation of sunspot theorists to correct these flaws by switching to RBC modeling and calibration, and provide a few hints on the current state of sunspot models.