Three Big Changes in the World of Economics -- Noah Smith
”[…]some big things have changed in the field of economics, and America should know about them. Three big changes stand out in particular: Econ today is more data-driven, far less politically conservative, and in general much more like engineering than it used to be.”
From theory to data
As of 2011, only 30% of papers published are theoretical works. The usual form is a sort of “structural estimation”, a blend of theory and empirical work. People are demanding proofs now, ideas backed up with hard evidence. With the information available today, it’s difficult to avoid using it.
From laissez-faire to liberal
People have come to realize that markets aren’t perfect and that no government intervention isn’t viable. Markets fail. People aren’t always rational. There is a tendency of economists to favour, to some degree, government intervention.
From policy to engineering
“The rise of auction theory has resulted in a boom in private-sector hiring of economists by technology companies (including startups). Auctions are one of those situations in which the “agents” are close to perfectly rational–just the type of case that the theorists of decades past liked to sit around and theorize about. This theory worked. And what works, makes money.” See Google as an example of this. Theory has taken to prediction beyond policy making.