2018-10-08

Ten years ago the financial crisis led to a reckoning for some macroeconomic models. In the decade since, the Nobel prize for economics has gone to scholars who study the economy as a whole only once. Last year’s winner, Richard Thaler, works on individuals’ deviations from rationality. A year before, the prize went to two scholars of contracts. Perhaps the pattern will change when a new winner is announced today. But the trend reflects a shift in the discipline as a whole, from macro to micro, and also away from theory towards empirical work. Big data-sets have allowed the study of questions that were beyond earlier generations of researchers. In time, this may cause the distinction between the two branches of economics to become blurred, as scholars can more easily link individual choices to economic fluctuations. Meanwhile, the problems facing macroeconomic policymakers—such as an inability to lower interest rates much below zero—have not gone away.