Dear Professor Romer,

I am writing you about your recent working paper The Trouble with Macroeconomics that generated lots of reactions.

I have simple question. I am a graduate student in economics. I am going to begin a PhD program in economics next year. I always loved macro, and I will probably specialize myself in this field. My question is:

• Shall I see all the critics made to the macro field as a signal that there will be massive developments and evolutions, which makes it pretty exciting?
• Or, on the contrary, shall I be scared and try to stay away from macro as much as possible?

I thank you in advance for your response and wish you a great week.

Best regards,

Dear ________:

My prediction about a new career in macroeconomics is:

– more variance, hence
– more option value.

You can always follow the consensus path, whatever that turns out to be. But relative to the last three decades, you will also have the option to do more exploration outside of the prevailing consensus. There has been so little exploration in recent decades that the returns from are likely to unusually high. (I think you can interpret Narayana Kocherlakota’s point about “the prevalence of puzzles” as supporting evidence.)

Of course, exploration is risky. Some new paths will lead to a dead-end. The ones that matter are the few that turn out to offer important new insights. So diversify and be ruthless about dropping all but the most successful. One additional boring paper will add little to your satisfaction or your opportunities. (For a more general discussion of this point, see my comments here about of what it means to think like a surgeon.)

If I am right that in recent decades the equilibrium in post-real macro has discouraged good science (and remember, many economists do not agree with me, at least not yet) there is some risk that a rear-guard of post-real macroeconomists will continue to defend their notion of methodological purity. At this point it is hard to know whether this group will fracture or dig in for a fight to death. If they dig in, I suspect that it will be in a few departments and that the variation between departments will be larger. Watch to see how this plays out and choose where you go with this in mind.

To learn about a department, visit and ask macroeconomists you meet “honestly, what do you think was the cause of the recessions of 1980 and 1982.” If they say anything other than “Paul Volcker caused them to bring inflation down,” treat this as at least a yellow caution flag. Then ask about cause of the Great Depression. If they start telling you about the anti-market policies of the New Deal, listen politely and scratch this department off your list.

Be equally cautious when you look for your first job. Promotion decisions in departments with clusters of post-real macroeconomists can be strongly biased in favor of their team and against “those guys.” Because they collude so effectively and so aggressively, they can have an influence that is out of proportion to their numbers. (Oh, the stories I could tell.) So look carefully at the actual pattern of decisions about hiring and promotion in macro over the last 20 years. In effect, test the hypothesis that a department relies on a one factor model that evaluates quality or a two factor model that weighs quality and conformity to local dogma. To do this, you will have to develop your own sense for the quality of the various journals where macro is published. You will have a feel for this by the time you finish your Ph.D.

When you consider graduate school or a job offer, try find one that has a culture like the one that Milton Friedman described at the University of Chicago when he said “an academic is concerned not with being diplomatic, not with trying to avoid hurting people’s feelings, but an academic is concerned with saying what’s right. Telling the truth, or trying to get at it. And if you disagree with somebody you don’t say ‘well, now there may be something in what you say’ … You say ‘that’s a bunch of nonsense.'”

Be wary if you are told that “we maintain a collegial environment in which everyone gets along” because this can be code for “we do not tolerate nonconformists.” (Oh, the stories I could tell.)

Remember that you have many exit options that limit your downside risk. If things do not turn out well in academic macro, go do something else.

For me, a life in science has been very rewarding. It offers one of the few opportunities to commit to a cause that is larger than myself. From a purely selfish perspective, this type of commitment has the benefit that it is a reliable path for a satisfying life. Plus, you get a chance to keep learning. As part of this strategy, define success in your own terms. You can frame a setback that seems to be a failure from the individual perspective (perhaps a bold conjecture that turns out to be totally wrong) as a contribution to progress for the field as a whole. If you start to interpret criticism as a personal attack and an admission that you were wrong as humiliation, you will cause yourself needless suffering and you will stop learning. The decision in my career about which I am most proud was when I concluded that the mathematical formulation of my thesis, which was published as Romer 1986, was flawed beyond repair and needed to be replaced by the one in Romer 1990.

Keep a journal. It is good for your writing and might eventually be a useful record of your experiences.

Good luck and please write me and tell me how things are turning out.

Best regards,
Paul