Theory and Measurement: Emergence, Consolidation and Erosion of a Consensus
We identify three separate stages in the post-World War II history of applied microeconomic research: A generally non-mathematical period; a period of consensus (from the 1960s through the early 1990s) characterized by the use of mathematical models, optimization and equilibrium to generate and test hypotheses about economic behavior; and (from the late 1990s) a partial abandonment of economic theory in applied work in the “experimentalist paradigm.” We document the changes implied by the changing paradigms in the profession by coding the content of all applied micro articles published in the “Top 5 journals” in 1951-55, 1974-75 and 2007-08. We also show that, despite the partial abandonment of theory by applied microeconomists, the labor market for economists still pays a wage premium to theorists.
We thank Robert Goldfarb and Thomas Wiseman for helpful suggestions, and participants in the 2016 HOPE conference on “Becoming Applied” for very useful discussions. No financial support was received by either co-author. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.