What Do Fed Economists Know About The Disruptiveness Of Social Media?
What is the value of “the economic blogging crowd,” including Matt Yglesias, John Stossel, Robert Samuelson, Robert Reich, Paul Krugman and Brad DeLong?
There’s a bit of a debate online triggered by an essay written by Kartik Athreya, a senior research economist with the Federal Reserve Bank of Richmond. The headline of the 4-page piece “Economics Is Hard. Don’t Let Bloggers Tell You Otherwise” summarizes both the essay’s premise and point of view.
“Deficits, short-term interest rate targets, sovereign debt are all chewed over with a level of self-assuredness that only someone who doesn’t know more could,” writes Athreya, in finding fault with “the sophomoric musings of auto-didact or non-didact bloggers.”
By contrast, Athreya says, “When a professional research economist thinks or talks about social insurance, unemployment, taxes, budget deficits, or sovereign debt among things, they almost always have a very precisely articulated model that has been vetted repeatedly for internal coherence.” He finds it bizarre that “untrained speculations” are being passed off as insights.
Athreya says he wrote the essay to alert others “to the giant disconnect that exists between the nuanced discussion that occurs between research economists and the noise (some of it from economists!) that one sees in the Web or the op-ed pages of even the very best newspapers of the U.S. As a result, my hope is that the broader public will ask for a slightly higher bar when it comes to economics rather than self-selecting into blogs that merely confirm half-baked views that might have been acquired from somewhere.”
I’ve been thinking about this off and on since yesterday, when I saw an @MKTWealth tweet that included a “The Fed Disses Financial Bloggers” link to a HousingDoom.com article whose actual headline was “Fed Economists Now Feeling Threatened By Bloggers?” After reading the commentary and the comments, I proceeded to read the essay. Athreya has presence on the Richmond Fed site, including a video and links to his work but I didn’t find the June 17 essay there. HousingDoom linked to the Scribd site, which is where the Zerohedge blog uploaded it yesterday. If memory serves, there were just a few hundred views yesterday and now 3,372 as I write this mid-day Tuesday.
I provided all of the detail in the preceding paragraph as an illustration of how information spreads nowadays.
This episode fascinates us from two perspectives.
Economic Bloggers Influence Advisors
Economic blogs are regularly read by financial advisors whose tweets are published on AdvisorTweets.com. In aggregating what advisors are saying about the markets, the economy, personal debt levels, small business planning, we care about advisors’ role in information dissemination—who’s influencing them, as suggested by the links they exchange—and how they in turn may be influencing their retail clients. Advisors forward links to economic blogs.
Does Athreya have a valid point? Is there too much reliance on untrained commentators? Here are a few links to some evaluations of the argument. Naturally, we welcome your comments below.
- The Fed Has Lost It; Publishes Essay Bashing Bloggers, Tells General Public To Broadly Ignore Those Without An Econ PhD
- A Rebuttal for Kartik Athreya
- Kartik Athreya: On Economics Writers
- It’s Hard Out Here For An Economist
But Polarizing Isn’t How It’s Done Anymore
As a digital marketing consultant steeped in helping financial services brands find their way in social media, I find it such a surprising communication. Across the Web today, all kinds of private sector and public sector entities are coming to terms with the concept that they are not in control—users/consumers are. As Athreya is now experiencing, someone can get at his essay, upload it to a content-sharing site, attribute his views to the Fed and widen the discussion beyond his essay to include commentary on his professional background. He may have started the conversation, but it’s gotten away from his original intent.
Athreya’s approach in the essay is so surprising because it’s polarizing and that really doesn’t work anymore. Others are finding a way to meet in the middle. It was a few years ago when automakers figured out that there was no winning with the online car reviewers and bloggers until they engaged them. Critical mommy bloggers are being recruited by consumer product companies to help improve their products and their promotions.
Is it possible that a Fed economist hasn’t heard of the power of the community, the groundswell, socialnomics even? Is criticizing the “untrained” for what they don’t know really the only play here?
Economics is Hard