[bgcolor=#ffffff]My point is very simple: there are quite a few papers nowadays which are purely a showoff of techniques without any economic insight. The rest is what you have said. Papers with good economic insight is because their ideas are good and intuitive and their conclusion can be summarized in at most a couple of plain English sentences. If those idea needs to be illustrated using whatever technique as necessary, then use it. But do not use technique solely for the purpose of showing off something unless you have some real interesting economic story to tell. The art of economic modelling is to illustrate your point using the simplest possible model, although sometimes the simplest possible model might be quite technical. At least this is what I have learnt from Bob Lucas and Ed Prescott. They write technical papers, but they use technique for good reasons.
I have no idea if the technique in B-S is basic to physicists, but their idea is simple and intuitive and can be expressed in plain English. If that needs to be done in such technical way, that is fine. You seems to be indicating finance people do not have as much technical skills as physicists. But, rather than derivative pricing, I do not see any physicists making real big contributions to the finance literature (exclude John Cochrane or Steve Ross who has a undergraduate physics degree because their PhD training are solid econ and finance), in particular the corporate finance area. What's more, as somebody in the board pointed out a long time ago (sorry I cannot remember the ID) in recent years most job market stars (especially Chinese) are from traditional finance and econ background and that does contribute to the point that economic intuition and institutional knowledge are more important than pure technical skills.
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I agree with your basic point but I may not holding such a strong attitude as you. Start with a great idea and then find a way to model it is a good way to do research, but there are many other possible way to contribute. There are indeed some very technical papers at their era but without too many fresh economics insight, but they provide some very useful tool for following researches(a not so good example might be theoretical econometrics, they mainly try to solve some problems in applied field, or just theoretical interest, but the solution itself often lack of any economic insight). There are also many other great works with some intuitions difficult to express in plain sentences, like Arrow's impossibility theorem, in those situations, technical work often provides some results out of people's intuitive thoughts, and it is those technical results which push people to rethink some so called "common sense", and change our view of the world. There are many examples in Micro theories generating those "counter intuitive" results, and many of them are not easy to explain in a very few sentences. And I think you know that there are many models and famous papers analyzing the same issue but generate totally different results with their own great ideas(like Macro, since you mentioned Lucas and Prescott), and the first step for us to compare them is to understand the technical details. And even though technical level itself has no direct relationship with the quality of the paper, I would say it is still a not so good indicator of quality of research in different field, the history of economic or finance research in a field is a history of relaxing assumption or finding problems in previous methods, both often requires a more technical method to deal with.
I'm not saying you are wrong, and no offense. I just say technical issue is not a secondary factor as you mentioned, it is a very important part of the research and I would be very cautious to make those statements. |