Secretary-General's Annual Report

The Secretary-General, Professor Richard Portes, presented the following report on the Society’s activities to its Annual General Meeting, held on 17th March during the 2008 Annual Conference at Warwick.

This is the last Annual Report of the Secretary- General that I shall deliver. After three five-year terms, I am standing down. In past Annual Reports, I have given details of the Society’s activities over the previous year. This final Report will not follow the same pattern.

First, I want to highlight some issues facing economics in this country and elsewhere. I have mentioned them in past reports, and I shall quote a few passages. The good news is that the Royal Economic Society has responded to these issues in various ways, and I believe we have made a difference. The bad news is that the issues have nevertheless not gone away.

'Usefulness' of research
In a previous Annual Report, I observed that ‘We are told that academic research must strive to be “useful”, to achieve multidisciplinary insights on the key issues facing business and public policy-makers. There is little encouragement or funding for introverted, discipline-based theoretical speculation and model-building. “Users” guide our research priorities — excluding, by (misguided) definition, researchers building on others’ results to push the discipline forward. Meanwhile resources are squeezed in higher education. This may be a rational, productivity-increasing reallocation of intellectual and other investment. We shall not know that for some time. What is already clear, however, is the fall in our output of high-quality PhDs who wish to enter academic life in the UK. We have not yet fully exhausted the inherited educational capital in our university system, so that despite relatively low real salaries, we are still able to recruit young staff from abroad, particularly elsewhere in Europe. But there is increasing difficulty in maintaining a significant UK presence in the forefront of a wide range of fields in economics.’

Some of the data have changed: more resources have been allocated to research; ESRC has moved to offering teaching buyouts, which are particularly valuable to theorists who did not benefit from ESRC funding for research assistance; UK economists have been entrepreneurial and rather successful in getting funding from the various sources offered by the European Commission; and salaries for UK academic economists have risen, partly because of competitive pressures that I shall discuss in a moment. They had until recently also risen relative to Continental Europe, with the strength of sterling since 1995. So we have held our own. But in my own field, at least, international macroeconomics and finance, our relative position has nevertheless deteriorated.

Outreach
More recently, I argued that ‘It is essential to our professional academic ethos that we insist on the importance of advancing knowledge for its own sake. Yet most of us actually do want to be “useful” too — many of the best academics serve as policy advisers or consultants, even go into politics or business. We must insist that there is no contradiction in this: much analytical research is motivated by empirical puzzles or policy issues, and most policy analysis must rest on a consistent theoretical framework and empirical knowledge if it is to be of any serious, practical use. And just as in physics or cosmology, even pure theorists often like to communicate the excitement of their research to a broader, non-specialist audience. Those doing policy-relevant work or discovering interesting empirical regularities are normally eager to get attention and recognition for their results. But they all need help. Only the rare scholar has the gift of writing for a broad public, and even those who might have it usually rely on comparative advantage: communicating through journalists.’

The RES Council took a similar view and launched our Media Initiative, an effort funded by the Society (with initial help from ESRC). Romesh Vaitilingam has with great success helped UK academic economists to get their messages out. We see that now at every Annual Conference, where we get considerable press coverage for a range of papers that Romesh commends to the media.

Research Assessment Exercise - the benefits of competition
‘Whatever the objections to the RAE, however, there is no doubt it has effected a remarkable change in incentives. The stimulus of competition is strong, even if imposed from above in a heavily regulated environment rather than developing from below with light regulation. It has induced unprecedented market-led responses from our institutions, and this has interacted with the growing internationalisation of our PhD students and faculty. It is instructive to contrast this new environment with the relative insularity and lack of competitive pressures in the German and French universities…I believe that overall the results are positive for both research and teaching, but we still must be concerned that we are unable to draw UK-trained undergraduates into our PhD programmes. The problems analysed by the Machin-Oswald report [that we commissioned 9 years ago and appeared in the Economic Journal June 2000, F334-349] are still very much with us. It is no consolation that the top American university graduate programmes are also populated primarily by students with non-American university undergraduate training — some of them, of course, our own.’

Competition is not the universal solution. It is, however, the best weapon we have against institutional rigidities, and we have seen the very positive results in the UK university sector. And here is an example from recent research on transparency in European and American corporate bond markets (in which I collaborated with several colleagues). We are often told that the US capital markets are the deepest, broadest, most liquid and most efficient in the world. We fancy ourselves to believe that the UK is not far behind. In fact, however, on a conventional measure of efficiency, the bid-ask spread, we found that spreads were actually lower in the euro-denominated corporate bond markets than either the US or the UK. Why? Our conjecture is simple: competition…

Let me give you another example, much closer to home. I work in a business school. Europe has no economics department that is clearly in the world top-15, but it does have two business schools that consistently rank in the top-10. That is not, I regret to say, because those institutions have endowments on scale of the major US schools. Rather, their relative success is due to market pressures, competition, and their willingness to respond to those pressures. Typically, business schools depend on fees, very little on state finance. They have no entry or exit barriers, so they both confront and exploit domestic and cross-border mobility. They face strong incentives to compete for students and faculty, so they are keenly responsive to market pressures. These business schools are outward-looking, with global reach. They stress differentiation and ‘branding’, not ‘harmonisation’.

In Europe — including the UK until fairly recently — we often find that conditions are very different. There is all too frequent outright opposition to market processes — faculty may be civil servants, there are restrictions on entry (e.g,. the agrégation), uniform and rigid salary scales, pensions that are not portable. We have seen recently a push for ‘comparability’ and ‘harmonisation’ of standards across Europe (e.g. for degrees). There are fairly rigid structures for cross-border cooperation (with some notable exceptions). We seldom observe any institutional identity or branding — academic institutions do not perceive a need for loyal alumni, partly because most or all of their resources come from the state. And universities strongly resist pressures to seek funding from alumni or the private sector.

Research programmes are often dictated by funders in a top-down manner. This is perhaps more frequent and blatant in the social sciences, because administrators and politicians think they understand these disciplines, which also have overtly political dimensions (whereas they cannot pretend to understand high-energy physics). So administrators, who may not have deep disciplinary backgrounds, nevertheless impose their own views rather than deferring to professional standards. We see this at the EU level in prescribed research topics, criteria for evaluating proposals, the choice of evaluators, and enforced multidisciplinarity. I quote from a referee report on a proposal to the European Commission:

A major strength of this proposal is that it addresses a very large part of [the] topic…and is thematically highly relevant. However, its view of multidisciplinarity seems rather narrow, because it is basically working within one methodological paradigm. While it does bring in a number of disciplines, these are represented by researchers who largely adopt this paradigm. This is not fully in line with the integrative approach toward multidisciplinarity put forward by the new Network of Excellence instrument.

We also often find deep distrust of ‘orthodox, mainstream economic thought’: a referee on another proposal said, ‘…despite the excellence of the partners’ record within mainly economic science, they fail to include alternative, complementary or even competing approaches.’ The proposal failed. Referees like these have regrettably been taken seriously. Mediocrity is rationalised on the grounds that it it is hard for the ‘heterodox’ to publish in top journals — despite the examples of Joseph Stiglitz, Amartya Sen, Herbert Simon, Samuel Bowles, Herbert Gintis, and many others.

The European Commission itself has confirmed the importance of this view:

Despite the fact that the results are interesting, some economists expressed strong reservations to publish the results [of the ‘reputational assessment’ of economics]. Their main concerns are that the addressed economists are only from the European Economics Association and not representing the vast spectrum of economic thought but represent more orthodox economic thought…Second…is that the results confirm common perceptions on where the good, but mainly mainstream economics is taught and researched. (Mapping of Excellence in Economics, DG Research, 2004, p 192)

What we clearly needed was a European Research Council like the US National Science Foundation. We need not so much more but better funding, awarded on the basis of serious competition. And we now have it. The ERC now exists, it has made an auspicious start, and it is good to know that soon the distinguished economist Andreu Mas-Colell will become its Secretary General.

The last fifteen years
The Royal Economic Society has changed very considerably in the past fifteen years. I have already mentioned the Junior Fellowship scheme and the Media Initiative. In rough chronological order, I cite several other features that make today’s RES totally different from that of the 1980s and before:

• First, and importantly for the others, we instituted open elections to the RES Council.

• The Easter School was launched fifteen years ago by Peter Sinclair, with support from the RES and ESRC. It has been widely imitated, but in my view, nowhere equalled.

• We instituted the conference grant scheme and the small budget research grant scheme, of which I have spoken in previous Annual Reports.

• The RES Executive Committee and Council took some while to accept that the RES should follow the American Economic Association and establish a Women’s Committee. But no one would now criticize that initiative, which has been very successful thanks to the commitment in particular of Denise Osborne, Carol Propper, and Heather Joshi.

• We have seen in recent years a substantial revamp of the Economic Journal. This began with Michael Wickens and his colleagues as Managing Editors, who have been succeeded by Andrew Scott and a new group of MEs. The EJ has been climbing steadily in the impact factor rankings, and recently its submission rates, especially in economic theory, have risen dramatically while its turnaround times have improved very substantially.

• Ten years ago we launched the online Econometric Journal, on an initiative led by David Hendry and under the editorship of Neil Shephard at the outset. This is now solidly established as one of the leading journals in the field.

• A few years ago, we began an ongoing series of annual public lectures, directed to students of economics in schools and other non-specialists. These have proved to be a wonderful example of outreach, as a sequence of distinguished economists have addressed with panache topics that are both serious and sexy.

There was considerable scepticism to overcome before the Society was able to launch our ‘job market’, which takes place at the end of January. Here John Sutton conducted excellent and successful diplomacy. This event brings in many participants from elsewhere in Europe, both economics departments and aspiring academics.

Most recently, we began last year an annual schools essay competition in economics. We were delighted to see 750 entries in this first year of the competition for the title of ‘young economist of the year’, and a number of the essays were of very high quality. This effort was sparked by John Vickers and Hamish McRae.

To conclude, I offer my thanks to several key individuals whom I have not already mentioned.

• to the Presidents with whom I have served: David Hendry, Tony Atkinson, Partha Dasgupta, Steve Nickell, John Sutton, and John Vickers

• to the Treasurers: John Flemming, whom I miss greatly, then Penelope Rowlatt

• to the Newsletter Editor, Peter Howells, whose patience with me is legendary, and to his predecessor, Thelma Liesner, who also served as Administration Officer for the first two years of my tenure

• and finally, most importantly, to Eleanor Burke, Administration Officer of the Society since 1995. The job grew considerably during that time, and so did Eleanor. I simply could not have done my job properly without her.

I have been Secretary-General of the Royal Economic Society for 15 years. There have been nine SGs since 1891. Edgeworth served only a year, 1891-2. Keynes, on the other hand, served 33, Austin Robinson 26. When I came in, succeeding the extremely capable Aubrey Silberston, it was following the major renewal of the Society inspired by Frank Hahn. I aspired to be the very model of the modern Secretary-General, ‘with information vegetable, animal, and mineral.’ But honestly, I could not claim that ‘I know the kings of England and I quote the fights historical from Marathon to Waterloo in order categorical.’ Still, I thought I might compensate by being ‘very well acquainted with all matters mathematical, [since] I understand equations both the simple and quadratical. About binomial theory I’m teeming with a lot’a news, with many cheerful facts about the square of the hypotenuse. [Like all economists], I’m very good at integral and differential calculus, I know the scientific names of beings animalgulus [well, not quite]. In short in matters vegetable, animal, and mineral, I have sought to be the very model of the modern Secretary-General.’

Well, I cannot judge how far I have succeeded, but thanks to many colleagues, it has been great fun. The RES is a strong institution with an important role. I am sure John Beath will work even harder on behalf of the Society’s members and the interests of our discipline, and I wish him all the best.

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