Carbon Pricing, Income Inequality, and Shakespeare: Highlights from the 2015 American Economic Association Meeting

January 7, 2015
Rachel Cleetus
Policy Director

While many of you were probably enjoying the last days of the holiday season, this past weekend I and thousands of my fellow economists made our way to Boston for the annual American Economic Association (AEA) meeting. Boring, you say? Not so quick! Among the many yawn-inducing sessions were some engaging, thought-provoking, even radical discussions. In no particular order, here are some themes that caught my attention.

  1. Income inequality matters. Experts agree that income inequality in the United States has grown significantly in recent decades. This seemed to be the year that it broke through as a major subject of interest at the biggest annual gathering of economists. There were at least three sessions devoted just to Thomas Piketty’s best-selling tome Capital in the Twenty-First Century. (If you can’t get through all 577 pages, here’s a handy 4-paragraph summary.) And many more sessions focused on income inequality and its impacts on economic growth, education and employment opportunities, and well-being in general.
  2. Economists need to become better communicators. One of the best sessions I attended was Talking the Talk: Communicating Economics to a Broader Audience. Jonathan Schwabish, Justin Wolfers, Amanda Cox (of the New York Times’ Upshot team) and Jim Tankersley (from the Washington Post) spoke of the need for economists to use better data visualization methods, better slide presentations, and more story-telling (and more tweeting and blogging) as a way to educate, engage with, and influence the broad public, including policy makers and the media. (Of course, almost every other session I attended seemed to feature slides cluttered with dense text and equations!) Wolfers had a particularly entertaining story about how a term he coined on Twitter, “cupcake deflation,” successfully entered the media lexicon on NPR’s Marketplace and CNN Money among other outlets.
  3. Climate change poses economic risks and requires policy action. Mainstream economists may have been slow to recognize the serious threats posed by climate change but this year it was clear that a shift has occurred. There is a very interesting body of work emerging that combines insights from financial economics on risk, insurance and incentives for mitigating risks, with cross-disciplinary research on climate damages, the social cost of carbon and appropriate long-term discount rates for estimating the costs of climate change. A long-standing near-universal consensus among economists that a price on carbon is necessary and beneficial was also in evidence at the AEA. (The politics of getting such a policy enacted by Congress is a whole other question!)
  4. Shakespeare, jazz, and economics are connected. There was a very interesting session on ‘Shakespeare and Economics’ that I was sorry to miss. Luckily, I can read Dierdre McCloskey’s paper on Shakespeare and the Bourgeoisie or listen to Sarah Skwire’s lecture on Shakespeare’s Economic Seductions on the web. A lovely tradition at the AEA is an evening of music. This year’s session included a jazz combo and a rhythm and blues band.

If you’re interested in viewing webcasts of selected sessions from the 2015 AEA meeting, including remarks from Gregory Mankiw, Raj Chetty and William Nordhaus, go here.