The paradox of economic competition

written by Felix, one of Economist David Zetland’s students.

as shown on the The one-handed economist

Economists have long defended the benefits of fair competition, explaining that it makes markets more efficient, increases innovation, and generates more benefits for consumers. It’s therefore surprising to see a lack of competition in academic economics, where the same few universities collect titles, honors and influence for their research.

How loyal are economists to their principles, when their professional interests are at stake?

Richard B. Freeman, Danxia Xie, Hanzhe Zhang & Hanzhang Zhou studied the concentration of award-winning academics across institutions and concluded that across “18 major academic fields in the natural sciences, engineering, and social sciences,” economics was the only discipline that was evolving towards a more clustered knowledge and centralized institutional system, going against the other disciplines leaning towards decentralization.

Indeed, their study shows that prestigious awards such as the Nobel Prize are disproportionately given to academics linked or directly working with a few universities, including the University of Chicago, Harvard, or MIT.

The paper suggests that a reason for that could be the importance of prestige in the field of economics, where a debate between two points of view or theories is influenced by high status individuals and the reputation of their institutions. Most importantly, this concentration is problematic because it prevents diversity of thoughts, fosters “club mentality” and overall limits new challenging perspectives from emerging scholars (The Guardian, 2024).

In theory, academia should be a meritocracy where the best research rises to the top, pushed by its own quality. In practice, the structure of academic economics does not look like a fair market, it rather looks like a winner-takes-all market where power is concentrated among a few key players. The LSE Impact Blog argues that academics have internalized a hyper- competitive system where success is almost only defined by publication in a small set of high-impact journals, mostly controlled by scholars from elite institutions. This dynamic leads to an inefficient situation where many economists spend more time “playing the game” rather than engaging in genuine intellectual exploration.

This lack of genuine competition in an academic field encourages unethical behavior. A study discussed by the LSE on “scientific misbehavior in economics” found that many economists admit to engaging in “dishonest” behavior: manipulating journal rankings, favoring insiders in hiring and promotions, and even suppressing opposing research. Again, the main reason of that is the common and constant pressure to publish.

Moreover, a survey on academic ethics showed that nepotism, through publication bias, and exclusionary practices are widespread in economics. For instance, senior economists at high-ranked universities have significant control over publication decisions, invitations to conferences, and career opportunities (List et al., 2015).

Bottom line: The excessive clustering of awarded academics and the nepotist practices present in the economic discipline goes against the virtuous competition economists call for. It impoverishes the quality of academic research and increases pressure on economists to publish without integrity.