Economics Has Another Diversity Problem
Although economists are finally addressing their profession's gender and racial imbalances, another key source of knowledge and insight remains absent from the discussion. Until there is a greater representation of voices from outside North America and Western Europe, economics will not be a truly global discipline.
CAMBRIDGE – Early in his career, the economist Joseph E. Stiglitz had an extended stay in Kenya, where he was struck by various oddities in how the local economy operated. Sharecropping was one such anomaly. If farmers were required to surrender half of their harvest to landlords, Stiglitz wondered, wouldn’t that greatly tax incentives and thus reduce efficiency? Why did such a system persist?
Stiglitz’s quest to resolve this paradox led him to develop his seminal theories on asymmetric information, for which he would later be awarded the Nobel Memorial Prize in Economic Sciences. “The time I spent in Kenya,” he reminisced, “was pivotal in the development of my ideas on the economics of information.”
Similarly, the economist Albert O. Hirschman was in Nigeria when he observed behavior that he found puzzling. The rail company, long a public monopoly, had begun to face competition from private truckers. But instead of responding to this pressure by addressing its many glaring inefficiencies, the company simply deteriorated even more. The loss of consumers, Hirschman reasoned, had denied the state firm valuable feedback. This observation about rail transport in Nigeria was the seed that grew into his phenomenally influential book Exit, Voice, and Loyalty. (Hirschman also fully deserved a Nobel Prize, but never got one.)