The fatal flaw in economics funding

The Bank of England. Captain Roger Fenton / Flickr. Public domain.

As the old saying goes, ‘He who pays the piper calls the tune’. This week, a coalition of economics students, academics and campaigners gathered to get inside the process for the funding of economics research, to create an economics fit for the real world.

The ‘piper’ principle plays out for academic research through a process called the Research Excellence Framework (REF), and  its impact is  considerable. The REF is a very big deal for universities. Every five years or so, each institution gets assessed through the REF. Academics submit their published research which is then judged against a set of criteria and graded. The higher it is graded, the more money their department will receive for future research.

Within economics departments the REF  encourages a single type of economics, while broader research is sidelined. Work that draws on innovative insights about human behaviour, market failures, gender dynamics, ecological limits and institutions is  not valued whilst more mainstream research, underpinned by a narrow set of assumptions about how the economy works,  receives the highest grade.

Because it determines so much of their funding, universities take the REF very seriously. In economics departments, it influences who they hire and fire, which topics they research, and the kind of economics that gets taught to students. Because it dictates the teaching, this cycle is perpetuated. Narrow economics begets narrow economics and society is burdened with economists who can not deal with the challenges society faces, from climate change, to inequality, to financial instability and beyond.

Because the REF has such an impact on society, the new coalition REFunding Economics is working to defend the discipline and make sure that diverse, real-world economics gets the funding it deserves.

The bias derives from several factors, but possibly most crucial is the choice of individuals that sit on the REF panels. They set the criteria for what is classed as ‘world-leading’ research, and later they grade the thousands of pieces of submitted work, ultimately deciding if it is high quality or not. In the 2014 REF, the economics panel was overwhelmingly made up of experts who subscribe to a narrow view of economics, while more diverse, interdisciplinary economists were left by the wayside.

The REFunding Economics coalition is determined to have a positive impact on the next REF, due to take place in 2021. As a first step, they are working to get top quality diverse economists into the heart of the REF system. The REF organising body, which is connected to the Department for Education, allows organisations to nominate individuals for the sub-panels, although the final choice of panelists is up to them.

“We need to make sure that the REF Economics panel values diverse, real-world economics,”  explains Laura Bannister, Strategy Co-ordinator at Rethinking Economics, who are co-ordinating the REFunding coalition. “We’ve been pulling together a group of brilliant economics researchers to put forward, and we sincerely hope that REF will select a good number of them for the panel. This could have a huge positive impact on how economics research gets judged, and will send a strong message to university economics departments about what is wanted from them.”

The deadline for panel nominations is 20th December 2017, so the successful candidates are likely to be announced in the new year.

This is just the first step in a big campaign. The REFunding Economics coalition will be taking every opportunity available in the next few years to influence the REF process for the better. “If we don’t take action, the REF may be a real barrier to reforming economics,” Bannister explains.

Rethinking Economics has grown out of the international student movement for better economics in the classroom and in society.

“Students all over the UK and the world have been sitting in their economics lectures, wondering when they’re going to learn about the big issues: inequality, financial crises, post-growth economics for the climate change age. Often, the assumptions and models that they are taught seem to be based in a strange alternate reality that bears little relation to the real world in which they’ll later be employed. Students, as well as many academics and professional economists, have become increasingly worried about this. The system isn’t creating the kind of economists that the real world needs, and the REF is a big player in this issue.”

By pushing for change in economics research and teaching, and in the mechanisms that fund it, Rethinking hopes to shift the way economics is understood, taught and communicated by governments, universities and other bodies of influence.

“Economics makes the world go round. We need economists that can grapple with the big issues of the 21st century, and this requires a broader subject that can deal with these multidimensional problems. Economics is crucial to everyone’s quality of life, and good economics begins in the classroom, where the decision makers of tomorrow learn their trade. It’s time we made sure that we’re creating an economics that is fit for the future.”

  • BC

    This pretty much confirms my suspicions. Effectively economics departments are funded to proselytise for a narrow and failed dogma while any challenges to that dogma are actively discouraged.


      It’s not only economics. The REF has failed to promote excellence across a broad spectrum, and effectively has been the mechanism by which politicians now control universities — in terms of both research and teaching. Anyone who thought that the Tories and Blair would oversee an institutional framework to promote independent and critical research was clearly deluded. I concede that the RAE started out looking quite independent, but that quickly vanished by the time Blair took control.

      Of course, an additional problem is who funds research. Most research funding comes from the EU, the UK government funding bodies, and big business. Occasionally the EU funds innovative and critical research, while the other two sources are clearly politicised and promote the interests of neoliberal ideology and big business. So, judging research “quality” by how much money is collected is obviously going to marginalise any challenges to neoliberal thinking. I didn’t see any of the UK academics twigging onto this and complaining when the RAE was set up, and I didn’t see any organised complaints from the overpaid university heads since. Basically, it’s structurally promoted propaganda dressed up as academic “scholarship” — fooling nobody. The UK academic sector is now a joke.

      • BC

        “Basically, it’s structurally promoted propaganda dressed up as academic “scholarship” ”

        Spot on

        “– fooling nobody.”

        Oh! If only that was true…


          I occasionally lapse into optimism. Forgive me!

  • steve

    Yup, the closed shop lives and breathes.

  • Macrocompassion

    Seems to me that in common with the way economics departments at the universities are being run, this so called “openDemocracy” is about as political as the rest! Especially when it introduces the prior decision opposing Brexit, see other parts of this site. I believe we have no place for introducing this topic and that until we can roughly agree on certain attitudes and approaches to more general economics there is little point in hoping to influence the direction modern thinking in economics is leading. So you will have to excuse me if I don’t join in on the REF work.

    I strongly contend that economics should be more logically and scientifically based and that our present unfortunate intuitive methods are able to result in selecting different policies at the same time. These confusing methods began with John Bates Clark, when he claimed (for political and commercial reasons) that capitalists are also landlords when it is perfectly clear that the dynamics of value of the durable capital goods (capital) and of the useful sites (land) are driven by completely different forces. From that time in about 1900, there has been confusion in logical thinking about macroeconomics from which we have never recovered.

    Although this critical view for more science is wide-spread among many hetero-economists, they are doing very little to change it. To make a step in the right direction seems to throw them into a panic, because the thinking processes are different. Their minds are insufficiently open despite their fine words! The reason that I became interested in the openDemocracy is because I was hoping to find some broader minded thinkers here who might appreciate my original way of making macroeconomics into a true science. My recent book “Consequential Macroeconomics–Rationalizing About How Our Social System Works” presents the sensible, logical and analytic way for getting down to a better representation about our society. I offer an e-copy for free to anybody who is academically honest enough to be concerned and share the claim that by this kind of thinking we can better learn about good government, when logic is applied with analysis to common sense.

    Write to me for a free copy:


      Economics is not a science. Only idiots think otherwise.

      • Macrocompassion

        Macroeconomics has recently been developed into a true science. I suggest that these idiots you mention can’t think at all, or their economics is not macro in its scope and nature.


          LOL. And the non-existent linkage between micro and macro has been resolved too? Come off it.

          • Macrocompassion

            There is a slight linkage but it is not particularly easy to find, and about the most significant they share is the idea of the demand and supply curves intersecting.

  • 3rd Millenia Project

    Anyone care to consider the idea of modernizing the distribution infrastructures with out nearly all of thier current consumptions in time, energy, resources.

    Enclosing and accomplishing the various transport, energy, utilities, and communications in a secure and controlled environment. Suggest itself as being an evolutionary step.

    Enclosure does pose itself as being the most ecologically and environmentally sound way to achieve them. However it also appears to be by far the cheapest, most efficient and capable way these processes could ever hope to be achieved as well.

    In a secure and controlled environment and opened to the ability to begin employing that full array of existing abilities.

    Its seems that most if not nearly all of thier current consumptions in time, energy, and resources can become reliably removed. All through the new found ability to begin reliably applying these numbers of existing abilities.

    Surprisingly. My own attempt to understand what kind of values of cost and benefits may be at work in such a practical change in structure. Shows that the cost is not only a few Percents of what exists today. But the values of the other efficiencies and enhanced abilities will truely dwarf the cost in accomplishment.

    Is my modern society? And indeed in time, that all of our humanity standing at the edge of taking its most revolutionary step EVER.

    And it amounts to little more than modernizing its infrastructures into those vastly more efficient and capable processes that they so need to be and can so reasonably may become.

    Its not a structural, technological, or financial problem.

    The cost of enclosure and the values of benefits are very discernable.

    Its not the disruptive innovation it seems. As the physical accomplishment in the enclosing network of connected structure cannot be reasonably achieved in any short period of time. Its merely a vastly more efficient replacement for the very antiquated processes of today. Whose beginning incremental and ever increasing achievement will truly revolutionize the populations abilities. So much so that it seems we could then begin getting beyond most if not nearly all of today’s social, economic, environmental and ecological problems.

    Care to consider that accomplishment of a more acurate feasibility analysis study.

    According to a 2010 Federal highway study. 200B was spent on highways. But we incurred 300B in just accidents on highways. Failed to mention the 1.7T spent on energy in order to get the 200B in fuel tax revenues.

    Non of which do we want. Not the short lived high energy and resource consuming highways, accidents, or energy dependency.
    Transport can be achieved with out all these things.

    The question is how to fund the development and accomplishment that will allow it to become that reality it so needs to become.

    There are plenty of incentives.

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