Method myopia

Abstract

AbstractMethod myopia is defined as theoretical rhetoric absent empirical discernment regarding flavor‐of‐the‐day econometric methodologies. This Fellows Address discusses why method myopia is pervasive, what factors contribute to the pervasiveness, why is likely it to increase, and finally, a possible remedy. To that end, incentive structures facing researchers, reviewers, and editors are considered within the life‐cycle of a typical econometric methodology. Considering our discipline is empirically driven, there are potentially large costs by using flavor‐of‐the‐day methodologies when an alternative ‐‐ possibly leading to different economic results and policy responses ‐‐ is the appropriate method. Furthermore, method myopia can notably restrict the set of research problems examined thereby creating additional, potentially large, opportunity costs. Finally, over‐selling the superiority/completeness/correctness of results from such flavor‐of‐the‐day methodologies to policy makers can not only be costly in the particular case, but can undermine the long‐term credibility of our disciplinary advice to policy makers.