In one of the very best assessments of the field of economics, Don Boudreaux at Cafe Hayek nails it. Here is a lengthy excerpt, followed by my own observations:
While... today’s professional economists continue generally to have a better and more nuanced understanding of economic reality than do non-economists, I fear that the mature and realistic understanding reported by [George] Stigler more than 55 years ago is today neither as widespread nor as deep among economists. A greater focus on mastering complicated tools has dimmed the typical economist’s insight into the functioning of the economy; this focus has denied to a larger portion (than in the past) of economists what Deirdre McCloskey describes as “the refined common sense we call price theory.”
Focusing on tools has had this baneful effect through a number of channels, some of which I’ll just mention here without going into too much of an explanation.
First, as economics becomes more mathematically intricate, the people who, as students, choose economics as a major tend to be those who naturally excel at mastering the beautiful sparse logic that is math rather than at pondering the great complexities of real-world economies – pondering that is fruitful only with some knowledge, not only of formal economic theory, but of history, of political science, and of institutions (especially law).
Second, more time spent mastering formal tools means less time that is available to read, ponder, discuss, and debate history – including economic history and the history of economics – and other aspects of reality that one must be much more than passingly familiar with in order to become a genuinely good economist.
Third, to master a tool – be it high-level mathematics or econometric techniques – too often gives to those who master it a false sense of mastery of economics. Yet just as mastering, say, how to use a hammer does not thereby make the hammer-master an excellent homebuilder, mastering technique does not make the technique-master an excellent economist.
As you might imagine, I share these views. Yes, I have done some mathematical work in economics, but it seems to me that most (though certainly not all) of the important work in economics is more of the "price theory" or "political economy" sort. I said as much in my 2013 address at The University of Regina, "I Didn't Learn a Thing as an Undergraduate." [video tba if/when the video tapes get transferred to dvd]
The trend really is amazing, as so many graduate schools find that the students most successful in their programmes have majored in mathematics or engineering as undergrads, having studied at most one introductory course in economics. These students go on to do high-powered mathematical economics and rarely, if ever, develop the nuanced, rich understanding of markets that George Stigler and Don Boudreaux are talking about. And, to top it off, we put many of these same graduate students in front of introductory economics students as teaching assistants [TAs]. The one benefit of this process is that by TAing introductory economics, the graduate students are almost forced to learn a little about institutions and nuances.
I shudder to think of the number of times I have sat in on interviews of job market prospects only to hear yet another young mathematician tell us they can prove such-and-such theorem. But during the questioning, it all-too-often became clear they had little idea about the institutions involved in trying to relate their theorem to anything in history, in markets, in gubmnt, or in the real world at all. They may be technically proficient, but they do no grasp The Economic Way of Thinking.
There are of course exceptions, thank goodness. They are too rare, though.