Fruitful/neglected areas of research today

[michaelmas]

Hello

I'm not sure if this question has been asked before, but what in your opinion are the most fruitful areas or fields of research in economics today? Which fields, if any, are unjustly neglected and which are saturated?

Can a field on the other hand become saturated, or are they all like bottomless pits of research topics and ideas? Is our world really everchanging so much?

One of my teachers claimed, if I remember his words correctly, that as sophisticated as financial mathematics was today, financial econometrics was rather naive in its approach - whatever that means - and needs some restructuring in the future. (He doesn't like stochastic volatility models all that much).

What are your professors/advisors telling you? Any ideas or thoughts?

[dreck]

We had an interesting related discussion not too long ago: http://www.urch.com/forums/phd-econo...economics.html (What is the most/least respected subfield of economics?)
There are a few other threads on the same topic.

First, a caveat: trying to pick your subfield based on what's hot is like trying to beat the market, and I do not recommend it. Fields ebb and flow like the tide, and when something looks like it's going to take off, everyone rushes in to get a slice of the glory. You should pick your field based on your actual interests. But if you're purely interested for curiosity's sake, then we can speculate away.

Every field has interesting research questions, but IMO randomized trials and behavioral economics are currently pretty fruitful. Environmental's pretty hot because of...well everyone's obsessed with sustainability and that. Saturated: well what's fruitful today is likely to be saturated tomorrow. I think theory tends to always be saturated, but that's a necessity: you need a lot of people plugging away at it before someone comes up with something that turns out to be important. Macro is IMO saturated, since one view (DSGE!!!!) pervades pretty much the entire literature.

[Baby Varian]

Academic research for finance is saturated but the demand for finance people is strong due to the private sector and MBA students. DSGE does have its own problems: (Google: Building a Science of Economics for the Real World Congress) so there's potential for change.

[behavingmyself]

I'd say that micro theory as a broad category is saturated. People continue to go into it because that's what they like doing, the work style suits them, and there isn't a total absence of interesting things left to be said. But micro theory faces the issue that increasing the number of assumptions decreases the usefulness of the result, so that, as the field develops, the questions being asked become increasingly irrelevant. I wonder whether it will still be engaging to study by the time we're in the latter stages of our careers.

I would argue that macro isn't saturated. Frustrating, yes; saturated, no. The big questions in macro are largely still unanswered. DSGE became dominant in the last quarter century because people thought it was a promising approach to understanding the economy. Because of the big misses of the last few years, many people are wondering whether it's possible to build macro models where less stuff is treated as exogenous, either within DSGE or by building some new framework. The field is really wide open.

[treblekicker]

micro theory is tricky because you need to think of it in a few ways. if you were interested in pure theory, then you could either further refine current theories and assumptions (as behvaingmyself discusses), or you could posit alternate theories. certainly the former is less wide up than the latter, however, the latter is often times far more difficult to publish and gain traction with others.

or, you could work within "applied" micro theory, which is largely the application of micro theoretic tools (principally game theory) to concrete problems. this approach, while quite saturated, is still a pretty "safe" field choice -- i mean that you could, if you were so inclined to, write a decent dissertation in this area.

[zurich_econ]

I still believe/hope that someday there will be no separate field of behavioral economics anymore but that it will be incorporated into standard micro. If not, then I, too, believe that the topics of research in micro theory become increasingly irrelevant, because I believe that the more distant the implications of the current assumptions in micro will receive ever less empirical support, and deal with ever more irrelevant questions. I think a good example for this is the literature on ambiguity aversion (read NU's Al-Najjar's "Critical assessment of the ambiguity aversion literature"), which, in my opinion, in its current state is a field to avoid.

[dreck]

I still believe/hope that someday there will be no separate field of behavioral economics anymore but that it will be incorporated into standard micro. If not, then I, too, believe that the topics of research in micro theory become increasingly irrelevant, because I believe that the more distant the implications of the current assumptions in micro will receive ever less empirical support, and deal with ever more irrelevant questions. I think a good example for this is the literature on ambiguity aversion (read NU's Al-Najjar's "Critical assessment of the ambiguity aversion literature"), which, in my opinion, in its current state is a field to avoid.

That's a bold claim, but an intriguing one. I whistled out loud. I don't know enough about either behavioral or micro theory to speculate if it's a valid one, but I do know some economists who would fight that kind of integration tooth and nail, for not-altogether-unfounded reasons.