NZIER Economics Award 2008 (updated)

The NZIER Economics Award for 2008 has gone to Professor John Gibson of the Waikato Management School at the University of Waikato. He graduated with a degree in agricultural science in 1987 and a master's in 1990 from Lincoln University before completing a PhD in economics at the Food Research Institute of Stanford University in 1998.

Gibson is no stranger to controversy. In a recent study he found pay rates for positions in public sector were between 17% and 21% higher than comparable positions in the private sector. He has argued that KiwiSaver will greatly enhance inequality among the elderly. Gibson explains that NZ Super evens out the disparities in income among the elderly to a marked extent, while KiwiSaver magnifies disparities in and of the workplace, male versus female, Maori versus non Maori, and working versus non working. On the differences in wealth and income between Maori and non Maori in New Zealand Gibson has argued that 60-65% of this was due to the younger average age of Maori.

In his acceptance speech Gibson points out that invoking controversy in nothing new for him, it started back in student days. The story also tell us something about the relationship between economists and the bureaucracy.

Looking back, I also had the good fortune to work for the Agriculture Department in Papua New Guinea in the time between my Masters and PhD. Not only did I meet my wife there, I also managed to raise the ire of the Secretary of Agriculture, who was a former politician who ultimately became the PNG ambassador to the UN.

He took issue with research I had done showing that it was far better for Papua New Guinea to trade for rice using tree crops than to try to produce rice in some self-sufficiency effort. After cancelling my contract he went to the unusual lengths of taking out a full page advertisement in the national newspaper to say that all advice that I had given was a load of rubbish.

On the academic front Gibson says that he has been lucky for a seachange in the attitude that economists, and especially the gatekeepers of the profession – journal editors – have to research relying on primary survey data. He says

It is no longer unusual to find articles in good international journals that rely on author collected data. Currently there is a much more equitable treatment for the two inputs into the production of good empirical economic science – method and data – than has historically been the case and my work has benefitted substantially from that change. This is a change that can also benefit institutions like the NZIER that have a long history of data collection.

Much the same could be said of papers based on experimental data.

On the policy front Gibson goes on to say that in his view economists in New Zealand's universities do not enter into public debate as much as they could or should.

It is my impression that as a society we are not getting full value from our university-based economists, in helping to inform public debate on topical matters.

And I would have to agree. His reasons for this are, firstly

The first reason is that many of my colleagues may not know where to turn to, to engage with policy, because they are fairly new to New Zealand. In part due to university’s responses to the Performance Based Research Fund there has been a very substantial turnover of academic personnel.

Second

... some academics might claim that working with policy agencies and research and consultancy companies might result in work that is unlikely to publish is good international journals.

Gibson argues against this. I'm not so sure. There are a few areas in which New Zealand may be interesting to overseas journal editors but there are many areas in which no one cares what happens here. And New Zealand is not as interesting to those overseas today as it was back in the reform period of the 1980s.

Thirdly Gibson writes

There is a final reason why I think that we are not getting full value from our university-based economists. It concerns the way in which tertiary sector independence has greatly eroded under the Tertiary Education Commission. The universities are now essentially centrally planned by the TEC, based on charters, investment plans and so on.

It is puzzling that central planning – which manifestly failed to deliver even basic foods and consumer goods to millions of households in China, Russia, Vietnam and elsewhere, should be expected to efficiently allocate resources for the much more complicated teaching and research services delivered by universities.

This dead hand of the TEC bureaucracy may also mean that universities are not at an ideal arms’ length distance from the government of the day. My own view is that the natural position of academics is to be agin the government, regardless of who that government is. That is part of the contribution that universities can make to a free and open society.

Gibson notes, currently in my view, that

... since the current funding mechanisms are so opaque, with much relying on the discretion of the TEC, one would never know if there was some penalty imposed for universities being overly critical.

All those in universities should feel free to hold whatever views they please without fear of penalty if the government of the day doesn't happen to like those views.

Update: A copy of the full speech can now be downloaded from the NZIER website here.