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My guess is that this goes to the "interesting but..." category:

Economics plays a crucial role in the rigorous scheme of competition policy in the United States and increasingly around the world. This creates a demand for economists and their students as consultants and expert witnesses on competition policy matters to defend their behavior on social welfare grounds or condemn that of their rivals or suppliers. This, in turn, creates a demand among economists who serve as teachers or consultants for academic research providing tools and frameworks for analyzing these issues. This demand shift raises the equilibrium quantity of work on allocative efficiency and the premium accruing to individuals working in this area.

On the other hand, regulation of the financial sector has not been nearly as rigorous, either in terms of it stringency or its reliance on economics. This has, on the one hand, reduced demand for economists and their students as consultants on allocative efficiency and, on the other hand, stimulated demand for their assistance on financial engineering of innovative products and profitable speculation. Just as in industrial organization, this demand increased equilibrium quantity and price of work on informational efficiency and financial engineering and reduced both on allocative efficiency. I discuss various pathways through which these external influences impact research in economics.

I'm entirely unsure that the regulation of banks has been less rigorous than the regulation of, say, capital markets. It's rather a different form of regulation: heavy handed, hard to detect, and done by regulators who are captured by/aligned with industry (you may view that as good or bad). I also think economists are at some point going to have to make their peace with constructivist takes on research agendas, rather than try to put everything down to material incentives.

It is interesting, however, that Weyl sees 40% of the compensation of financial economists coming from consulting. Legal scholars in almost every case would come nowhere close to that.

Hat tip: Marginal Revolution.

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My guess is that this goes to the "interesting but..." category:

Economics plays a crucial role in the rigorous scheme of competition policy in the United States and increasingly around the world. This creates a demand for economists and their students as consultants and expert witnesses on competition policy matters to defend their behavior on social welfare grounds or condemn that of their rivals or suppliers. This, in turn, creates a demand among economists who serve as teachers or consultants for academic research providing tools and frameworks for analyzing these issues. This demand shift raises the equilibrium quantity of work on allocative efficiency and the premium accruing to individuals working in this area.

On the other hand, regulation of the financial sector has not been nearly as rigorous, either in terms of it stringency or its reliance on economics. This has, on the one hand, reduced demand for economists and their students as consultants on allocative efficiency and, on the other hand, stimulated demand for their assistance on financial engineering of innovative products and profitable speculation. Just as in industrial organization, this demand increased equilibrium quantity and price of work on informational efficiency and financial engineering and reduced both on allocative efficiency. I discuss various pathways through which these external influences impact research in economics.

I'm entirely unsure that the regulation of banks has been less rigorous than the regulation of, say, capital markets. It's rather a different form of regulation: heavy handed, hard to detect, and done by regulators who are captured by/aligned with industry (you may view that as good or bad). I also think economists are at some point going to have to make their peace with constructivist takes on research agendas, rather than try to put everything down to material incentives.

It is interesting, however, that Weyl sees 40% of the compensation of financial economists coming from consulting. Legal scholars in almost every case would come nowhere close to that.

Hat tip: Marginal Revolution.

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