A fateful decision
In 1996, Elsevier launched the journal Energy Finance and Development. It was not a success. The journal was folded into Energy Economics in 2000. This was premature because around the same time, financial markets for energy and the environment got going. Scholarly research in the area boomed. Energy Economics has published many papers in the area.
Economics and finance are different disciplines. Publishing both in the same journal is strange. I once proposed to split the journal into two but the tyranny of journal impact factors stopped that: The Institute for Scientific Information (now Clarivate) does not allow daughter journals to inherit their mother’s reputation. So we continued to publish in finance.
We are now revisiting that decision. Our historical obligation to finance is 25 years old and fading. Older finance journals now regularly publish in what used to be almost exclusively our area. New finance journals appeared to satisfy supply.
The credibility revolution in economics seems to have passed by finance. Most finance papers are about associations. The econometrics are complicated and advanced, often cutting-edge, but the results are descriptive. You can make your descriptive statistics as fancy as you like, but you still do not have a causal interpretation. We used to worry about parameter instability. Now people proudly present time-varying parameters — models that are incomplete by construction.
Replication packages have become common in economics in the wake of Jaap Abbring’s bold experiment with Quantitative Economics. It has yet to be widely accepted in finance. Our replication audits reveal that many researchers lack the training to write a proper replication package while some show an unwillingness to engage. Too many focus on the volume of their output rather than the quality.
Problems with integrity — skullduggery, fakery, bribery — also appear to be concentrated in finance.
The editorial board of Energy Economics has therefore decided to reduce the number of finance papers considered for publication. We will publish some finance but not nearly as much as in the past.