IN THE world of economics, macroeconomists have had all the kudos. As designers of economy-wide models, they provide the house-price and interest-rate forecasts that fuel dinner-party talk. Many hold power, twiddling the dials of tax and spending in finance ministries, or shifting the monetary levers at central banks. Others grab the riches that banks and hedge funds offer. The natural order is, however, changing. Not only have macroeconomists been embarrassed by a decade of failed predictions, but they are also losing their edge. For anyone starting out in economics, the future is micro (see article).

Microeconomists are a humble bunch. Rather than seeking a unified theory of everything, they hone in on a particular area, often a single type of market or firm, and try to find out how it works. But technology is lending them clout. Armed with vast data sets produced by tech firms, microeconomists can produce startlingly good forecasts of human behaviour. Silicon Valley firms have grown to love them: by bringing a cutting-edge economist in house, they are able to predict what customers or employees are likely to do next.

Take SmarterTravel, a subsidiary of TripAdvisor, a travel company. When a user lands on its website an economist-designed algorithm kicks into action. Data, including the time taken between clicks, help predict whether the user is a browsing time-waster or a potential buyer. The site is adjusted in milliseconds—browsers see more adverts, buyers a simpler site to focus on their purchase—to maximise profit. Other outfits sell their ability to predict. Any firm worried about staff retention can let hiQ Labs’ team delve through its records to spot individual employees most at risk of leaving or being poached. The head of HR can target those staff accordingly.

Rather than taking supply and demand as a given, the new breed of microeconomist helps nudge the two into line. In the early days of Airbnb, an online market for home rentals, its economists pored over customer data to spot market weaknesses. Costly enhancements, including professional photographs of every listing, are rigorously tested to make sure they work before being rolled out. The company also guides users uncertain about the right rate to charge for a listing. At Uber, a taxi service, prices surge during peak hours, pulling more drivers onto the road. At Poynt, a Silicon Valley startup offering a new type of cashless payment, an economist was included in the product-design team. Microeconomists no longer just study how existing firms work, they help design new ones.

Blessed is the geek

There are lessons here. The shift from bean-counter to revenue-earner makes the new microeconomics lucrative. Tech giants like Google, Facebook and LinkedIn all hire economists. It means those drawn to the subject by the urge to understand the crisis or the lure of Wall Street might be better off shifting track, twinning economics with coding rather than trading.

Established macroeconomists would do well to pay attention. They should start by being much more careful about data. Silicon Valley economists obsess over how the numbers they use are collected, and would not accept something as old-hat as GDP (see article). Second, they should tone down the theorising. Macroeconomists are puritans, creating theoretical models before testing them against data. The new breed ignore the whiteboard, chucking numbers together and letting computers spot the patterns. And macroeconomists should get out more. The success of micro is its magpie approach, stealing ideas from psychology to artificial intelligence. If macroeconomists mimic some of this they might get some cool back. They might even make better predictions.