Tyler Cowen may or may not be the greatest economist in the world, but he's certainly the best economist in the world to be talking on the subject of the economics of blogs in general, and of academic – and especially economics – blogs in particular. So if you have a video iPod and an hour on the subway, or otherwise can carve out a chunk of your time, and if you are remotely interested in a masterclass on this subject, then go here now and watch his talk.

If you don't have that kind of time, however, I've picked out some of the most interesting bits of his talk for you.

Cowen starts off with a startling number:

On a given day, my estimate would be 400,000 to 500,000 are reading fairly serious economics blogs.

That's a huge number, and it's probably an order of magnitude greater than the number of people reading blogs devoted to any other academic subject. Cowen has some interesting analysis of why that might be: he says that the empiricism of a lot of economics is both naturally bloggable and of naturally interest to a broad population of smart people online.

Cowen then explains that economics blogs can be, when it comes to relatively narrow issues, le dernier cri when it comes to academic debate:

Very recently in the blogosphere there was a mini-battle as to the correct interpretation of the Malthusian model in Greg Clark's new book "A Farewell to Alms". Greg weighed in, Bryan Caplen weighed in, I weighed in, about 60 or 70 other people weighed in. Over the span of about three days, there was a very intense discussion of this one issue, the Malthusian model in Greg's book. And no matter what one thinks the settled answer is, this is an extraordinarily rapid way of processing this question, and it's probably the most intense scrutiny the question will ever receive.

He's good at slogans:

In the blogosphere everything is immediate. The deadline is now.

You get the readers you deserve.

And he's excellent on the basics of blogonomics:

This is a funny market. The price of reading a blog is as close to a zero price as you're going to get in this world. The price of writing a blog is also zero. Economists are not always comfortable with models where all prices are zero...
When we ask why people write blogs, the dominant motive is blog as loss leader. You're hoping to sell some other attached commodity for a real price. Dani Rodrik started blogging a few months ago; he has a new book out. Tim Harford just started blogging, it just so happens that in January he has a book out. Greg Mankiw has a textbook he wants to sell more of. It's not a coincidence that the level of Greg's blog is aimed at a Principles course.

He also has a generous definition of what a blog is:

Why is Ed Glaeser writing for the New York Sun? Essentially he's blogging. Without blogs I can't imagine it would make sense for Ed Glaeser to do that.

He goes into a lot of detail about how the low cost of moving from blog to blog means that there's no time to write long posts:

The cost of going from one blog to another is the smallest cost you can imagine. Massively quick sampling, blog posts are very short, there's a premium on brevity.

I'm not convinced about this, and not only because I'm the kind of person who writes 5,550-word blog entries on vulture funds. I do think that Cowen and Mankiw are popular because their posts are short. But I don't think that popularity is necessarily the best metric by which to judge a blog. Is icanhascheezburger.com one of the ten best blogs in the world? It's in the technorati top 10, after all.

But at the same time, Cowen does celebrate the enormous diversity of the blogosphere, with a very clever model of how you can get pretty much everything you want just by reading five carefully-chosen blogs. If you choose the five blogs which most closely mirror your own interests, he says, there's a very good chance that they'll pick up substantially everything you're interested in.

Again, I think Cowen's over-egging the pudding here. I read blogs not because they have the content that I know that I want, but because they have the content I didn't know that I wanted. Did I care at all about the Baltic states' currency boards before I read Willem Buiter's blog entry on the subject? No: which is why it's such a good blog entry. (And 7,300 words long, to boot.)

Cowen's excellent, however, on bloggers' learning curves, especially when he says that "most people when they start blogging don't realize how little real-world reputation matters". Yes, being well-known does give you a massive headstart on the millions of bloggers who aren't. But if you have a leaden prose style, infrequent posts, an unwillingness to link to others, and a general idea that people ought to listen to you just because you're an Expert – well, then you'll rapidly learn that really, no one cares what you think.

He also has a compelling analysis of the aspirational nature of blogs. Highbrow blogs often do better than lowbrow blogs, because readers like to think of themselves as being reasonably highbrow.

I'll write a post and I'll say "marginal rate of substitution", which to an economist is straightforward, but even to a very smart social scientist who doesn't know a lot of economics, they might not know exactly what this means. And certainly the common man won't know. So when I write "marginal rate of substitution", why don't I put in a link to Wikipedia, or define it in parentheses? Won't more people read the blog then? I think actually that more people actually will read the blog when you don't define "marginal rate of substitution". By not defining it you make your blog a smarter blog, it feels to the people who are reading it that they're being aspirational, and that they're learning more. It's higher demand through exclusivity. If you link everything to Wikipedia, people think that blog isn't so smart after all, it doesn't feel that wonderful of a club to belong to.

At the end of his talk, Tyler takes questions, and only then answers the number one question of blogonomics: How much money can you make by blogging?

Every now and then I get a check, but it's small: it's much smaller than you think. When you take into account all your real costs, you're lucky to break even.

I think Tyler and Alex should fire BlogAds, if that's really the case – but actually I believe him, since it seems that the left-hand ad costs just $300 a week, while the right-hand ad is only $125 a week. That's decent pocket money for a pair of economics professors, I suppose, but I'm sure they could do a lot better if they tried. Sooner or later, I'm pretty sure that New York Times Digital will be selling their ad inventory, and bringing in much more money.

Later on in the Q&A section, Cowen says this:

Right now there are 8 major econ bloggers, 8 or 9. It's a powerlaw market. Within a field, almost everyone who reads any econ blog will read the 2 or 3 main ones, and maybe 2 or 3 others, and everyone else is fighting for scraps.

Well, there's no doubt that Marginal Revolution is one of the "2 or 3 main" economics blogs: the only one which even comes close is Freakonomics, and I'm not sure that Cowen was mentally including that blog in his list: my guess is that he was thinking that the top 3 were probably Marginal Revolution, Mankiw, and DeLong.

But if it's really true that all econ-blog readers read Marginal Revolution, then how on earth can Cowen say that on any given day half a million people are reading econ blogs? I don't know much about MR, but I really don't think it's ever come close to half a million uniques per day.

That's a niggle, though. This is a fascinating and thought-provoking talk, and I highly recommend it to bloggers and non-bloggers alike.