Economists and the Public

|Peter Boettke|

Tyler Cowen recently linked to this paper by Christopher Johnson and Andrew Ballard entitled "Economists and Public Opinion: Expert Consensus and Economic Policy Judgments."

Our colleague at GMU, Bryan Caplan addressed these issues in my book The Myth of the Rational Voter in the sections where he draws on his analysis of the data from the Survey of Americans and Economists on the Economy.  Bryan's basic intuition --- that individuals will hold false beliefs about matters when they don't have to pay a high cost individually for holding such a belief --- is of course brilliant.  But some of the implications that Bryan derived from the survey data I never agreed.  My point never was the same as how Donald Wittman responded to Bryan -- see their debate. But instead, that public opinion shifts over time and that the more educated sector of the population in the survey will reflect the prevailing wisdom.  As my Dad used to say --- only a PhD could believe such a thing.  Meaning, rather than seeing the educated elite as somehow being more atuned to economic truth, I have always believed they could talk themselves into denying common-sense truths (see Frank Knight's AEA presidental address on this aspect of economic opinion as well).

To put this another way, after the Great Depression and during the Samuelson era of dominance in economic education (at the undergraduate and graduate level), the neo-classical synthesis of Keynesian macro management and micro market failure theory would be reflected in the professional consensus and in the more educated opinions in the survey.  Similarly, after the Collapse of Communism, and during the "Age of Milton Friedman", the professional consensus would reflect a more market oriented position that previously and so would the educated in the survey.  The Survey of Americans and Economists  that Caplan reports on was done in the Age of Milton Friedman.

But what if the professional consensus is not what it means to "think like an economist".  Instead, if the meaning of thinking like an economist was not what other economists think and do, but rather the persistent and consistent thinking in terms of scarcity, trade-offs, incentives, multiplicity of margins of adjustment to changing circumstances, etc., then you would have an body of economic concepts that was fixed around which either professional consensus dovetailed or not.  In short, truth in economics would not depend on a counting heads theory of truth.  Whereas professional consensus would waffle about based on fad and fashion in science and in the broader culture of opnion.  Citizen attitudes would be a lagging indicator of this professional consensus.

Consider the world we live in today --- AFTER the problems of post-communism; AFTER the problems with failed and weak states; AFTER the disillusionment with globalization; AFTER 9/11; AFTER 2008.  But also after the New Classical revolution in economics stalled; after the New Keynesian counter-revolution; after the fracturing of neoclassicism in economics, and the rise of behaviorism.  The historical background that individuals take for granted over the past 25 years, as well as the set of professional economic lens they are provided in their education to look through to makes sense of this experience didn't cultivate in them the same things that were cultivated during the 1950-1975 era, let alone the 1975-2000 era.  Since 2000, the educated elite would be more or less closer in thought process to the 1950-75 era, than the 1975-2000 era of thinking about the economy and public policy.

This I think is reflected in the recent survey at Chicago about the stimulus.  I think there are 2 things that are very important about this survey -- look at the confidence with which the different economists hold their position, and look at who actually studies the issue being asked.  Without going into this discussion in too much depth, just let me say Alberto Alesina -- who studies the effectiveness of fiscal policy as part of his ongoing research -- takes the opposition position of the consensus opinion, and he holds his opinion with a confidence of 8 out of 10, and 7 out of 10.  Could it be that Alesina is right, the consensus opinion is wrong?

Asking economists their opinion on policy positions that they don't study and for which they actually hold very little confidence that their opinion is correct doesn't amount to a professional consensus of experts.  And it certainly doesn't reflect what economics as a scientific discipline has taught about thinking about the world through the years from Adam Smith to today.

So we have a "professional consensus" but it doesn't reflect scientific expertise on any particular topic, and we have a lagging popular public opinion. Of course it matters how and why ideas spread and when, and we need to study that.  But the content of what this is telling us about economic truth and appropriate public policy is still very unclear to me.

Is it clear to you?

Comments

[Mario Rizzo]

I agree with Pete. The fact is that social scientific phenomena are complex. It is not easy to discern truth from superstition or wishful thinking. I have no problem accepting Caplan's thesis when it comes to individual beliefs about the world as it affects the individual -- really Wicksteed's point made in 1910. In this case,there is an tendency for stupid beliefs to be shed as the costs rise. That is because the feedback is more direct. But it you ask why the general public believes contrary to what "economist's" think -- who? where? when? -- I afraid that standard of truth will vary with many factors. When I was in college (1960s) I would have been considered one of the public whose anti-Keynesian views were fantasies by reference to the economics consensus of the day. What happened? The profession changed. And now it changes again and again.

[Mario Rizzo]

THERE IS SOMETHING WRONG WITH THE SYSTEM. My earlier comment which was not offensive just disappeared.

[Roger McKinney]

This seems to be a continuation of the trend toward consensus as truth in all field. It began in morality and has been the dominant mode of argument in the climate debate. It's a "democratization" of truth: majority rules.

[Curt Doolittle]

I think I've heard this argument a dozen times now from one person or another in the field. But then, why don't we have a 'game' we play with professional economists and their areas of expertise, and capture those votes accordingly?

Or, rather, why don't more economists say "I don't have the relevant knowledge."

My grandmonther's era, prior to the postwar degradation of rhetoric, was perfectly comfortable saying "I don't know". Part of the promotion of democracy for the past near century has been encouraging everyone to have an opinion that they have no basis to render, in order to increase the membership at the polls and justify moving the agenda left.

So I would flip this around and say "why don't economists admit their ignorance when polled?"

Because if they don't know their qualifications then the industry has a bigger problem of legitimacy and we DO need better theory canonized.