The Secret Consensus Among Economists

If you follow the economic policy debate in the popular press, you would be excused for missing one of our best-kept secrets: There’s remarkable agreement among economists on most policy questions.  Unfortunately, this consensus remains obscured by the two laws of punditry: First, for any issue, there’s always at least one idiot willing to claim the spotlight to argue for it; and second, that idiot may sound more respectable if he calls himself an economist. 

How then can the quiet consensus compete with these squawking heads?  A wonderful innovation run by Brian Barry and Anil Kashyap at the University of Chicago’s Booth School Initial on Global Markets provides one answer: Data.  Their “Economic Experts Panel” involves 40 of the leading economists across the US who have agreed to respond on the economic policy question du jour.  The panel involves a geographically and ideologically diverse array of leading economists working across different fields.  The main thing that unites them is that they are outstanding economists who care about public policy.  The most striking result is just how often even this very diverse group of economists agree, even when there’s stark disagreement in Washington. 

That observation is the starting point for my latest column with Betsey Stevenson

Let’s start with Obama’s stimulus. The standard Republican talking point is that it failed, meaning it didn’t reduce unemployment. Yet in a survey of leading economists conducted by the University of Chicago’s Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate. On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed.

Or consider the widely despised bank bailouts. Populist politicians on both sides have taken to pounding the table against them (in many cases, only after voting for them). But while the public may not like them, there’s a striking consensus that they helped: The same survey found no economists willing to dispute the idea that the bailouts lowered unemployment…

How about the oft-cited Republican claim that tax cuts will boost the economy so much that they will pay for themselves? It’s an idea born as a sketch on a restaurant napkin by conservative economist Art Laffer. Perhaps when the top tax rate was 91 percent, the idea was plausible. Today, it’s a fantasy. The Booth poll couldn’t find a single economist who believed that cutting taxes today will lead to higher government revenue – even if we lower only the top tax rate

The point here isn’t that the panel of economists have all the answers.

Rather, they agree on the best reading of murky evidence. The folks running the survey understand this uncertainty, and have asked the economists to rate their confidence in their answers on a scale of 1 to 10. Strikingly, the consensus looks even stronger when the responses are weighted according to confidence.

I’ve never seen the disjunction between the political debate about economics and the consensus of economists be as large as it is today.  And I think this is incredibly damaging.  Instead of having a serious discussion about how best to end the current economic slump, Congress is gridlocked, as one of the major parties is blocking every effort to improve the economy, using arguments which are so far outside the mainstream that it is hard to find a single economist to agree with them.  The result is that Congress is doing nothing in the face of the tremendous suffering wrought by high unemployment.  And it’s also doing nothing in the face of a longer-run budget problem.  Indeed, fear that continued inaction will lead the US to walk off the “fiscal cliff,” may already be dragging the economy down. 

The optimist in me thinks that the new Economic Experts Panel may be a (small) part of the solution.  My hope is that journalists will come to see this as a useful resource—a way of checking whether political debates reflect serious disagreement, or something more cynical.  And hopefully this will lead us to focus on the more serious debates, rather than convenient and disingenuous talking points. 

You can read our full column, here.

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COMMENTS: 86


  1. Daniel says:

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    • Enter your name... says:

      You don’t seem to understand the post here.

      The economists were asked, did the bank bailout lower the unemployment rate? (That is, did the bank bailout make the supply for jobs more nearly match the demand for jobs?)

      The economists said yes. The word “consensus” here means only that the overwhelming majority of experts about supply-and-demand questions agreed with each other on the answer to the question.

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      • brent says:

        Hidden due to low comment rating. Click here to see.

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    • Lynn Weathersby says:

      Actually……..”jobs” aren’t a factor of production (nor are they a consumer good). The word I believe you are looking for is labor. Labor is supplied by employees. Labor is demanded by employers. Daniel, you should be more precise in the langauge you use. You’ll convince more people that your argument has merit. Secondly, you should research countries that have true laissez faire economies and move there.

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  2. Joe says:

    Dateline – 2007

    Breaking news – A special group of super smarty pants economists met today and agreed that the economy is in great shape and running on all cylinders. “There is virtual consensus among this incredibly smart group of people that the global economic future continues to looks bright. Our intelligence and economic understanding has ushered in a new era of economic prosperity. Due primarily to the policies we’ve outlined, and we all agree, the global economic outlook is better than ever. Since we’re so incredibly smart, and did I mention that we all agree?, anyone who disagrees with our policy suggestions is a short-sighted ignorant backwards cretin.”

    …and we all know how that turned out.

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  3. 164 says:

    The point seems to be that academic economists all tend to agree with left of center policies for the economy. A survey of private sector economists engaged in making money in the real world would, I suspect, show a different consensus.

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    • dumpus says:

      when you factor in the whole incentive scheme of a private sector economist advocating public policy that he can profiteer from, what remains?

      back in the 80′s and 90′s, there were two distinct camps of economists – those who believed that derivatives markets should have been centrally regulated (largely the economists in academia), and those who believed that it shouldn’t be regulated (largely the ones in govt and industry). those who believed that it shouldn’t be regulated just so happened to be in a position of influence – either in government or in the private sector – and they profited immensely, to the detriment of pretty much every living soul on the planet not living in a mud or grass hut.

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    • SGordon says:

      You might note that nowherein the article does it state that the group of economists in question were “academic economists” – for all you know, every single one of them could have come from private sector gigs.

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    • Shawn12 says:

      Actually, you’re wrong to suspect that. The National Association for Business Economics
      did a survey of 236 economists, mostly from the private sector, and found the majority agreeing with those in the survey above: http://www.csmonitor.com/USA/Politics/2012/0924/Economists-surprising-election-year-request-Raise-taxes-please

      Most economists agree more with Obama’s philosophy of trying to fix the economy and the debt problem than the philosophy espoused by Romney and the Republicans. As a longtime, but former, Republican I can see how the party has moved so far to the right that they now view the moderates as the far left and have abandonded economic sense along the way.

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    • Nate says:

      Private sector economists, at least the great majority of them, are working in positions where they’re responsible for making money FOR THEIR EMPLOYERS (and themselves).

      They are not tasked with analyzing what’s best for society at large, which is what one should do if you’re making policy that affects everyone.

      Unless academic economists are surveyed on a question that inherently affects their own bottom line (e.g. “is a college or grad school education a good investment?”), they should be considered vastly more objective sources than corporate economists.

      (Note: you’re using the term “private sector economists” as if most of those 40 academics don’t work in the private sector … most of those universities are in fact private universities. Your right-wing bias is showing).

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  4. Eric M. Jones. says:

    Justin,

    Thanks. Pretty good stuff.

    But I become apoplectic when I see “consensus”.

    “On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed…” And one was looking at his watch and wondering when the meeting would adjourn….

    This astonishes me that people who consider themselves “professionals” don’t know what the hell is going on, and get paid for it. Am I being unkind?

    In what is called “Science”, nobody asks for a vote like this.

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    • Enter your name... says:

      “In what is called “Science”, nobody asks for a vote like this.”

      Sure they do. They call it “mainstream academic consensus” for basic science and it’s an outright vote for regulated practical applications. Every single FDA advisory committee recommendation is a plain old vote on whether or not a drug or device is safe and effective enough for it to be marketed.

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  5. caleb b says:

    Well, here’s a question….out of these 40 economists, how many are liberal or republican?

    ….40/40 barbers think I need a haircut.

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    • Michael Peters says:

      That ratio of conservative to liberal is only as important as it compares to the industry average. You can’t compare it to the national average or to a 50/50 split since that would mean picking people farther down the list of experts in order to fill out some ratio you have in mind.

      If economic principles more align with liberal or conservative positions then you’d expect that more economists to be on one side or the other. It doesn’t show a sampling bias, but rather a refusal by one side or the other (outside of economists) to accept economic experts/principles.

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    • Marc says:

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  6. Colin says:

    In your column you wrote:

    On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed.

    No, that’s not true. Rather, 46% agreed that it did, with 41% either uncertain, in disagreement or having no opinion. You only get to the “more than half” bit by using the weighted responses, which you fail to note. Under the weighted system, the responses of people like David Cutler — who was an adviser to Barack Obama and scored his confidence a “10″ — distorts the overall findings. Austan Goolsbee is another example — a former Obama admininistration official who rated his confidence as a “9.”

    You also note that not a single economist disagrees with the notion that the bailouts lowered unemployment than what they otherwise would have been. Well, no kidding. But I think the more cogent argument against the bailouts that it was bad for the long-term health of the economy and that such moral hazard would have worrisome long term consequences. Shouldn’t we make decisions based on the long-term rather than just the immediate impact on unemployment?

    Lastly, this bit also stood out:

    Do you remember the Republican concern that Obama had somehow caused gas prices to rise, a development that Newt Gingrich promised to reverse? There’s simply no support among economists for this view. They unanimously agreed that “market factors,” rather than energy policy, have driven changes in gas prices.

    You could have used President Obama’s nonsensical blaming of speculators for the increase in energy prices to make the same point, but instead chose to focus on remarks by Newt Gingrich, who enjoys a far lower profile. It’s almost as if you were mainly interested in scoring partisan points in your column.

    “Raw politics” indeed.

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    • Justin Wolfers says:

      Check your math. 19 agree, 11 are uncertain, and 5 disagree. So clearly a majority of respondents (19/35) agreed, as I stated.

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      • Colin says:

        No Justin, you check your math. There were 41 economist queried. 19 agreed. 19 out of 41 is not more than half. And you didn’t say more than half of “respondents” in your column. This is what you said:

        “Yet in a survey of leading economists conducted by the University of Chicago’s Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate. On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed.”

        So 41 were surveyed, and 19 agreed. This is not a majority, it’s not consensus, and your point about the GOP being at odds with established economic wisdom is far from proven.

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      • Tom says:

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      • Tom says:

        Actually, 19+11+5 IS equal to 35. And 19/35 IS a majority. Sorry for the brain fart – I’m embarrassed.

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    • James says:

      “Do you remember the Republican concern that Obama had somehow caused gas prices to rise…”

      Quite well. I also note that gas prices have decreased (about 50 cent/gal locally), and not one Republican has stepped up to give Obama credit :-)

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    • Colin says:

      Allow me to cop to one error: Austan Goolsbee’s response was a “9″ for the first question, but only a “5″ for the second question (which is actually quite interesting). However, let’s take a look at those who believe the stimulus was a net benefit and responded with an 8, 9 or 10 for their confidence:

      * Judith Chevalier: Donated $1500 to the Obama campaign in 2008
      * David Cutler: Wikipedia notes that he served in the Clinton administration and was senior health care advisor to Barack Obama.
      * Barry Eichengreen: Political affiliation unknown.
      * Maurice Obstfeld: Donated $250 to the Obama campaign in 2008.
      * Richard Thaler: Donated $10,000 to the “Obama Victory Fund” in 2008.
      * Cecilia Rouse: Served on President Obama’s Council of Economic Advisers.

      As can be seen, five of the six economists who were very confident that the stimulus package was a net benefit are either fans of President Obama or have directly served him in some capacity. While there is nothing wrong with any of this, it’s hardly noteworthy that economists who support Democrats also favor Democratic policies.

      This is worth pointing out given your statement that “The folks running the survey understand this uncertainty, and have asked the economists to rate their confidence in their answers on a scale of 1 to 10. Strikingly, the consensus looks even stronger when the responses are weighted according to confidence. ”

      The confidence weighting means zilch.

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      • Will says:

        It could also be that the economists put their money where their brain is, supporting the candidate/party with the better economic policy. You can’t determine causation but you sure can accuse it in order to discredit results.

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      • Colin says:

        Will,

        No doubt the economists support the party that they think has better economic policy, but it really makes no difference which way the causation goes. That people who are already predisposed to favor increased government spending/Keynesian measures fervently believe in the efficacy of such measures when they are put in place — i.e. the confidence rating in evaluating the net benefit of the stimulus — tells us nothing. It’s as remarkable as a similar poll revealing that Republican/right-wing economists believing strongly that tax cuts are good for the economy.

        My point is not to accuse the economists of anything untoward, but simply to note that the data isn’t very revealing.

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    • Shawn12 says:

      I actually saw an oil speculator on Fox News talking about how oil speculators DO raise gas prices. He admitted this and also stated that admitting this goes against his self-interests since he works in the profession. There is plenty of evidence that has shown that the oil speculators do influence gas prices.

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  7. Franklin says:

    Left wing propaganda – sad to see it here @Freakonomics. You’d think that people here know Hayek and Bastiat

    I’ll leave you a quote from the former ““The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

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    • Enter your name... says:

      I think that the field of economics has advanced a little since the early 19th century, but Bastiat is really talking about forward-looking plans, not about figuring out what happened several years before. Economics is better at assessing what actually happened in the past (the subject of this post) than at predicting the future (the subject of Bastiat’s statement).

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      • Franklin says:

        You are making a distinction that has no actual difference. Assessing what happened in the past on an economic level IS predicting what will happen in the future. Either that or eliminate the field of economics entirely, we can just call them all historians.

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      • Enter your name... says:

        I don’t think so. “If you do X, I predict Y will happen” is a materially different activity than “I see you did X last year. When we totaled the data on what actually happened, here are the results:”

        You should use past data to inform your predictions, but predicting the future isn’t the same thing as measuring the past.

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      • Franklin says:

        …but your activity leads to the former: “I see you did X last year and the result of that is Y. So if you do X again this year Y will happen again”

        Asserting a causality between X and Y (which is what economics is all about – right? if not then it is completely pointless) is the same thing as a prediction that if we do X then Y will occur.

        Totaling the data without asserting any causality is not only not helpful, it is not what Wolfers was asserting in the article. He was clearly stating that a plurality of economists agree that liberal policies will cause a good economic result while virtually none (except some hacks that will say anything for a paycheck) think conservative policies will cause a good economic result. That makes this whole article a left wing hit job.

        My friend without a name: your point is meaningless in this argument

        I should also state that simply because economist was in a earlier century does not make him wrong. the principles that economics are based on are in essence based in human nature. And that is unchanging. Also Hayek is a much more recent economist (which you conveniently ignored).

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  8. Dan says:

    A University of Chicago poll – already makes me wonder, I mean we are talking about a policy pushed by a politician that called Chicago home.
    As I then look a little deeper into the polling data, and wait, was that Austan Goolsbee? You actually include in a poll a guy that was involved in the policy, and you think he’s going to tell you it was bad? Not only that but you include a couple of guys that works beside Christina Romer.

    You might as well just have polled every one that currenly lives in the white house. Did you write this in your Obama ’12 campaign office? Even these sad attempts at trying to make the current administration look like they have a clue about economics, is not going to make the 15% of real unemployed people think they are better off now.

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  9. Scott Templeman (@tallbonez) says:

    Consensus is a poor substitute for evidence

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    • Enter your name... says:

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  10. Steve_0 says:

    This is literally the stupidest column containing the word “Economics” that I’ve ever read.
    1. Consensus? Seriously?
    2. Is there a single Austrian school economist on that panel?
    3. How does this show anything besides the self-serving bias of the prevailing economic school of thought? In graduate school, I spoke with a friend who had an undergrad degree in economics. She said not once in four years did anyone mention Hayek or Bastiat. She’d never heard their names. So the vast majority of economists within the tiny sample size here agree on questions that are completely beside the point, and they’re very confident in their own determinations. Call Aaron Sorkin. You two can have an “I grovel for self proclaimed experts” part.

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    • who says:

      Of course there’s no Austrian economists on that panel. It’s only academic economists (there are very few actual academics who are in the Austrian school) and it’s only respected academic economists (the few academic Austrian economists are all cranks anyway). Unlike the Austrians, most of economics has made it past the 1800s.

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    • Matt says:

      It’s good that there’s no Austrians on the panel, since the Austrian school is crank economics.

      Thumb up 6 Thumb down 9
  11. J1 says:

    Article by Left Leaning Economists Cites Survey Proving Academics Dislike Republican Economic Policies. In other news, The Earth Orbits the Sun.

    Can’t you just stick with those studies proving liberals are smarter than conservatives?

    Also, the ‘mainstream” qualifier is an almost guaranteed BS warning. Leave it out next time.

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  12. Erin Kaplan says:

    Thanks for posting this. As an academic economist, I have been thinking this for a long time. My department houses a diverse set of political ideologies, and yet when we all get together for a beer, the consensus of opinions on policy applications of economics is shocking.

    I’d like to see the sample expanded to 400 academic economists. That would remove some of the speculation that the sample is cherry-picked to exemplify a certain point of view.

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  13. Dave says:

    On the tax-lowering issue, I beg you to explain how it was under Harding, Kennedy, and Reagan that lowing tax *rates* increased government revenues if it doesn’t fit the narrative today.

    By the way, shouldn’t a big part of the economic analysis address the fact that if Uncle Sam confiscated everyone’s income above $200K, it still would not be enough to cover Obama’s spending? The tax issue is a straw man!

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  14. Jason says:

    Wow. One has to wonder if all economist’s arms hurt from patting themselves on the back so much.

    Speaking of consensus in economics, here’s a link to an article that places the blame on the abysmal management policies and practices of American companies over the past 30 years squarely on the economists. My consensus is that I agree wholeheartedly with that perspective.

    http://www.weblog.keepthejointrunning.com/?p=4791

    You could extrapolate that if economists advising business management hasn’t had the best results, what can we expect from them advising government?

    The United States was founded on the concept of individual liberty, not on macroeconomic theories.

    One reason that economists always seem so enamored over progressive thought is that they always think of people as “the masses” and not as individuals.

    I also agree with the other posters that actual sciences do not base their findings and observations on voting and consensus.

    This is easily one of the most politically biased posts I’ve seen on Freakonomics.

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    • jennfizz says:

      Please stop with the “America was founded on individual liberty” crap. It’s just not true. Yes, there is some respect for the individual found early American political discourse but it is more than balanced out by a clear and deep fear and distrust of individual liberty–such ideas are why we are a republic and not a democracy. It is why your senators were chosen by State Houses, why there were property qualifications to vote, why there is an electoral college, and why early corporations were required to get government charters in order to do business.

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  15. CS says:

    Hmm. I think this reveals the writer’s bias, ’nuff said:
    ” … one of the major parties is blocking every effort to improve the economy …”

    Really? You mean there are good efforts to improve the economy emerging out of one of the parties? You have pretty good consensus on that too?

    Firstly, economics being what it is, the consensus among economists is not the same thing as consensus among physicists, and even that has proved less than fully reliable. Secondly, until we understand more about the ideological balance in the Gang of 40, the consensus is not shown to be free of political bias.

    Give it up, Wolfers. You can’t persuade us ignoramuses, we revel in our philistinism.

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    • Dan says:

      What bias? Just because this article was written on “obama ’12″ stationary.

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  16. Nate says:

    “Let’s start with Obama’s stimulus. The standard Republican talking point is that it failed, meaning it didn’t reduce unemployment.”

    I think when someone says “it failed,” it’s in reference to what “success” was projected to be by Obama’s team themselves. I believe this is the graph that the Obama team trumpeted as what would happen with and without the stimulus. Clearly by their own standards they failed.

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  17. MIckey says:

    I wish n>40

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  18. V says:

    Is it surprising that people with similar training at similar schools and of a similar age cohort and demographic mix would agree on policy? Now, they may or may not be right but the idea that a consensus on the topic is some sort of defining factor is one of the reasons economics is more akin to sociology than chemistry (despite the advanced mathematics).

    A much more convincing argument would be to show in regards to:
    1. Stimulus: How standard economic theory explains away the 1946 and 1921 recessions and not just the 1930s (where the evidence is much more mixed in any case than standard Keynesian narratives); the evidence against the liquidity trap; episodes where austerity seems to have worked (1982, 1998, etc); how countries where stimulus is economically suicidal (Greece with a primary budget deficit and a creditor run, etc) are compellingly different than the US with a huge debt ratio (no, printing more money a la Yglesias is not exactly attractive to most people)…

    2. Bank bailouts: People argue with the consensus here because the explanations of how banks that aren’t really responsible for most of the commercial lending in the US matter to commercial health seem so self-serving. The presence of deposit insurance makes bank runs appear much less worrisome to ordinary people so why do governments treat the runs like its 1932 (pre-FDIC)? Bondholder and shareholder haircuts are usually implemented but not in this case–why not? If banks are so central to the economy, nationalization would seem to be on the table in order to avoid socialization of losses and privatization of profits.

    Economic policy-makers need to engage these arguments in public forums to preserve any sort of legitimacy and putting forth cartoon version of Keynesianism and crony capitalism isn’t exactly confidence inspiring. Many of these questions are also not necessarily amenable to an economist defining a right or wrong answer (i.e., they are value judgments like government is likely to run the banks worse than the private sector, etc.) so once again, putting forth a consensus as an argument is weak.

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  19. Dave says:

    I think it’s interesting to note the stark contrast between the comments here and the comments on the original article published on bloomberg.com.

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  20. Jerome Solanum says:

    “92 percent agreed that the stimulus succeeded in reducing the jobless rate”

    Well, if 92% of economists say so, then it must be true, regardless of what any actual evidence may say to the contrary!

    I for one welcome our new economist overlords.

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  21. Andrew B says:

    This debate is not even close. Please watch the movie Inside Job and see how the “smart” economists, including the heads of the departments at Harvard and Columbia, are either wrong or just bought off by the powers that be. They were given fair questions and could not answer them even reasonably well regarding the current recession and its causes. So why do we think the learned economists, getting nice financial benefits from various powers, are either honest or know the answer?
    And I am a one percenter, and believe in science and global warming.

    Thumb up 4 Thumb down 3
  22. Tom Altman says:

    As is all-too-typical of public policy discussions, there is demonstrable cherry-picking or misrepresentation in comments from both sides here.

    (1) The IGM (Initiative on Global Markets) Economic Experts Panel is _not_ a partisan group. “Our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States.” Among other characteristics, the panel includes “past Democratic and Republican members of the President’s Council of Economics.”

    The group’s findings are, indeed, interesting. There are a few issues on which there is no consensus — for example, whether randomizing airport security screenings, rather than subjecting everyone to the same process, would make it harder for terrorists to evade those procedures. But, as Justin Wolfers notes, it is interesting how often there is significant consensus among that diverse group.

    (2) Justin Wolfers has clearly cherry-picked the examples he cites from the Economic Experts Panel. As someone already pointed out, his own comments, including the claim that “one of the major parities is blocking every effort to improve the economy” tip us that he prefers the left-wing conclusions.

    If I were selecting interesting examples of the group’s consensus, I’d point out their strong agreement on such things as:

    - Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment. (Weighted responses 96% agree, 0% disagree.)

    - Using more congestion charges in crowded transportation networks and using the proceeds to lower other taxes would make citizens on average better off. (Weighted responses 98% agree, 0% disagree.)

    - A tax on the carbon content of fuels would be a less expensive way to reduce carbon dioxide emissions than a collation of policies such as ‘corporate average fuel economy’ requirements for automobiles. (Weighted responses 95% agree, 2% disagree.)

    - Long-range fiscal sustainability in the U.S. will require cuts in currently promised Medicare and Medicaid benefits and/or tax increases that include higher taxes on households with incomes below $250,000. (Weighted responses 91% agree, 0% disagree.)

    - Cumulative budget shortfalls in the U.S. over the next 10 years can be reduced by half or more purely by increasing the federal marginal tax rate on ordinary income for those in the top bracket. (Weighted responses 3% agree, 84% disagree.)

    - Mandates that government purchases should be ‘buy American’ unless there are exceptional circumstances, such as in the American Recovery and Reinvestment Act of 2009, have a significant positive impact on U.S. manufacturing employment. (Weighted responses 10% agree, 67% disagree.)

    - If public school students had the option of taking the government money currently spent on their own education and turning that money into vouchers they could use toward covering the costs of any private or public school of their choice, most would be better off. (Weighted responses 54% agree, 6% disagree. Allowing there’s a large 40% uncertain group, that’s still a pretty strong finding.)

    So my favorite examples might focus more on issues favored by conservatives than by liberals.

    Bottom line: This _does_ appear to be a fair and distinguished group. And it does identify issues on which there is a real consensus among economists, helping at least a little to cut through the noisy ideological/political commentary around us. Don’t be misled by the spin Justin Wolfers chose to put on it with the examples he selected, the group’s underlying purpose and message is interesting. Freakonomics fans will likely enjoy following their work.

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    • triclops says:

      Thank you for the most helpful, intelligent, and illuminating response on this whole thread. Gonna go read some more about the IGM

      Thumb up 2 Thumb down 0
  23. reflected-sound-of-underground-spirits says:

    So you’re basically saying that you want to create a crowd-sourcing engine that gathers the combined wisdom of the leading economists.?

    BTW, “squawking heads” = nice turn of phrase

    Thumb up 3 Thumb down 0
  24. Skyler says:

    It’s not just about employment, it’s about total production. It’s not enough to just create or save jobs, if you’re paying people to dig ditches, you’re can’t pay them to serve the economy elsewhere.

    Just because economists agree that the stimulus and bank bailouts created or saved jobs, doesn’t mean squat. If people are organized in lines of production that are wasting resources, those jobs SHOULD be lost so they can be replaced. If we are going to prize destructive and wasteful jobs over actual production, we may as well not even bother with economics.

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  25. artemis says:

    Yes, if only we would just let all the “smart people in the room” run things for us the world would be a better place and we’d be happy.

    The problem isn’t people ignoring consensus. “Consensus” is a classic headcount fallacy, hallmark of an argument lacking in real substance. The problem is economists such as yourself who are willing to sell their soul to shameless shill for a political party.

    It is sad that the man who said this died so young:

    “Let’s be clear: the work of science has nothing whatever to do with consensus. Consensus is the business of politics. Science, on the contrary, requires only one investigator who happens to be right, which means that he or she has results that are verifiable by reference to the real world. In science consensus is irrelevant. What is relevant is reproducible results. The greatest scientists in history are great precisely because they broke with the consensus.” — Michael Crichton.

    You sir have revealed nothing more than which side of the politics vs. science line you are on.

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  26. Jeremy says:

    Okay, I hate to engage in this ridiculous discussion, but let me tell you what an actual hard scientist (theoretical physicist) thinks of these kinds of discussions. (One who has no real political opinion, is not a fan of any party, and doesn’t generally find politics all that interesting. But does have an advanced background in math, has read many economics textbooks, as well as graduate texts and papers.)

    1. The idea of a “consensus” representing anything scientific is *insane*. As a physicist, if someone asks me to prove relativity is correct, I don’t take a poll of people I claim are leading scientists. This is what crackpots do. To prove it, I write down the equations that define the theory, and preform experiments demonstrating that they are correct.

    I don’t care if the sample size was 100% of all economists. I don’t care if you psychically contacted all economists from across time and space in the entire universe and polled every single one of them. It would not matter if they all completely agreed or disagreed on every single issue. It would still be totally meaningless.

    Correct science speaks for itself, it does not need your help.

    2. Scientifically, if you need to solve a problem, write down your theory, make a prediction, act according to the prediction, and then later find results which disagree with that prediction THEN YOUR THEORY IS WRONG.

    You do not get to say that doing something else would have been more wrong.

    You do not get to speculate on how, based on the theory that made these predictions, things changed to make it wrong; that’s logically fallacious (in the technical sense, not the colloquial one). You don’t know how these changes effected your system *because they were not included in its description*.

    I mean, physicists recently discovered the Higgs boson, which was predicted as a general effect in the 1960s, and refined to specific predictions in the ’70s and ’80s. If we had not found the Higgs boson at the LHC, we could not have claimed, “well, if we hadn’t made this prediction, the theory would’ve been even worse!” That’s crazy. All you could do is say “whoops, that theory was wrong,” then throw it out and try again.

    If you predict “doing x will cause a y% change in the unemployment rate” then, simply, it had better, or you were wrong. This applies to *all* sides of course, the Republicans, Democrats, and Economists, have made predictions, based on their models which were shown to be radically incorrect. You simply can’t plow on after your model has made an incorrect prediction, no respectable science works that way.

    3. Real science has clear, meaningful, definable, margins of error.

    If a physicist published a paper saying “I measured the Higgs mass to be 125 GeV using the LHC” they would be punched in the face by every physicist who read it for wasting there time.

    A real model makes statements like: “These results are consistent with a Higgs-like particle of mass 125 GeV +/- 2 GeV with a combined 5 sigma confidence over all decay channels.” That *still* doesn’t mean anything, so they go on to explain in detail how these details were all calculated. Read the papers involved with things like this, no one talks about the measurement. The papers are almost entirely devoted to excruciatingly discussing how margins of error were obtained and to statistics.

    No one cares about the actual value of the measurement, it was just a meaningless detail, we care that the measurement was done *correctly*.

    I should point out, the only reason 5 sigma (about 1 in a million chance of a signal being due to random noise) is good enough, and we don’t need something like 10 or 100 sigma or more, is because of the huge amount of effort put into correctly doing the statistics, the *thousands* of experts working on it, and because of the amazingly sophisticated mathematical structure behind the models describing, e.g., the detectors and machinery, in addition to the theory.

    Any of the other hard sciences adhere to these kinds of standards: chemistry, engineering, math, etc. This is what it means to be a hard science. (This is also one reason, of many, that hard scientists mock and ridicule results of soft science.)

    4. It’s not hard.

    I often hear economists complain that successfully modeling “complicated” systems like the economy is hard. There are too many unknown factors. There are too many unknowns. There are too many random elements.

    You know what? Boo-freaking-hoo. Let me break out my tiny violins for you.

    Every scientist’s job is hard! Do physicists complain that “ohhh quantum mechanics is so hard how can I ever build you a liquid crystal display out of it!” No, they shut up and do it. If they don’t know how to do it, they say “I don’t yet know how to do this,” and then they get back to work.

    They do not make ludicrous predictions about how it might kind of work if only their job weren’t so hard, and then, when shown to be wrong, conduct a freaking poll of other scientists to see who agrees with them.

    Let me tell you, real scientists simply do not care if anyone agrees with them, what they care about is if they are demonstrability correct, about if they can make predictions, and about how to make their models even cooler.

    And, really, not to be condescending, but, I can literally tell you how the universe started. Maybe not *all* the details, such as how this particular particle spectrum came about, but I can tell you about how it started from a process similar to bubble nucleation, how the early universe came to be in that state, how it tunneled to be at that value of the potential, how that potential energy was released as particle radiation (“the Big Bang”), how that process slowed down, how nuclei formed, how the CMB and large-scale cosmic structure formed, how this expanded and cooled to become galaxies and stars, how those stars used up their fuel, created large clouds of heavy elements, out of which more stars formed, out of which more heavy elements and stars formed, out of which planets like the Earth and stars like the Sun formed.

    I understand how quantum mechanics really works (despite the mystical B.S. you read about it), how the universe really has more than 4 dimensions, and I even understand why and what that means!

    I can write down physics problems that can’t be solved because no known math exists that can solve problems like it.

    This is what I live with. This is the level of quality and standards that are a part of my every day life.

    And what do I see from economics?

    A poll?

    Models that are “sometimes” right, if you allow for margins of error of 2, or 5, or 10, or more? And other times fail even with those error levels?

    Claims that economics uses sophisticated math? Like calculus! Oh my god, you can write down integrals, it must be right! A subject nearly all of my colleagues were experts at by 15 or 16, is surely the pinnacle of math!

    Here is my challenge to economists if you want hard scientists to believe anything any you say. Do one of the following two things:

    1. Make at least one nontrivial, *quantitative* prediction of a meaningful, *dimensionless*, real-life macroeconomic observable, complete with a proper statistical analysis, careful Bayesian analysis of how this prediction compares to other models, including several candidate null hypotheses, as well as several other models. Then, show me that these predictions agree with future data, made after the model was published, to at least 5 sigma for an appreciable period of time.

    Then, you may claim: “our model for predicting the observable X is consistent with the observed data in the 5 sigma confidence interval.”

    Do this because this is the *minimum* standard for calling yourself “correct” in science.

    Or, alternatively,

    2. Say “we don’t know, our models are not good enough to make a definitive claim about any observables yet.”

    We’ll believe that too. And there’s no shame in making claims like that. Science is all about making that exact claim, analyzing, in the above manner, what is not known, and repeating this until you can make a claim.

    Or, you know, keep making polls and claiming you all agree on the wrong models, and those who don’t agree with you agree with each other about other wrong models.

    This kind of thing really irritates me, because it damages the public’s understanding of real science. When they see inane, and huge volumes of sure-to-be-wrong predictions by actual economists (disregarding the claims from politicians and political lackies), they come to the conclusion that it’s too hard to make predictions about anything. That science, in general, isn’t sure of things. That “you can’t really *know* things.”

    When people live in an environment like this, they don’t trust science, they do not support science, and they do not make correct scientific judgments. For example, they believe that doctors don’t really understand how vaccines works, or that maybe compound X in their food or water really is bad/good even though it is definitively fine/bad.

    This kind of discourse unnecessarily diminishes the public understanding of science and their confidence in science. You should be ashamed of yourselves for participating in it.

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    • Mueller says:

      And to think that economics is the only ‘hard’ social science.

      Thumb up 4 Thumb down 0
    • Jason says:

      Wow. Dude, this is an EPIC post! Quite well done.

      Also, I need to ask, Sheldon Cooper, is that you?

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    • samiam says:

      REALLY? This is what you’re going with?:

      “And, really, not to be condescending, but, I can literally tell you how the universe started. Maybe not *all* the details, such as how this particular particle spectrum came about, but I can tell you about how it started from a process similar to bubble nucleation, how the early universe came to be in that state, how it tunneled to be at that value of the potential, how that potential energy was released as particle radiation (“the Big Bang”), how that process slowed down, how nuclei formed, how the CMB and large-scale cosmic structure formed, how this expanded and cooled to become galaxies and stars, how those stars used up their fuel, created large clouds of heavy elements, out of which more stars formed, out of which more heavy elements and stars formed, out of which planets like the Earth and stars like the Sun formed.”

      I’m sorry, but have you recreated the beginning of the universe with the formation of planets, stars, and particles that you claim to understand and found it to match within 5 sigma of your prediction requisite to claim that your theory about where said planets, stars, and particles originated is true?

      I agree with much of what you said about needing better scientific tools and doing the calculations CORRECTLY. But please do not assume that the “hard sciences” are any more exempt from the fallacious position of claiming to know more than it actually does. . To do so disgraces the pure act of science that you so agonizingly espouse. Maybe you too need to recognize the limits of your own studies just as economists do. And to be honest, “writing down physics problems that can’t be solved” does about as much good as an economic theory that can’t be tested.

      The characteristic that separates economics from the “hard sciences” is this: the hard sciences seek to model and predict the behavior of OBJECTS in space-elements, etc. Economics seeks to do the same with AGENTS–enigmas unto themselves which are equally as difficult to understand as the elements, if not more so.

      Just as physics has needed some time in its growing pains (with PLENTY of arguments among its practitioners), give economics some time as well.

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      • Dave says:

        The speaker at my father’s graduation from dental school said something like this:

        ‘Well, we have taught you a lot of things over the past 4 years. The bad news is that half of it is wrong. What’s worse, we don’t know which half’

        I am an evolutionary biologist and we make calculations all the time on such things as when zebras and horses has a common ancestor. While we feel very confident in these assertions, hopefully most understand 1)Margins of errors, and 2) Extrapolation. Anyone who can assert we know exactly what happened with the ‘Big Bang’ doesn’t understand those points.

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  27. Fellow Traveler says:

    The concept of “policy” implies that some group of people are using coercion to force the rest of us to do things we otherwise wouldn’t do, in a free market.

    Perhaps the “policy” itself is the whole problem?

    Isn’t our entire monetary system a form of policy? And our banking system?

    Policy == force.

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  28. Matt says:

    Let me explain why this panel is just about useless.

    Imagine you belong to a group of firefighters whose job is to put out all forest fires in your area. This group has been going strong for about a 100 years, and doing a pretty good job putting out all fires. Then one day in the middle of a hot, dry summer a fire starts. It starts out normally, but you can’t seem to put it out. Nothing seems to work. So you bring in top experts in firefighting from around the country to map out a plan. You try this and that, but nothing really seems to solve the problem. In the end the entire forest is wiped out.

    Why were the experts unable to help?

    By the time the experts were brought in it was too late. It was impossible to fix the problem. The real problem started a hundred years earlier with the decision to put out all fires. You see, over time dead wood and bushes built up. Then gaps between areas filled in. Slowly the entire forest positioned itself for collapse. Small fires would automatically fix these problems, but they were heavily suppressed by the firefighters. Over time the build-up of dead wood and bushes became too great, and the forest system collapsed.

    Forests and societies both work the same way. They both move into the future with a positive feedback loop that automatically positions them for collapse after a long period of time. The seeds of destruction are sown during the good times. Economic collapses and wars have the same (or similar) distribution as forest fires – a power-law distribution.

    Over time societies collapse because a build-up of bad decisions and corruption becomes too great. Suppressing economic recessions (The focus on stability) allows these bad decisions and corruption to grow. If you thought the global financial crisis was about finance or economics, then you would be wrong. It’s about bad decisions and corruption. Other areas will be affected by this as well.

    The expert panel in the article will not be able to fix our problems because it’s not just about finance and economics. At this point there is only one solution – let the collapse happen.

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  29. Lynn says:

    Click on the above link showing the participants. Every single one is listed with a university affiliation. I guess you can only be a real “economist” if you are a professor.

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  30. Torrey says:

    Half of all economists think the benefits of the stimulus outweighed the costs? So we spent $800 billion on something that in the end only half of economists think was worthwhile. On smaller policy questions a 50/50 shot may be a risk worth taking, but on an $800 billion program? Geez…

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  31. Lynn says:

    And if someone surveyed “scientists” in the year 1500, most would agree that the sun revolved around the earth. Certainly made that true!

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  32. Dave says:

    Well, I don’t like. A few problems I see with this.
    1) Who chooses who is on the list? What sort of qualifications does one need to be on it? There have been 20 econ nobel prizes recipients in the last decade and only one of them made the cut. I am wary of the opinions of a subjectively selected panel. Even if they were chosen in some subjective manner (i.e. highest impact factor of publications in the last decade) there are always some subjectives controlling those whether big journals like what they are saying).

    2) Consensuses are a funny way of determining truth. As stated in other comments, the consensus in 2007 was that the economy was fine. The consensus around 50 years ago was that smoking wasn’t bad for your health, even though good evidence had shown it caused cancer. We can find these examples in every field today, and we can find them hundreds of years ago. What is the case is you have correct people and incorrect people, and a majority doesn’t change what is correct. 99.9% of people believing the earth was flat doesn’t change the fact that Columbus was right.

    3) We can’t eliminate direct looks at exactly which question was asked these economists and what their responses are. While a 10 might show confidence, I usually trust people with some doubts a bit more, as they are making decisions after seeing both sides.

    While this forum has definitely pulled together some big people, I do think more needs to be considered here. Economists in general have been wrong before, and will be again.

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  33. Nosybear says:

    Problem is the squawking journalist reporting the results who doesn’t understand that the one squawking pundit on the opposite side of the debate from the consensus is a lone quack, particularly if the quack produces a shiny, informationally thin chart to “prove” their point. The real scientist, and it the case of economists I use the term very loosely, knows it’s impossible to “prove” much of anything, you can only disprove it. Every year journalism schools produce more journalism graduates than there are positions in journalism, a tribute to why you should never trust a journalist with a number. Or a “expert opinion.”

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  34. robert says:

    When I left University with an Economics degree in hand I figured that Keynesian Theory was an opportunity for economists to get out of the ivory towers of the university and into fat government jobs showing politicians how to fiddle. And fiddle they have.
    Just because a bunch of ‘economists’ agree – consensus – does not make them right.
    And so far they have been very wrong.
    And its not going to get any better just because someone has polled a bunch of them and got a ‘consensus’. They are still just as wrong.
    The best thing to do is get ready for the debacle coming up as the economists try to prove they are right in fiddling.

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  35. heatshield says:

    I looked up the composition of the “Economic Experts Panel”. Here is a very telling statement on the site: “The panel members are all senior faculty at the most elite research universities in the United States.” This tells me that they are clearly not ideologically diverse since the universities are probably the single-most intellectually homogenous institutions in the country. I would be more impressed with the findings of an “Expert Panel” if there was also strong representation from people with the most hands-on experience with an economy – business people, especially entrepreneurs.

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  36. Young Economist says:

    Nice post, except for the slight bias: why does Wolfers only mention the Republican talking points that are at odds with the “economist consensus?” There seem to be plenty of examples on the other end of the political spectrum. Heck, I actually thought of Paul Krugman and Brad DeLong when he first mentioned the “squawking heads!”

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  37. john werneken says:

    The divinity is in the details. First, any spending anywhere is likely to support employment. It does not follow that all employment or even employment in general is worth supporting. Downstream effects of policy could affect innovation, investment, infrastructure, education, and economic incentives, perhaps in ways that REDUCE the longer-term income and employment of the people as a whole. The odds are that ANY public policy will be less wise than any alternative private policy, if there is one, as the private policy IN GENERAL seeks net benefits whereas the public policy only claims to do so, there is no test or reality check in the future on the wisdom of past public policy, whereas a dumb business can go broke.

    Second, tax collection depends more on economic and population growth and the exemption or inclusion of various incomes in taxable income than it does on rates. That said, raising tax collections is only a good thing in a couple of cases: if what it will pay for provides broad and enduring benefit, which is doubtful for the majority of public spending in a democracy, or if the possibly better fiscal condition of the government leads to stable currency values. A large difference in marginal rates may penalize those with more money and choices more than it benefits those less money and with fewer choices, and may encourage the better off to preserve wealth rather than to invest to try to increase it.

    Also there is more to be said for possible benefits to decreasing taxes on wages and on incomes and increasing taxes on consumption, than there is for rate changes per se for any one type of tax.
    Finally, the public tends to be largely of one mind on many things without getting into any grasp of the details – in favor of peace, employment, the environment, security, debt relief, and growth all at once; I doubt ANY economist could identify an economic policy equally supportive or even a bit supportive of ALL of those values.

    So our leaders cloth arguments about what works (which economics should be able to discuss) and about who wins and who loses (not an economic subject; that is politics!) as if they were disagreements about HOW to achieve simultaneously a set of objectives which may not be compatible with each other.

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  38. Barbara says:

    “The Booth poll couldn’t find a single economist who believed that cutting taxes today will lead to higher government revenue – even if we lower only the top tax rate. ”

    I do not believe the conservative view is that cutting taxes will bring more money into the government. The view is that cutting taxes will bring more money into the private sector. Republicans are against more growth of government and believe in building private business that produces products.

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  39. triclops41 says:

    Hidden due to low comment rating. Click here to see.

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  40. RichardP says:

    “Congress is gridlocked, as one of the major parties is blocking every effort to improve the economy, using arguments which are so far outside the mainstream that it is hard to find a single economist to agree with them.”

    Should this line refer to Republicans in the House not blowing the roof off of our debt with more spending? Or, could this be said of the Senate which will not vote on a single plan for business and the economy coming out of the House? They didn’t survey ~every~ economist (who make a living being wrong most of the time) and we can’t see the mailing list. How is thin not a huge partisan waste of time?

    Just about anyone can show anything looking forward on paper, but please show me where a country has taxed and spent its way to prosperity… Greece?…

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  41. mannyv says:

    Why not pick 50 economists that work in the financial sector and see what they say? The financial guys have to put their money where their mouths are, so have an incentive to be accurate.

    In a similar vein, are private weather forecasters better than the government ones? Again, the private weather services presumably have more incentive to be correct, as companies routinely use them for hedging, etc.

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  42. Clint says:

    This is just the usual political partisanship masquerading as economic analysis.

    Even if it were true that there were consensus among economists, you couldn’t prove it by surveying a grand total of 40 of them. Oh wait, but they are the “leading” economists. Right. No subjectivity or bias there.

    How does one square their opinion on the stimulus, for example, with the fact that 80% of economists surveyed by the NABE a couple years ago said that the stimulus didn’t work? That doesn’t sound like consensus.

    But the statement that really takes the cake is: “Instead of having a serious discussion about how best to end the current economic slump, Congress is gridlocked, as one of the major parties is blocking every effort to improve the economy, using arguments which are so far outside the mainstream that it is hard to find a single economist to agree with them.”

    Obviously this is completely false. One of the major parties is NOT blocking every effort to improve the economy. Politicians do not sit around thinking about how to keep the economy from improving. They simply hold different ideas about how to impove the economy than their counterparts on the other side. And I’d really like to hear what arguments are being made that almost no economist agrees with. There are economists of every persuasion under the sun, and you can find one to argue just about anything. There are even economists right now arguing for INCREASES in federal spending, debt and regulatory burdens, if one can imagine that.

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  43. Cyrus says:

    The “x factor” is something pundits and economists don’t usually track: freedom.

    It has a tremendous impact on the future economics of the USA.

    Have you heard about “The Libre Initative?”

    http://opensourceamerica.typepad.com/1/2012/08/the-libre-initiative.html

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  44. Scott says:

    I think what frustrates me about this article is when I look at the actual website… there were plenty of topics that are dear to lefties that could have been shown to be disagreeable to economists but the only ones highlighted were the ones disagreeable to republicans.

    Here are a few from the same site that I think most Liberals disagree with.
    95% say trade with China makes the country better because we can buy cheaper stuff from there.
    95% support NAFTA and say that made us better off too.

    Or how about 81% saying a leading factor in the rise in inequality is due to a difference in ability for certain workers.

    There were plenty of caveats on the site for all those points but the same is true for every one of those poll questions (which might explain why polls and policy are so different).

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  45. Steve O says:

    “Rather, they agree on the best reading of murky evidence. The folks running the survey understand this uncertainty, and have asked the economists to rate their confidence in their answers on a scale of 1 to 10. Strikingly, the consensus looks even stronger when the responses are weighted according to confidence.”

    While I certainly agree that there are “right answers” on things like whether the bailout increased jobs or even if had a net positive effect, it has been well established that confidence is not predictive of accuracy (see the “illusion of validity” bias). Mr. Wolfers, surely you’ve read Thinking, and Slow? Let’s not take shortcuts. (For the curious, here’s some of the original research on the matter: http://www.sciencemag.org/content/185/4157/1124 or just google “confidence predictive validity” on Google Scholar.)

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  46. MattD says:

    Does the panel agree that a 100% tax rate would be generate the most revenue to the Federal Treasury?

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  47. fred says:

    Most economists would agree that the free market gives better results than a managed economy. And, yet, they’ll turn around and say that they can manage the economy with stimulus, bailouts, etc. Markets are the best allocator of resources. The only thing we need to do is get the government out of the way and let the markets work.

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    • Bill Rabara says:

      This is a comical, yet unfortunately, common oversimplification that lures people into deeply conservative mindsets. ‘Get the government out of the way’ is idiotic. Many ‘markets’ allocate resources very well but doesn’t mean they do not need regulation and intervention from governments. The management of the economy exists out of necessity. Conservatives have a hard time dealing with the fact conditions change. They live in some dellusional conception of old america being greand and ideal and what worked then will work now. Evolution is a fact. (including that of social dynamics). Also of course the efficient allolcation of resources is fine and dandy, but at what expense? Don’t be afraid of education, conservatives. We humans have learned a hell of a lot over the course of our existences about many things including economics and human behavior.

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  48. Clark Fincher says:

    This is a good example of what is needed; availability of a consensus of expert opinion on complicated or controversial matters. If both sides could agree to defer to the consensus, where one exists and is strong, then we could make a bit of progress. Trouble is, the consensus of experts is too often devastating to the case of one side and they are not willing to consider it as relevant. Too bad. Thanks for an interesting bit of info.

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    • Bill Rabara says:

      The problem is that political science deals with ‘messy’ data, mostly ever-changing forces (except for maybe that to business entitiies try to increase wealth), and the absence of testible predictions. It is like a quasi-science/philosophy amalgam. In science, determining causation is notoriously difficult but attainable because the the constants of nature and testability of findings allows for replication and possible falsification of hypothesis. Of course thare are so many perceived and actual biases from ‘economists’ with vested interests in advancing a particular cause or supporting a particular conclusion. It seems eliminating this potential roadblock is a formidable obstacle because we are participants in an economy that is interwoven through the fabric of our lives.

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  49. MdrnPlgrm says:

    This article overlooks the fact that economists have an incentive to agree with the President. Not only does it help them keep their jobs but they feel better giving an answer which implies they can explain everything.

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