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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  1. Scott Templeman (@tallbonez) says:

    Consensus is a poor substitute for evidence

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  2. 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.

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  3. 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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  4. 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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  5. 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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  6. 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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  7. 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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  8. 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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