Slowly Becoming an "Expert"

In Freakonomics we poke fun at “experts” — folks who go around speaking with great authority about topics they don’t actually know that much about.

I can be criticized for a lot of things since Freakonomics came out, but one thing that I have been pretty good at is not masquerading as an expert on topics I know little about. For instance, although I have views on the financial crisis, I’ve more or less kept them to myself, instead using the Freakonomics blog as a vehicle for publicizing the views of people who know more than I do about the issues, even if I don’t necessarily agree with everything they are saying.

Every once in a while, though, I let someone get me going on topics I have no business talking about.

A recent interview with Steve Paulson on NPR is a good example. Somehow he got me talking about the housing bubble and the stimulus package. I wouldn’t actually encourage you to listen to it, but if you want to be a witness to my descent into expertdom, it is available online. My segment starts about 30 minutes into the show. Other guests on the show include Paul Krugman, who has a very different view of stimulus than I have.


Derick

I'm sure your thoughts are better than Krugman's. The way Keynesian economics, which contrary to popular belief the US government has been doing since the 80s, has caused this but market economics are being blamed reminds me of the Reichstag fire.

Peter Merriam

Oh come on, everybody's got a theory, and to anyone who's read your work knows that you will at least attempt to look at the data and give it some thoughtful analysis, unlike the vast majority of talking heads who, like Bush and "Colbert" think from the gut.

Off topic, but I'm not sure where else to address it:

Is there enough money out there for Americans to buy back our debt? What I think I mean is this: during past crises, Americans have been encouraged to buy bonds issued by the US govt. to provide it the cash it needed to, say, fund WWII.

It may be simple minded, but it seems to me that deficit spending hands the problem off to our kids. At least if we bought the bonds ourselves we would have a greater sense of participation in fixing the problem. Why isn't it a priority of all patriotic persons to own a piece of the US debt. So what if the interest payment is tiny, at least it gets payed back in the US, hopefully making its way back into the US economy eventually.

Obviously there are probably not Trillions lying around American households, but surely there are billions being "invested" in other places. If we could own the debt, would we be any better off?

Thanks,

Pete Merriam

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C. Larity

I have this vision of Krugman sitting around on the day that Lehman fell, then standing up from his recliner and shouting "Yes! Face time for Krugman!" Then maybe he and his ego split a bottle of champagne and some cigars.

I realize it's not your area of expertise (note how I'm tying back to the original topic here), but do you have any economic models that would predict what would have happen if we allowed all the bad banks to fail and injected all $700 billion into only healthy banks? I don't claim that it would have been the best solution, it just sounds like an interesting idea to test.

Bobby G

"Other guests on the show include Paul Krugman, who has a very different view of stimulus than I have."

This certainly gives your "expertise" a lot of credence in my eyes.

Joe Smith

I won't go and listen to your interview but it seems to me that precisely what the current situation needs is more of the Freakonomics approach would advocate:

Put aside your presumptions and look at the data with a clear eye and a cold heart and see what you can learn.

Krugman appears to believe we can stimulate and get back to the height of an artificial and unsustainable bubble and stay there - seems unlikely to me.

charles

You are very aware then of the "expert problem." I love it when people are humble. I listen closely to those folks, because they question themselves. This is a true value added attribute to what comes out of their mouths. If only there were more people like that and less "experts."

Thanks

Captain Obviousness

Krugman, Obama, Pelosi, Reid et al. want to get the economy "back on track" with deficit spending. Even if it is possible to get the economy back on the old track we were on, that track was headed for a cliff anyway. The economy needs a fundamental restructuring that can only be achieved with a complete collapse of the festering tumor that is the financial system.

P

It's easy to be an expert on this topic. Simply determine where Paul Krugman stands, and take a position diametrically opposed to him.

It can't fail.

Megan

I personally do not agree with the bailout - what ever happened to being responsible for your actions? I think what should have been done is the re-evaluating of homes to a lower price and banks taking a huge profit cut to refinance mortgages. Also, all of the subprime mortgage contracts should be revised or thrown out. I know the world in general would suffer for quite some time, but at least that way, people would be able to afford their homes (for the most part) and banks could still stay afloat. Of course, this is my simplistic one-sided view without considering other points. I hate giving money to a bunch of banks who obviously don't know have good, viable business planning skills...

Megan

btw, I should mention, I am no expert so my opinion should be taken lightly...

Elizabeth

The term expert is subjective, it is relative. A student may be an expert when surrounded by a group of people who know nothing about the student's field of study, but not so much when surrounded by researchers and professors from the same field.

BT

I have come the conclusion that most people who claim to know don't usually know and that the whole notion that there is someone/something out there (a non-supernatural figure) with a pulse of the world is baseless. That has led me to lose confidence in that someone/something.

G

Why is nobody talking about the real reason this all happened - the fact that too many people couldn't pay their mortgage? Maybe they weren't being paid enough for their skills. Maybe they didn't have enough financial education about what they could and couldn't afford. Maybe they didn't have enough education in general. I realize that our standards of lending for the last 10 years have a lot to do with the housing bubble but the question remains of why were there enough people in this sub-prime condition to effect the housing market so much??

Mike99

Wow, you folk must be independently wealthy to be voting with your "opinions" that you'd prefer the economy to continue to Spiral into a DEEP DEPRESSION, and put millions of workers out of jobs, along with Killing a lot of small businessmen, and their families. Is this just a great buying opportunity to you folk?

Typically in a recession we try lowering interest rates. That hasn't worked. Keynesian policy at this point is all we've got. The Chicago school has got Nothing to Offer.

Keynesian policy, when the economy is near full employment, is bad policy. That's not now.

Stephen

One only needs to go back to Friedman's famous 1953 Essay on Positive Economics to see that his observations then are more true than ever today:
" Self-proclaimed “experts” speak with many voices and can hardly all be regarded as disinterested; in any event, on questions that matter so much, “expert” opinion could hardly be accepted solely on faith even if the “experts” were nearly unanimous and clearly disinterested. The conclusions of positive economics seem to be, and are, immediately relevant to important normative problems, to questions of what ought to be done and how any given goal can be attained. Laymen and experts alike are inevitably tempted to shape positive conclusions to fit strongly held normative preconceptions and to reject positive conclusions if their normative implications - or what are said to be their normative implications - are unpalatable."

Jonathan

I've often found that the people who know the most are those who know enough to know what they don't know. I applaud you're acknowledgement of the "expert problem".

griff

An expert is anyone from out of town with a briefcase..

friend

Dear AJ, Sky,MD, Bob H, PK; and others in my family

`FREE' AT LAST.

Now I understand this principle, it takes `full' knowledge to be an expert- to the extent that this is possible.

Like the idea of bonds- but then who's gonna manage them- whom can we trust-- maybe we ought pay china back by selling bonds- then the millionaires who invest in'em will have a invested interest in not cheating themselves--a grand scheme- gget to work- stop stuttering-

As to the difficult housing situation- go look at the implications of the Parsonian Marshall plan (that should work fine when fine tuned) - I could use a mortage rate of about 4 % to tide me over til job situation improves- maybe we need a new banking system with checks and balances- I doubt anyone wants to lose their homes- otherwise why buy one-- and no one wants a free lunch- when junk food i.e., somebody's left overs and trash is all you get. that is one lesson that McDonalds needs to learn or perhaps they have.

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out of towner coming home to roost

Dear Griff;

Yes, so true- a brief case is all that is required.

Jim

I have continually recommended that there should be a website similar to FactCheck that is called something like "OpinionCheck" or "ExpertCheck".
The MSM is overrun with 'experts' spouting opinions that are seldom correct. William Kristol and James Carville are too that immediately come to mind.
There could be a yearly tally of their accuracy.

Jim