Winner of the New Statesman SPERI Prize in Political Economy 2016


Friday 3 June 2016

The Media and Brexit redux

In this post I complained about how little attention the visual media gave to the fact that the overwhelming majority of economists thought that Brexit would involve significant long term costs. All I have now is more evidence to back up the argument in that post.

First, I was not alone in these thoughts. Here is Andrew Scott talking about his foreboding concerning the Brexit debate: “I just really wasn’t looking forward to the debate because I knew that it would stifle what are the really important issues, it would become partisan rather than insightful and that the economic voice and argument was vulnerable to being politically sidelined.” [1]

Second, the argument that there will be long term costs with Brexit has not, as yet, convinced most voters. In this poll, which is not unique, only 22% of voters thought they would be worse off as a result of Brexit. It seems unlikely that voters are unaware that David Cameron and George Osborne have claimed they will be worse off, but quite rightly they may be very distrustful of what politicians say. Virtually no voters will have examined the economic arguments on both sides and made up their own minds. Crucially, unless they read one of the broadsheets, they will have no idea that there is such an overwhelming consensus among economists. 

Third, we now have more evidence besides letters that there is indeed an overwhelming consensus among economists, thanks to the Observer. True, not quite as overwhelming as I had imagined, but 9/10 counts as a consensus for economists.

Fourth, there is polling evidence that the public do have a high level of trust in what academics say. Here is the relevant data (source):


So to sum up, most people do not think they will be worse off after Brexit, economists (including academics) overwhelmingly do think people will be worse off, and people have a high level of trust in what academics say. I can only think of one plausible explanation that is consistent with these three facts, and that is that people do not know what the overwhelming majority of academic economists think. [2]

In a vote that could well be close, you cannot argue that this failure to transmit information is unimportant.

One of the structural issues that help produce this problem is what you could describe as the politicisation of truth which comes from the overriding need to be unbiased. The visual media rely on either side to bring the relevant information to the table, because to do otherwise might seem biased. If a statement is made by one ‘side’ and disputed by the other it is contested, whether it is true or false. [3] 'Contested' is the word I heard a BBC reporter yesterday describe the £350 million a week claim, even though the UK Statistics Authority and one of their own fact check websites say it is false. So if one side does not headline that the overwhelming majority of economists think Brexit will involve significant long term costs, this fact - if it is reported at all - can get lost in the endless and tedious sequence of political claim and counterclaim.

This politicisation of truth did not begin with this referendum. The Leave campaign chose to headline a figure which they knew to be wrong. They did so because they also knew it would do them no harm. They knew it would do them no harm because no one in the media other than the broadsheets would have the nerve to describe it as a lie. They knew that from observing how the media has worked in the past. 


[1] Here is an example of how the media tries to fit this consensus among economists into their standard confrontational model. Now I have no objection to economists being challenged, but it is a shame that all this interview seemed to be about was Tony Yates trying to get across the concept of a counterfactual. Just one question along the lines of why do you think that on this issue economists are so united might have been interesting for viewers

But I do object strongly to the preamble. All the statements made were either wrong or beside the point. (1) that the 364 economists were wrong is the opinion of some but not others - it is not a fact. (2) the ‘establishment’ may well have thought we should stay in the ERM in 1992 but did the majority of economists think we would be worse off coming out? I certainly did not, and published a paper saying so. (3) it was the evidence from economists in the 5 tests analysis that convinced Brown to say no, not the other way around!

So rather than examining why there is such a consensus view among economists we get a rather poor interview about the value of counterfactual analysis, and certain opinions passed off as facts without any opportunity to challenge them. If anyone in the media asks me why academics appear reluctant to appear on TV, I shall show them this.

[2] Some people have a kneejerk reaction against complaints involving the media. In reading Andrew Scott’s piece an analogy occurred to me which I think might help here. Until the financial crisis, most macroeconomists (not all) tended to view the financial sector as a simple ‘transmission system’ rather than thinking about it as a system with its own incentives and dynamic. That was a huge mistake. Equally criticisms of the visual media which amount to ‘they are all biased’ are about as informative as saying the problem with the financial sector is that everyone in it is too greedy. More sensible critiques in both cases look at the way the sector works, and the incentives actors with each system face.

[3] Equally if something is stated often enough by one side and is not contested, it becomes a fact.  

34 comments:

  1. Economists were also pushing financial liberalisation for decades. There are valid concerns about fads and groupthink in that profession which is closely linked to the establishment (BOE, Civil Service, the City). BOE should also be taken with caution, three of its MPC members are ex-Goldman Sachs, and the latter is a major funder of the remain campaign. Valoufrakis has rightly dismissed the Treasury forecasts and polls of academic economists as utterly worthless, even though he is an academic economist and wants the UK to remain. Really, sensibly speaking, if you think the common market is so crucial a lot will depend on what is negotiated. As Valoufrakis points out the bigger question is sovereignty. Maybe as a macro-economist who knows about the Euro and prospects and consequences of further economic integration or stagnation you might have something useful to say, rather than enter model-guided speculation. I think the people that will really have something useful to say, however, are (non economist) academics. They are more up with the social effects of European integration and the problems relating to political gridlock and poor democratic representation and the prospects for reform if we stay in and what we are really likely to lose if we leave. This is really the debate we should be having. Macroeconomists are distracting us with speculative and largely vacuous nonsense.

    I'm for staying in, but my concern is what is the prospect for EU reform. Are we going to be part of a reforming process, or dragged down into something else.

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    1. If you think the Treasury analysis and polls of academic economists are "utterly worthless" then you imply that economic analysis is itself utterly worthless. Does it not worry you that you share the same perspective as those on the right driving the Leave campaign?

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    2. Yes and no. I worry about the motives of the likes of Gove, but in terms of sharing the perspective - if that is a perspective that politics and major decisions about people's lives need to be brought back to the people who have been losing both an economic and political stake in this system to a technocratic and financial elite, I am happy to share that perspective with them even if I do not support Brexit.

      The latest nonsense going around thanks to economists and their models is interest rates will rise following Brexit. You know as well as I do that this is largely irrelevant to the fundamental issue. Low interest rates in countries in and out of the EU have more fundamental causes. So does England's performance as a trading nation. The issues facing England's trading performance in some ways are not that different to Japan's - as is the low interest rate problem. The causes are not directly tied to EU or non-EU membership of a country. The answers to these problems, though, could be. How do we raise productivity to ensure growth with equality in the future? How is the EU going to help us in that process?. What is the vision for the EU in the future? How is it going to contain continued socially disruptive large internal labour flows for which it was never designed? How is it going to address the problem of a single currency without the proper fiscal and political set up. If it goes for greater centralisation, how does that affect us? These are the sorts of questions, and if we can move away from models into some fundamental debates about political economy, we can get some answers. There may also be issues relating to British and European identity which are not directly economic but might also be important - eg. the German system works for Germans; it might or might not be what we want.

      Unfortunately macro-economists, associated government and other think tanks and self-serving economists in US investment banks et al and their neo-classical models have been distracting us from the real debates we need.

      This could be a great event to galvanise the population, as the Scottish referendum was. Let's not squander it.

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  2. I would wage that most of those polled who said they 'trusted academics' would not assume economists are academics!

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    1. Given that the question focused on the referendum, what other academics do you think they had in mind!

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  3. I just watched the interview with Tony Yates. It is disturbing to see the wilful delight in the rejection of any kind of respect for academic endeavour.

    I find it surprising based on that kind of content that academics are trusted at 66% on Brexit.

    Perhaps, if the poll had split between economists and other academics the outcome would have been different, implying a fourth possibility; that while academics as a whole are trusted, economists are not (sorry).

    Realistically, that would seem strange, since who, other than economists are better placed as academics to predict the economic outcomes, but nevertheless, it remains a (somewhat) plausible possibility.

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    1. Given that the question focused on the referendum, it does not seem unreasonable to assume it included economists.

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    2. Sorry, I only just saw your reply...

      Yes, I absolutely agree that "academics" (focused on the referendum) includes economists. The point I was making was that perhaps people polled on whether they trust economists would respond differently to people polled on whether they trust academics.

      It would be sad if that were the case, but it would also raise further questions about why economists in particular are seen as somehow less credible than academics in general.

      Still, without an easy way to repeat the poll, it is just conjecture.

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  4. Part of the cost is based on immigration studies. All the immigration studies get the null hypothesis wrong. They fail to separate out those who would get a Visa with those who wouldn’t. So they are simply wrong.

    Leaving the EU is only about the latter category of worker.
    So unless the remainers can provide a study on that category, then they are useless in evidence. Because the issue is not migrants *as an aggregate* as the whole EU debate is about migrants who wouldn’t get a Visa.

    Unlimited immigration of *unskilled* workers may well suppress the wages, housing and public services available to equivalent skilled (and unskilled) workers in the UK.

    The trick the Portes of the world use is to aggregate the skilled and unskilled immigrants together and *refuse to talk about that set of people that would be excluded outside the EU* – those who wouldn’t otherwise get a work visa.

    Outside the EU we can do something about the race to the bottom and create a positive differential to the rest of the world via controlled borders. With open borders you just can't do it.

    So it's really whether you want to stick with the EU lowest common denominator, or raise the UK above that for the betterment of ordinary people in the UK.

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  5. "So to sum up, most people do not think they will be worse off after Brexit, economists (including academics) overwhelmingly do think people will be worse off, and people have a high level of trust in what academics say. I can only think of one plausible explanation that is consistent with these three facts, and that is that people do not know what the overwhelming majority of academic economists think. [2]"

    What the problem is with this "logic" is what matters is *if they are right or not* and only that.

    They are using neo-classical economic models that failed the world in 2008 and have been failing the world since the 1970s.

    You are essentially asking humanists to dispute the 'figures' on the number of angels with catholics. The whole premise is utterly ridiculous so why bother.

    The whole argument here is one of appeal to authority and bandwagon. Yes 'experts' are not always as expert as they believe and group think is a real thing.

    Smart people aren't all that smart. They suffer from blind spots and groupthink like all humans do. For example we've just had forty years of dietary recommendations to avoid fat based upon 'science'. Finally that has turned out to be false. Now they are going after 'sugar' in the same way. The truth is they don't know because if you try an experiment people can generally tell the difference between a lettuce leaf and a steak.

    Science is not truth. It is mostly opinion that is then filtered by experiment. It is *the experiments* that do the work of eliminating the bias inherent in beliefs.

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  6. You say “that people do not know what the overwhelming majority of academic economists think “– Do you really think that would make a difference?

    I've found the whole EU ref debate depressing but I suppose you have to take into account the sophistication of the average UK citizen.

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    1. Given the evidence I present, why not. Probably not for many of those who have already made up their mind, but there are plenty of people who have not.

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    2. It seems that if voters do not follow what the media hype dictates then they are obviously uneducated and used their vote as a crude form of protest to the government. Economists and academics - or refer to them as economic academics can get things very wrong and base their predictions on debatable theories at times, as has been mentioned in the previous comment. What is some voters looked at more than the economic argument and thought more of wanting more say in the decision making of policies? Is that any less valid? Perhaps some voters don't have much to lose so the threat of being worse off does not make them fearful. To vote against big government is not an unsophisticated view. The media had made a very successful propaganda campaign at portraying the 'vote leave' camp in a negative light as ignorant racists waving Union Jacks, touting tattoos and looking unattractive (these are shoddy stereotype props and I am not saying tattoos or the Union Jack are not attractive by any means). To then mirror this view across into the academic arena is poor practice and surely the point of academic exploration is to investigate the other viewpoints and expand on subjects accordingly. I have seen little of this in recent times. Maybe this is related to who is funding the academics or am I being cynical?

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    3. I wonder if the EU is actually even operated following an economic model but rather one based on power. If you considered the current EU countries as an economically functioning entity you would surely restrict labour movement to place the workers you require in the various areas of development? So for example, you would not want to flood labour into the places with established systems, placing pressure on housing and services, but rather invest in building new infrastructure and development in countries that require modernisation and improvement? If economics and not power were the key then we would see very different EU policies surely?

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  7. I think that what you are actually fighting against is the global perception that economists are perceived as the soulless calculating generals of the financial and business world.

    I do believe that no one would be surprised, or not believe, if I concocted a story about economists. Lets say I went around telling the story that most of the economists agree that health care for people over 60 should be terminated because the return on investment does not make financial sense. Old people bring no value to the economy and are just a drain on resources. I can see it now people would just shrug it off.

    That's what you are fighting. Its not that no one believes your analysis. No one believes that an economist would make a decision that is best for people over businesses.

    Sad but true.

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    1. Which is why I showed the poll results. However academic economists are perceived, they seem to be trusted.

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  8. The media has utterly failed in challenging statements by going along 'he said...' and 'she said...'. Unfortunately, not all arguments are equally valid (the truth is not, contrary to what some might like, something we can pick and choose). When the Leave campaign says that the UK can negotiate with whomever it chooses, the obvious question would be: Who would rather a trade agreement with the UK? And why? After all, it takes two to tango.

    What motivation would there be for the time and energy to work out another trade agreement when there are already trade agreements in place. Moreover, why is a 64 Million person market more attractive than a 436M person market? The Leave campaign makes many assertions which are simply articles of faith, and there is no basis for taking as fact and I have not heard the media challenge them once.

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  9. I think that if you did a correlation between who people trust and what their view on Brexit is, it might answer some of the problems.

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    1. So 66% of people are against Brexit?

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    2. I assume your figure of 66% relates to the Academics. We have politicians and journalists down the bottom. They have mixed views on Brexit but the lack means they are likely to be ignored (which means 90% of the 'debate' is being discarded). From my observations people are often saying 'all my friends are Remain' or 'all my friends are Brexit'. This can leave people with a choice between what big business says and what small business says. When you look at what these two are saying and then look at their trustworthiness, then this is what is making it difficult for what should be an easy decision to remain, at least on short term economic terms.

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  10. I'm sorry to completely disagree with that approach. The opinion of economists is irrelevant, because Brexit is not an economic issue, but a political one.
    Doesn't make sense to ask “how will be the economic consequences of Brexit?”, because the correct answer should be “it depends”. “It depends on what?”. “On what UK will do, and other countries will do”, and a lot of different factors outside economics (externalities?).
    Not every problem can be addressed by economics, which is a science – as many others – not in a Laplacian sense, nor “closed” as happens f.i. for physics.
    If I have to decide to be operated for appendicitis, I can of course consider that the operation will cost something, that I will suspend for a while my work, thus loosing my revenues - while skipping the operation, these costs will disappears. They can nevertheless come even worse, if my appendicitis go worse, becoming a peritonitis, and so on.
    I suspect that if I submit such considerations to my physician, not only he shall advice me to get surgery as soon as possible, but mainly to consult a good psychiatrist.
    And we are also speaking of “long term consequences” of Brexit. “In the long term we are all dead”, once said someone I don't remember. For sure, he couldn't have been an economist.

    https://www.washingtonpost.com/opinions/8an-independence-day-for-britain/2016/05/27/9abdb77e-237a-11e6-9e7f-57890b612299_story.html

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    1. I would add this:
      https://www.opendemocracy.net/can-europe-make-it/john-weeks/brexit-and-law-of-unexpected-consequences

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  11. The issue is complex as the EU involves economic and political elements. I think you should accept that economists cannot be the only arbiters of the question. It is odd that the debate is dominated by economic predictions that are all doubtful while the equally important political matter of a future federal state has little in depth consideration. In a strict sense a political union could have any set of economic rules you like, while the actual rules are all increasingly ultra capitalist. Neither side in the referendum have presented a proper case covering all the economic and political elements. A fair plebiscite would probably be a multi option vote. The result of the referendum will be unsatisfactory as it will not really resolve all the issues economic or political. That is the problem with this sort of way of running politics. It gives an illusion of Democracy but not the reality.

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    1. When did I ever say economists should be the only arbiters of the question? I just want the fact that there is an overwhelming consensus among academic economists that Brexit will do economic harm to repeated often in the media.

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  12. Here is another explanation.

    People may trust academics... but do they trust economists?

    Post-financial crisis I doubt it.

    Gove even went as far as to say he is glad the economists are on the other side!

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    1. So what other academics did the people who answered this survey have in mind?

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  13. Anonymous. You just don't get it. If you don't agree with 9/10 of economists you are clearly unqualified to discuss economics. It's the way closed shops work.

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  14. Hi Simon, great blog but on this particular issue I really believe you are not giving the British people enough credit. I think the main reason people are not taking long-term forecasts seriously is because they know how difficult it is for economists to make accurate short-term forecasts let alone long- term ones!

    Also many of us remember the predictions of gloom on black Wednesday only to see the economy unexpectedly rebound only a couple of years after exiting the ERM.

    Thirdly, many people can see how badly the eurozone has been managed and how shoddily the weaker eurozone states have been treated. What happens if the Eurozone disintegrates? Or extreme right-wing groups are elected? Would it then be better to be outside? How does the Eurozone reconcile the necessary further integration they require with eu member states that don't want further integration outside the eurozone? These are all very real issues that not have been properly addressed by the IN team, which will impact the long-term.

    Lastly, how can we be certain that Brexit will not spark/speed up the disintegration of the Eurozone? Many believe it is inevitable that it will break up anyway and it could be argued it is the only way for the PIIGS to free themselves from the economic straitjacket they are in. If that is true then maybe an earlier break-up is preferable? Will the long-term look better than if these countries keep trying to muddle through?!

    There are too many unquantifiables and maybe we can't reduce it down to just economic forecasting. Politics plays a huge part and will impact the economic long-run anyway.......

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    1. 1) unconditional forecasts are not the same as counterfactuals (=conditional forecasts).
      2) predictions from whom. I thought it would do the economy a lot of good
      3+4) See my post on the eurozone is not dying

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    2. 1) I just think most people switch off as soon as we say long-term forecast.

      2) a lot of noise (probably garbage) in the right wing broadsheets at the time - I admit I'm not sure if they were academic economists as it was so long ago.

      3/4) I have read it and you may well be right that the Eurozone continues on in its current form for decades but for the sake of all the young unemployed in Greece/Spain on the scrap heap I hope you are wrong. Compared to the 80s the Internet maybe a game changer and enable the unemployed to mobilise politically.

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  15. I imagine the impending deterioration if the economy will no doubt be portrayed as Labour's fault. Imagine the scale of state reduction that will be achieved in the forthcoming "technical" recession.

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  16. https://medium.com/@aldursys/the-other-240m-per-week-contribution-due-to-the-eu-c54e4eb0a763#.k61eu57zr

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  17. Simon,

    I don't know how this survey was conducted or the questions put, but looking at the results I could well imagine that if you asked the British public who they trust on any subject in the public domain - climate change, say - you would get similar responses.

    The survey goes to who people trust, not who they think has the greatest expertise or credentials. Many people tend to believe academics are in some way impartial and above the fray, therefore more trustworthy, generally speaking; in any case more trustworthy than some of the groups listed.

    That said, I suspect most of the public a) don't first and foremost think of economists as academics, more as people who 'work in a bank or something' (thanks Mum), and b) probably assume 9/10 economists agree on everything anyway, if indeed they give it any thought, or have any knowledge upon which to form an opinon, at all.

    I'm tempted to suggest, in the friendliest of spirits, that you should get out more.

    James.

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