Brad DeLong entered
the debate between myself and Unlearning Economics with a post
entitled “The Need for a Reformation of Authority and Hierarchy
Among Economists in the Public Sphere”. He writes
“Simon needs to face that fact squarely, rather than to dodge it. The fact is that the "mainstream economists, and most mainstream economists" who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side.”
The dodge, and I
think it is a pretty good dodge, is that politicians and a good part
of the media choose the economists they publicise. If you accept that
austerity came from what I call deficit deceit - an attempt to reduce
the size of the state using the false pretext of deficit reduction -
then obviously politicians and their supporters in the media would
choose those economists whose views were useful in promulgating that
deceit. As the UK discovered during the Brexit debate, even a tiny
proportion of economists (8!) can appear much larger if the media
gives them much more attention than they deserve.
But the argument
remains a dodge in the following respect. How were people outside
economics, including much of the non-partisan media, meant to know
that particular academic economists were unrepresentative of the
majority? Indeed how can even economists be sure of this? I’ve
argued that the majority of academic macroeconomists were always
against austerity, particularly once the reason for the Eurozone
crisis had been resolved by Paul De Grauwe, but the evidence I use to
back this up is piecemeal and indirect (see here,
pages 3 to 4).
Part of the problem
is a certain disregard for consensus among economists. If you ask
most scientists how a particular theory is regarded within their
discipline, you will generally get a honest and fairly accurate
answer. In contrast economists are less likely to preface a
presentation of their work in the media with phrases like ‘untested
idea’ or ‘minority view’. In macro it also reflects periods in
the past, which still resonate today, when there was deep division
and antagonism between different groups. This extends to not being
sure what is taught at masters level in the top schools: it turned
out, when André Moreira and I did the research,
that there was more consensus in one key respect (Chicago excluded)
than some had imagined.
Part of Brad’s
post it seems to me is simply a lament that Reinhart and Rogoff are
not even better economists than they already are. But there is also a
very basic information problem: how does any economist, let alone
someone who is not an economist, know what the consensus among
economists is? How do we know that the people we meet at the
conferences we go to are representative or not?
To help fill that
gap we have in the US the IGM Economic Experts Panel survey, and in
the UK/Europe the CFM survey.
(The IGM survey has recently started a European
version.) The US IGM survey has asked a question about
the Obama stimulus package on more than one occasion, and the latest
result is here.
It is one key part of the evidence for my claim that most academics
were and are against austerity.
However all these
surveys share a common feature which I find problematic, and which
also reflects on Brad’s concern. They are selective, and
deliberately designed to only include the academic elite. IGM writes
that panel members are all senior faculty at the most elite research
universities in the United States. So they tell us not what academic
economists think, but what a chosen sample of ‘elite’ economists
think. Now if those samples are well chosen, as I think they mostly
are for these surveys, that may not matter too much, but how
representative they are can always be questioned. It also gives the
impression that it is only this elite that are worth listening to
when it comes to policy issues, something I think is simply wrong as
well as being elitist.
As part of the build
up to the Brexit vote, the Observer newspaper commissioned Ipsos MORI
to email all members of the Royal Economic Society. 91% of those who
responded thought
Brexit would have a negative impact on UK GDP in the longer term. As
most UK academic economists are RES members, it was therefore
possible to say that there was a clear consensus among academic
economists that Brexit was harmful. To be able to say this about all
economists, rather than just a select few, in my view strengthens the
power of the survey. (Some defend elitist surveys because the elite
is ‘influential’, but if they influence their fellow economists
that will show up in a larger sample.)
I think the
experience with austerity and Brexit suggests it is time for national economics associations (like the RES or AEA) to start
representing the opinions of economists by conducting such polls of
their members under their own initiative. With email addresses the
technology makes it easy to do. It is time these organisations
started telling both us and the world about what the consensus (if
any) is on key policy issues. It would be an important step towards
ending the misrepresentation of economists and economics.
I think this is a great proposal. It's not a magic bullet, but it is at least a start.
ReplyDeleteOne extra issue springs to mind. If I remember correctly, the first R&R "publication" on austerity etc. was a "working paper." Now we all know why working papers have become so prominent (slow journal turn around etc.) but a side effect is that "prominent" economists can publish ideas/thinking into public debate with the imprimatur of "academic research" but without the quality assurance of peer review. I don't know what the solution is, but it's worth being aware of.
I agree that gauging the exact extent to which the economics profession was guilty / innocent of promoting austerity during the recent recession is difficult. Surveys of the type suggested by SW-L would help. But what also needs to be taken into account is the clout of relevant economists. And the fact is that powerful voices in the profession were calling for austerity (politely known as “consolidation”).
ReplyDeleteOne powerful voice was the OECD. See:
http://bilbo.economicoutlook.net/blog/?p=13520
Another was the IMF. See:
http://bilbo.economicoutlook.net/blog/?p=16226
For more on the IMF and OECD’s enthusiasm for consolidation / austerity, Google “consolidation” “IMF” “OECD” “billyblog”.
As for Rogoff and Reinhart, my impression is that they were making huge efforts to promote their pro-austerity views to judge by the amount they had published on the subject.
Where I live, there is an informal ranking of graduate schools maintained by the central bank. It is not public information, but it is known among professors. My place tends to be ranked very high (always top 3 in the country) and do you know what are the central reasons why it is the case?
ReplyDeleteIt's one of the only department that teaches state of the art New Keynesian models to master's students whereas others almost always keep that for the PhD level...
This is indicative of what the profession believes to be our best guess of how the economy works: finance departments and central banks work with NK models, structural VARs and VECMs.
In my view, on top of the selection bias in publicity that you pointed out, part of the confusion stems from how we write introduction textbooks. It should be clear from day 1 that it is an empirical science and we should put simplified versions of our current models in those books instead of nonsense. Nobody should leave after one course convinced economics systematically warrant inaction.
"Part of Brad’s post it seems to me is simply a lament that Reinhart and Rogoff are not even better economists than they already are."
ReplyDeleteI do not think this is the issue. The Reinhart and Rogoff *working* paper was from January of 2010. No scientist would ever consider using a such new (at the time) non-peer-reviewed paper to motivate any policy. Even if it had been peer reviewed, such a recent paper would still take a back seat to more established results or the academic consensus.
This would be like a government embarking on a multi-billion dollar cold fusion plant in 1989 right after the Fleischmann and Pons *press release*.
It is mind-boggling.
"The majority of academic macroeconomists were always against austerity"
ReplyDeleteAfter taking a B.S. in economics during the 2000s, then a PhD and now teaching Macro ...I have to admit that the more I read Simon's argument the more I wonder if I ever understood the New Keynesian School or the RE.....which were both shoved down my throat (with no "pluralism" at all)
For this to be effective, the public would have to care which economists are, and are not, academics. It's unlikely that they do -- in fact, 'academics only' would repeat the mistake of 'self-styled top academics only' which you rightly criticise.
ReplyDeleteSimon, I have to say that I agree with Brad DeLong on this one.
ReplyDeleteAs I am sure you will recall, on 14/2/2010, a group of 20 eminent economists wrote a letter to The Times making it clear that their view was that with government finances in their then state, the clear priority for whichever government was about to be elected should be deficit reduction, principally driven by pending cuts -- ie austerity. These economists were:
1. Tim Besley, London School of Economics; 2. Sir Howard Davies, London School of Economics; 3. Charles Goodhart, London School of Economics; 4. Albert Marcet, London School of Economics; 5. Christopher Pissarides, London School of Economics; 6. Danny Quah, London School of Economics; 7. Meghnad Desai London School of Economics; 8. Andrew Turnbull, London School of Economics; 9. Orazio Attanasio, University College London 10. Costas Meghir, University College London; 11. Sir John Vickers, Oxford University; 12. John Muellbauer, Nuffield College, Oxford; 13. David Newbery, Cambridge University; 14. Hashem Pesaran, Cambridge University; 15. Ken Rogoff, Harvard University; 16. Thomas Sargent, New York University; 17. Anne Sibert, Birkbeck College, University of London; 18. Michael Wickens, University of York and Cardiff Business School; 19. Roger Bootle, Capital Economics; 20. Bridget Rosewell, GLA and Volterra Consulting.
Four days later, 58 eminent economists wrote to the Financial Times making it clear that they disagreed and arguing strongly that growth should be the number one priority for whichever government was about to be elected.
Since both groups contained significant numbers of eminent academic economists, the only conclusion that can logically be drawn from this episode is that being an eminent academic economist does not enable one to determine whether growth or fiscal consolidation is the appropriate response to a major financial crisis. I cannot see how you can draw the conclusion that the economics profession was largely(or indeed, at all) united against austerity.
"The dodge, and I think it is a pretty good dodge, is that politicians and a good part of the media choose the economists they publicise. If you accept that austerity came from what I call deficit deceit - an attempt to reduce the size of the state using the false pretext of deficit reduction - then obviously politicians and their supporters in the media would choose those economists whose views were useful in promulgating that deceit. As the UK discovered during the Brexit debate, even a tiny proportion of economists (8!) can appear much larger if the media gives them much more attention than they deserve."
ReplyDeleteIn order to understand this above, you need this information by George Monboit who accurately outlines the origins of misinformation, corruption in politics, and the use of dark money to achieve it:
https://www.theguardian.com/commentisfree/2017/feb/02/corporate-dark-money-power-atlantic-lobbyists-brexit
A simple question to ask yourself; is when we look at the trade deals like TTIP and CETA, why would any economist not understand the real mechanisms in play that are designed to control the economic and political benefit for the few against the interests of the many?
Or are most economists only concerned with economic outcomes without evaluating the public interest as a whole?
In other words it doesn't matter to them who or how many benefit just so long as they can predetermine an outcome, which can be concluded by all money travels uphill.
I think you are being too easy on Rogoff and Reinhart. I was working in the City when “Growth in a Time of Debt” was published and in City presentation rooms it was seized upon like raw meat in a lion’s den.
ReplyDeleteIt’s not about consensus, it’s about impact.
The paper succeeded on multiple levels:
1. It provided serious professional validation of a perspective that large parts of the political classes wanted to believe.
2. It provided a very simple cause and solution to the crisis engulfing the developed world: debt above 90% bad – debt lower better, debt much lower better still - irrespective of the economic context.
3. It provided the media with a presentational gift: a line chart with “% of GDP” on the y axis and a great big solid red line at the 90% interval. Breaching the red line was taken to imply economic catastrophe.
4. It provided a simple and dramatic heuristic to identify good economies from bad with Greece clearly at the far end of the scale.
5. It came with a really catchy, media friendly, title.
And yet, as we discovered later, it was an error prone piece of work. As Richard Feynman might have said, it was “bad science” and “bad use of science.”
But, the damage was done. That particular “meme” was in the public domain and once there, impossible to dislodge. (Much like the Labour profligacy issue).
Counter-arguments are long, difficult and often counter-intuitive. In the world of Twitter, simple, dramatic and wrong is a much more effective communication strategy.
In this world your responsibility to police academic economic opinion is much more onerous. As you have said many times in these pages, austerity has imposed large and unnecessary real costs on the British public.
“Growth in a Time of Debt” bears a large responsibility for that.
I agree that SW-L goes a little too easy on R&R (and perhaps his profession more generally) but isn't the City supposed to be full of physics graduates? The R&R paper is so bad that anyone with a reasonable grasp of [scientific] inference can see that it's a crock. And "mediamacro" might've had more of an excuse for failing to expose its flaws than "mediamedico" did with the Wakefield paper, but not much.
DeleteYep, it was always an obviously bad paper. But the really damning part of the business for R&R is not that they produced a bad working paper but that they promoted it knowing it was "unsophisticated" (ie slapdash), so its conclusions must be tentative at best and simply wrong at worst. Of course as it turned out it was actually worse than slapdash - it sailed close to outright scientific fraud. And they must have known what the real world consequences of telling those in authority what they really, really wanted to hear would be.
DeleteThe misery they contributed to should be keeping them awake at night. Meanwhile for the rest of us we should simply ignore anything they now say; for the sake of the fields' reputation there should be real professional consequences.
On a related issue, has any reliable research been done on links between the known or acknowledged ideological predispositions of academic economists, whether mainstream or otherwise, and the way in which they interpret the data they analyse? This is a sincere question. For example, it strikes me that here, in Finland, and perhaps in Germany, academics are formally civil servants. This is not the case in countries such as the UK and the US. Does this explain why , for example, German economists neglect Keynes (if they do), i.e. because they have to share the political ideas of their employers - the ordoliberal elite? I don't know the answer to these questions, but DeLong's remark that he cannot explain the psychological reasons for R&R's behaviour over the 90% public debt fallacy is interesting. Is this a question of them very badly wanting the fallacy to be true i.e. ideology trumping even high-flying economists' respect for data and empirical evidence? If this is the case, then the profession has a long way to go indeed before it can recover the public respect it has lost in recent years, particularly since 2008. In the meantime, politics will prevail...
ReplyDeleteI fully agree with you Simon,it will bring some integrity back that MSN as deliberately destroyed in economist & economics & please a institution of economist that is the Media outlet of the consensus of economist.then anyone not in consensus is rightly given airtime but can't twist mislead people into thinking they are the consensus!It will help the economist in the long run to maintain integrity!
ReplyDeleteI think most economists are astrologers hiding behind statistics. This is an example of the astrologer category.
ReplyDelete