Friday, 15 June 2012

When economists agree

Adam Ozimek writing at The Atlantic says,
In reading the sometimes polarized debate in the economics blogosphere, the discipline often appears to suffer from an excess of disagreement and uncertainty. But this is more about the incentives economists face when writing and speaking in the public sphere than the actual state of knowledge in the field. In reality economists agree about a lot of things, and in many cases they do so with a high degree of certainty.
This is true, the "economists always disgree" card is well overplayed. There are issues on which they disagree but there are also a lot of issues on which there is agreement. But it makes better news for the disagreements to be played up. Saying "economists agree on X" isn't much of a headline.

Ozimek continues,
This fact is on display frequently at the IGM Economic Experts Panel from the University of Chicago. This is a panel of 41 of the worlds top economists who are offered statements about economic policy to which they can indicate whether they agree, disagree, or are uncertain. In addition they rate the certainty of their answer on a scale of 1 to 10, which allows the answers to be weighted. Over the past few months there have been several issues where this ideologically diverse group of economists have shown resounding unanimity. Some of these may surprise people, as it's fairly obvious that public opinion would not side with economists with the same amount of unanimity. So here are a few things economists strongly agree on.
A list of the economists on the Expert Panel can be found here.

The issues:
The benefits of free trade and NAFTA far outweigh the costs

None of the economists surveyed disagreed that the gains to freer trade are much larger than any costs. And only two economists even said that the answer is uncertain. In a space for additional comments, MIT's Richard Schmalensee declared "If that's not right, almost all of economics is wrong".

Government policies don't explain high gas prices

Individual's beliefs about the extent to which the U.S. government should be blamed for high gas prices seems to have a strangely strong correlation with whether they like whoever happens to be in charge at the time. Economists on the other hand strongly reject the idea that the government has much affect on these prices. None of the surveyed economists disagreed with the following statement:

"Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies."

The Stimulus and Bailouts Lowered the Unemployment Rate

Economists may differ on whether the American Recovery and Reinvestment Act was worth the cost overall, but they are in solid agreement that as of the end of 2010 it lowered the unemployment rate. Very few disagreed with or were uncertain about this. In contrast, a significant number questioned whether the recovery act was worth the cost. Importantly, in the space for comments, Stanford's Pete Klenow emphasized what Scott Sumner and others would say is the central issue: "how much was it offset by less aggressive (than otherwise) unconventional monetary policy?" But even stimulus skeptics should keep their criticisms in perspective: economists strongly reject the idea that stimulus is to blame for our economic woes.

In addition, economists strongly agree that the bank bailouts also lowered the unemployment rate. Of course as Austen Goolsbee commented: "the fact it was necessary doesn't mean we should be happy about it."

The Gold Standard is a Terrible Idea

This is an issue that has returned to a certain prominence in the last few years. But despite it's popularity among some on the right -- and Ron Paul fans in particular -- economists overwhelmingly agree that the gold standard is a bad idea. In this sample of leading economists, 100% of disagreed with the claim that returning to a gold standard would improve price-stability or employment outcomes. Nobody even answered uncertain, because this question really isn't up for debate anymore.
This result I found a bit surprising, I would have expected a bit more support for the gold standard. This may reflect those on the panel, there is no obvious Austrians on it for example.
Some Other Things Economists Agree On

Rent control is bad, congestion pricing is good, eliminating tax deductions and lowering rates is efficient, and the tax deductibility of healthcare creates consequential distortions.
So it may not make the news but economists really do agree on stuff.

1 comment:

Eric Crampton said...

Ha! I'd caught that a while back: