Why isn’t there more consensus among economists?

by on February 10, 2009 at 9:57 am in Economics | Permalink

Clive Crook asks that question about the fiscal stimulus (by the way, Paul Krugman responds to the part of the column about him).  I do think there is more of a consensus than the current debates in the media, and the blogosphere, might imply.  I take the general consensus of macroeconomics to be not too far from the position articulated by Alice Rivlin.  That means accelerate the truly stimulative parts of the proposal and ponder the rest at greater length, plus emphasize aid to state and local governments.  I'm not suggesting that you have to bow down and yield to that view, only that the view makes sense to a large number of macroeconomists.

In part the appearance of so much disagreement is driven by the fact that both MSM and the blogosphere select for opinions which deviate from the mainstream.  Many segments of MSM are willing to represent the mainstream opinion, but there is then a sense that some new point of view must be offered, if only to hold the interest of the reader or viewer.  And some parts of MSM are openly partisan and thus they skew toward extreme points of view.  In the blogosphere libertarians are overrepresented, relative to their numbers in the profession.  On the Democratic side, Paul Krugman is the most influential figure, and I would place him to the left of most Democratic economists.  Progressives, like libertarians, are overrepresented on the web, relative to their numbers in the economics profession or elsewhere.

It is good that so many different points of view are being reflected, but we need to keep the biases of our filters in mind.  Repeating a moderate view, again and again and again, isn't always the best way to attract or keep an audience.

1 Greg Ransom February 10, 2009 at 10:10 am

There’s consensus in large part because consensus is a manufactured product of the academic filter which gives us “macroeconomists”.

Economists who find this stuff beyond pale the what they can produce as “science” without embarrassment or discomfort self-select themselves out of this field.

You can hear microeconomists expressing these discomfort and embarrassment constantly.

So we end up with a self-selected theocracy comfortable with the “science” of either “macro” tinker-toy model and macroeconometrics.

Not everyone can swallow this stuff — and only those with the stomach to swallow the program become “macroeconomists”.

So in large measure we have a manufactured “consensus” produced by a self-selected cohort.

2 Zach February 10, 2009 at 10:31 am

your also assuming that a moderate position is in some way the correct one… otherwise, you’d be angrier (or happier) about fiscal stimulus.

3 Torben February 10, 2009 at 10:39 am

How can there be consensus where macro is more or less like bible study! It is still has not managed to shift from religion to science. This is pretty sad.

4 Troy February 10, 2009 at 10:50 am

I’m not sure that continually repeating a moderate view would be bad for building traffic. I’d love to see someone who could compellingly talk about a moderate viewpoint.

5 Jim February 10, 2009 at 10:58 am

Agree completely. Variations on the theme of “capitalism is dead! We need a new paradigm!” are the most irritating to me. Yet this seems to be the way that the British media, at least, are choosing to style their coverage and op-eds. For example:

http://news.bbc.co.uk/2/hi/business/7874667.stm
http://www.timesonline.co.uk/tol/comment/columnists/article5689642.ece

6 dale February 10, 2009 at 11:00 am

I find the “consensus” statement fairly accurate – regardless of whether it can be supported by religion or science, both, or neither. The self-selected critics stating extreme positions do serve a function, particularly since we cannot really support the consensus view with anything resembling evidence. However, the real tragedy is that the public is left in true ignorance – the stimulus looks free to them, except for those that object on ideological grounds. I truly believe that the public does not believe there are any costs to a massive stimulus package. That is why the politics trumps the economics (as usual) – eventually a massive stimulus package will be passed and Rivlin’s wise position will fall by the wayside as numerous other agendas are pursued.

7 Eric Rasmusen February 10, 2009 at 11:37 am

Is even Rivlin’s degree of support for stimulus mainstream? Could you please link to some non-administration pro-stimulus economists? I’m having a hard time finding any besides Profs. Krugman and DeLong, and there seem to be lots of academic economists against the stimulus bill. Am I missing something? Maybe there are lots of them, but where are the op-eds, blog posts, and open letters?

8 Tushar February 10, 2009 at 1:25 pm

thomas,

Yes semantically progressive means one thing. However, in the american political context, the “Progressive” movement is at least a 100 years old.

9 Ozornik February 10, 2009 at 2:17 pm

Few other occupations with this type of a consensus problem come to mind. Dieticians and nutritionists. Astrologists. Alchemists. Homeopaths. Ayurveda followers. Also, Siberian shamans use different patterns of gong-beating†¦

I think Jonathan Swift nailed it long time ago.

10 Mr. Econotarian February 10, 2009 at 3:26 pm

I think the problem is not the macro arguments. I think that it is possible to create a “stimulus” bill that (as Christina Romer predicts) can drop the unemployment rate by 1% versus non-stimulus for 2.5 years. I’m not sure this is that bill, but let’s imagine you could do this.

The question is whether that benefit is worth the cost. It will cost my household (based on income tax incidence) around $50,000 NPV. That’s around the loss I’d take if one of my household temporarily lost a job for a few months. On the other hand, the stimulus only reduces chances of unemployment by around 10%, so I’d really need it to cost $5,000 NPV to be worth my while.

Thus, I am against it!

11 Superheater February 10, 2009 at 5:00 pm

A bit of topic here, but can we please stop referring to people like Krugman and DeLong as “progressives”? This is an appalling euphemism which implies that those who are opposed to their view of coercive government intervention are somehow standing against “progress”. The word liberal has already been stolen from us and distorted beyond imagination — we should put our foot down this time and refuse to refer to them as they wish.

AMEN!

12 Greg Ransom February 10, 2009 at 6:13 pm

It’s clear that many of the leading macroeconomists in the country don’t consider Krugman to be a macroeconomist.

I think a lot of economists are reluctant to say what they really think of the Krugman whose mostly abandoned economics for journalism.

13 Greg Ransom February 10, 2009 at 7:27 pm

Give me an account of science that includes Darwin, then we can talk.

Explanatory power and non-magical causal mechanisms are what really matter in complex sciences like Darwinian biology and macroeconomics.

Keynesian economics doesn’t make the non-magical causal mechanism cut, if you understand the choice theoretic logic of non-permanent productive resources, and the rest of microeconomics.

This is what Hayek meant went he pointed out that the “causal” interaction of Keynesian macro aggregates makes no sense, if we assume a system produced by human beings, and in which scarcity of any sort exists.

“Macroeconomists” are still trying to come to terms with this, not not doing a very good job of it.

14 Andrew February 11, 2009 at 12:51 am

Consensus isn’t cool anymore once everyone is doing it.

15 Russell Nelson February 11, 2009 at 1:42 am

Tyler, you’re making the mistake of thinking that the center is correct. It isn’t. Austrian economics is correct here — but of course you aren’t an Austrian economist, so you’re not willing to admit that.

16 Andrew Merrick February 11, 2009 at 7:54 pm

Absolutely, I think we are proving through our own history that economics is more art than science. There can be no concensus in a matter that is as fluid as the system that we have devised.

I suggest that we take a few calculated and reasonable blind risks but maintain some calucluated and reasonable structural elements. Sort of like surfing the internet for resourcing (a risk because you don’t know what you will find) but still maintaining a decent digital security back up system (structural against malware and spyware).

http://www.justaskgemalto.com

17 Tracy W February 12, 2009 at 7:14 am

Ozornik – in Medicine, Chemistry, Physics, Biology you can do research with controlled studies (medicine has some particular problems because of the variation of human bodies, but they manage a lot by double-blind studies), and mostly you can see what you are trying to look at.

In macroeconomics, you can’t do controlled studies, you can’t do randomised experiments except by luck, and you are very limited in what information you have about the economy. Yes there is the System of National Accounts, but we don’t know what isn’t measured, and have our doubts about how accurately National Accounts measure what it tries to measure. So basically in macroeconomics you make a hypothesis and then are dependent on chance on having it disproved, eg the idea that there was a stable trade-off between inflation and unemployment was decisively disproved in the 1970s.

In geography, controlled studies are hard, mostly the earth stays still enough that once you’ve measured it the measurements stay true for a while, and when it does change that often makes the national news. In macroeconomics, you turn around and someone has invented the WWW and suddenly you suspect that international trade in services may be happening online without anything going through the customs department. And then you have to try to get the attention of the greybeards at the statistics office who think that the Internet is like a TV with a really large number of channels. If they’ve heard of it at all.

I wasn’t aware that there was much in the way of a consensus in philosophy.

Macroeconomics hasn’t progressed much as a science because of the particular problems of studying whole economies. Because of this, macroeconomists may be not much good as scientists – it sounds plausible that the emphasis on testing forces chemists and physicists to put aside personal ideologies and focus on what’s right because it’s so obvious when their hypotheses fail.

But I suspect that if you fired all the macroeconomics professors and replaced them with physicists, chemists, doctors and geographers, you wouldn’t see any better macroeconomic theories comong out.

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