Monday, November 21, 2011

Do economists agree on anything?

It is often said that economists have a hard time agreeing on anything.  In my experience, this is true to some extent when you get into the details of economic policy, but that there still tends to be broad agreement on a lot of issues.  The most commonly cited examples of this are the benefits of free trade and that the minimum wage harms the employment prospects of the less-skilled.  

When these agreements do occur, it is usually difficult to find out about them through the media.  This is partly because of the liberal bias of the media, partly because journalists never got past introductory economics in college, and partly because journalist are trained to write about both sides of an argument. The result is a muddle of information without a clear idea about what economists tend to think about important economic policy issues. 

There is a new web site hosted by the University of Chicago that has the potential to sort through this muddle.  An "economics experts panel" has been assembled as representative of the range of views among prominent economists.  A different question is posed to the panel each week and their responses are compiled into a nice histogram to show the distribution of views.  Panelists can also give comments for their responses, as well as express how confident they are in their view.  

Several of the questions were very poorly constructed (especially this one), which can make it difficult to agree or disagree with a statement in its entirety.  Even so, the site has the potential to become a very useful resource.

For example, on a topic of the day, tax reform, only 5% of the experts disagreed with the claim that "Eliminating tax deductions for non-investment personal interest expenses (e.g., on mortgages), with reductions in personal tax rates that are both budget neutral and keep the burden of taxes by income group the same, would lead to more efficient financing decisions by individuals."

Also, none of them thought that the Fed's Operation Twist would be very effective  Specifically, none agreed with the statement that "All else equal, the Fed's new plan to increase the maturity of its Treasury holdings will boost expected real GDP growth for calendar year 2012 by at least one percentage point."  However, the wording of this statement is such that someone who thought that the effect will be zero would provide the same answer as someone who thought the effect will be an increase of 90 basis points in growth.