Four Economists Come Together to Say ‘We Agree’

by Claudia Goldin, William Nordhaus, Richard Schmalensee and Anil Kashyap

Bloomberg
January 5, 2012

“If you laid all the economists in the world end to end, they still wouldn’t reach a conclusion.” This old joke still works because it reflects a common belief that economists can’t agree on anything important. Yet the four of us are part of a project that we believe will demonstrate that this proposition is wrong.

Each week since late September, along with 37 other economists at top universities, we have been answering questions on major public policy issues. These include the predictability of the stock market, the best design for health insurance and the effect of China’s managed exchange rate. You can find our answers (and sign up to be notified of future poll results) here.

Why are we taking the time to do this? Although we can’t speak for the other distinguished panelists, the four of us are tired of seeing our profession’s views misrepresented in policy discussions.

We think there are two main reasons for the distortions. The first is the conventions of journalism itself: Although there are notable exceptions, most journalists have limited training in economics, and those who edit the articles often have even less. Hence, out of an understandable but misguided sense of fair play, there is a bias toward wanting to show both sides of an issue. When, for example, an economist tells a journalist the equivalent of 1+1=2, the writer, in an effort to provide “balance,” will often include a quote from someone who says that 1+1=3.

Second, editorial boards don’t want wishy-washy, hedged opinions. As a result, op-ed pages are more likely to publish someone advocating an unequivocal position than someone who offers a more nuanced argument. This favors fringe views. A position that sounds new, yet is completely untested, is all the more enticing to editors, so long as it appears to challenge mainstream views.

We don’t claim that there is research-based consensus among economists on all important policy questions. But even when there is broad agreement (say, 1+1=2), the news media rarely makes it clear that such a consensus exists.

To overcome this problem, we rely on a phenomenon that is often called the “wisdom of crowds” effect. It is based on the observation that the collective judgment of a diverse group of people about a question is almost always better than the answer of any single person from the group. (Think of the accuracy of the “Ask the Audience” lifeline in the game show “Who Wants to Be a Millionaire.”)

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