This is from a fascinating blog at the NY Times by Princeton Economics Professor Uwe Reinhardt. He writes frequently about health care, but this excerpt is from his recent remarks about now economists frequently bias their statements and products based on a mix of who is paying them and on their personal ideologies.
He "explains how easy it is for economists to infuse their own ideology – or that of their clients – into what may appear to outsiders as objective, scientific analysis."
Caveat Emptor!
"Writing in The New York Times, for example, the Harvard professor N. Gregory Mankiw, former chief of President Bush’s Council of Economic Advisers, makes a case for stimulating the economy through tax cuts rather than added government spending.
First, he suggests that government usually spends money on things people do not want or need – like bridges to nowhere, or digging ditches and then filling them in again. To buttress his case further, he then cites an empirical study by Valerie A. Ramey, according to which the $1 of added government spending will ultimately increase gross domestic product by only $1.40, while according to another recent study by Christina and David Romer, $1 of tax cuts over time increases G.D.P. by $3.
Noneconomists may ask, of course, exactly how a $1 cut in taxes would translate itself into a $3 increase in G.D.P. at a time when traumatized households, whose wealth has been eroded, might use any new tax savings merely to pay down debt or rebuild their wealth through added savings, rather than spend it, and when businesses unable to sell their output even from existing capacity might hesitate to invest such tax savings in more capacity.
But never mind this fine point.
More interesting is that Christina Romer is to be the head of President-elect Barack Obama’s Council of Economic Advisers. In that capacity, last Saturday she released an analysis of fiscal stimulus alternatives, with a co-author, Jared Bernstein. Curiously — or perhaps not — for that analysis, the two authors assume a much larger four-year multiplier effect for added government spending (1.55) than for tax cuts (0.98), although they do confess to a high degree of uncertainty on the actual sizes of these multipliers.
So there you have the flexibility, shall we say, that economists enjoy when they apply their professional skills to affairs of state in what may seem, to outsiders, like purely scientific analyses.
In the first lecture of my freshman economics course at Princeton titled “The Art of Siffing Among Seasoned Adults,” I demonstrate how seasoned adults routinely structure information felicitously (i.e., “sif”) to further their own agenda, and I point out that economists can be among the most skillful practitioners of this art.
“If at the end of this course you still trust me,” I warn them, “I have failed in my mission. When economists advise on public policy, the operative mantra is Caveat Emptor!”
1 comment:
Without reading this article I know his point is absolutely true. But it's not only economists! Add NEWS reporters, JOURNALIST, SCIENCE itself, and especially most HIGHER education institutions as a whole, and PUBLIC INTELLECTUALS.
They have all lost touch with what their basic jobs require. Their primary roles are not to change minds. They are supposed to help the masses FULLY understand the issues at hand so that WE can make our own decisions. Sure, they may give their opinions, but not until they have provided clean, clear, honest, reliable information that WE can use to make up our own minds. We also want to know where they come down on the issues in the end, so sure they should inject their opinion too. But that's the LAST part of their jobs. They all need to become more radically moderate in the lions portion of their occupations.
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