Myths about the political beliefs of economists

This morning’s Globe includes a lengthy, very low quality article by Ira Basen on what’s wrong with modern economic research. It’s yet another repackaging of the same old ideologically-charged and technically incompetent canards, basically reducing all of economic thought to a cartoon version of macroeconomic theory circa 1980, and all economic research to mindless and/or corrupt advocacy of laissez-faire politics.

Putting aside the other ignorant attacks, let’s focus on the claim that mainstream economists advocate nothing but free market policies: the “orthodoxy” of “neoclassical, pro-market, laissez faire ideas,” as Basen puts it. Is it true that all, or even a substantial majority, of economists support laissez faire? It would be very odd if that were the case, as even Economics 101 textbooks include extended discussions of multiple ways in which markets left to themselves will yield poor outcomes. And of course it’s not at all true. A few years ago, Dan Klein and Chalotta Stern published an analysis of survey results of members of the American Economic Association, Is there a free market economist in the house? As you might guess from the title, the political beliefs of mainstream economists—even American mainstream economists—-look nothing like Basen imagines.

Klein and Stern asked economists to rate their support for various government interventions on a scale from 1 (“Strongly support”) to 5 (“Oppose strongly”). Interventions included: tariffs, minimum wage laws, income redistribution, socially provided education, interventionist fiscal and monetary policies, OSHA safety regulations, EPA environmental regulations, laws against discrimination, laws against hard drugs and prostitution, and others. The distribution of responses, for all economists and broken down by whether they reported being Democrats (58%) or Republicans (23%) (with the remainder reporting independent parties or refusing to answer). Note that in 2007 there were about 2.5 Democrat economists per Republican economist. The distribution of reported support for intervention averaged across 16 types of intervention looks like:

According to myths such as those propagated by Ira Basen, the graph ought to look very different: everyone should be piled up on 5.0, “Oppose strongly” the intervention. The overall proportion of economists reporting an average score of greater than 4.5 is less than 3%, which makes such strong support for free markets a fringe position. The overall average support for intervention is 2.67 on the 5.0 point scale, about half way between “support mildly” and “have mixed feelings.” The item responses reveal support is widespread for some policies and widely opposed for others. For example, most economists oppose tariffs to protect domestic industries ( 4.46 / 5.0 ) and most economists support laws against discrimination ( 1.76 / 5.0 ). Klein and Stern proceed to discuss a number of reasons why outsiders may incorrectly believe that most economists are strong free market supporters.

21 Comments to “Myths about the political beliefs of economists”

  1. In class today I was talking about economists’ political beliefs (“Could economists manage to form a special interest group? And, if so, what would they advocate?”). I said that the only two policies that would command consensus among economists are marijuana legalization and carbon taxes.

    Of course marijuana legalization is a classic example of the kind of neo-classical, laissez-faire, pro-market idea the author had in mind…

  2. I’d add `opposition to corporate subsidies’ to that list, yet another example of the sort of pro-business bias of which we stand accused.

  3. It is true that most people who criticize economics don´t know economic theory, but the million dollar question is why people, in general, do think that economics is right wing propaganda (generally, the right as well as the left think so – the extrem right excluded).

    The answer surely can´t be that everyone, except economists, are stupid. Klein and Sterns hypothesis that economists are relatively right wing also seem kind of bizarre – I work in academia and I still don´t have any idea about the general political beliefs of e.g. biologists, so I could not make that comparison.

  4. Klein and Stern list a number of reasons people why people may tend to draw the wrong conclusions about economists. I will merely try to point out again that economics isn’t actually all about politics: just like you, I don’t have any idea about the general political beliefs of most of the people with whom I have worked, even my coauthors. It just doesn’t come up; it isn’t relevant.

  5. “but the million dollar question is why people, in general, do think that economics is right wing propaganda”

    If that thinking is incorrect (and I agree it is incorrect), then perhaps it is the public face of economists that is the problem. Certain beliefs about how the economy behaves (i.e. lowering taxes will reduce deficits) might be wrong, but they are commonly advanced by well-funded interest groups and those groups have spokespersons who at least pretend to be economists.

    Are those spokespersons able to get away with that because of the ignorance of the public, or do they get away with it because the consensus amongst economists themselves on such issues is weak?

  6. Most economists are not the caricature the public think we are. But the influentials are. By influential, I don’t mean Krugman,Stiglitz or DeLong. I mean those at the banks, Finance or Treasury, the Geithner crew…. And even more, those the public think they are econom,ists. The pundits, editorialists,commenters.
    A guy at a large newspaper who was telling me in a private exchange that he was ” a humble municpal commenter” and then went on writing a long article about the “magical thinkiing of Keynesianism”. Another, recently retired and well respected in business circles whose colums were used as homewok by Queec college teachers ( find the errors..5 points each).
    As long as people think of Kevin O’Leary as an economist…

  7. To repeat myself: Are those spokespersons able to get away with that because of the ignorance of the public, or do they get away with it because the consensus amongst economists themselves on such issues is weak?

    So you are saying its the public’s ignorance that is the problem, not a lack of consenus amongst economists?

  8. Richard, it is normally a mixture of both. But the spokespersons do not seem to be able to understand the difference. There are many areas where there is a near consensus amongst economists, such as on taxing or otherwise pricing greenhouse gas emissions, but the public does not realise this because of the spokespersons poor communication.

    Economists should probably do more to correct the misunderstandings, but most economists I know will only try once or twice and then give up in the face of seemingly willful ignorance.

  9. Economists oppose minimum wage laws and rent controls. They accuse virtually all taxation of causing deadweight losses to the economy. They support unrestricted free trade. These positions can be found in virtually every freshman textbook.

  10. see this by Mark Thoma where economist went wrong in the public debates
    http://publicsphere.ssrc.org/thoma-new-forms-of-communication-and-the-public-mission-of-economics/

  11. To someone at the extreme left, any acknowledgement that markets could do anything better than the government is seen as extreme laissez-faire. When you consider that most reporters are left (93% of Washington correspondents reported voting Democrat), even centrist views might seem far-right to them, especially if most of their friends are other leftist reporters.

    If Klein and Stern had included “nationalisation of the oil industry” on their survey, the response would have been close to 5, and Ira Basen could say, “See! That’s what I’m talking about!”

  12. “When you consider that most reporters are left (93% of Washington correspondents reported voting Democrat), ”

    Democrats are ‘left’??? Of course, most Republicans these days seem to view policies widely accepted 20-30 yrs ago (even by people like Reagan) as anathema. What was centrist then is viewed by Republicans as wild-eyed communism today. Can you give us some examples of ‘lefty’ reporting from the mainstream Washington media?

  13. Chris, I noted that you failed to respond to many points in the article, which I thought were quite cogent. Indeed, the people the article cites who are critical of the economics profession are highly respected economists themselves, not anti-intellectual rabble as you seem to suggest.

    Why did mainstream economists completely fail to see the 2008 financial collapse coming? Isn’t it interesting that it was the unorthodox economists who did? (e.g. Stiglitz, Krugman, Keen, Baker, etc…)

    What is your response to economic historian Philip Mirowski’s claim of the “homegenization of economic thought”.

    Prof. Mirowski, who is co-writing a book on the history of the [Nobel] economics prize, notes that throughout the 1970s and 1980s, economists whose work supported neoclassical, pro-market, laissez-faire ideas won a disproportionate number of those honours, as well as support from the increasing numbers of well-funded think tanks and foundations that cleaved to the same lines. People who rejected those ideas, or were skeptical of the natural sciences model, were quickly marginalized, and their road to academic advancement often blocked.

    What of the disturbing conflict of interest problems in the economics profession regarding its relationship with the finance industry as highlighted from the documentary “Inside Job”?

    What of economist Perry Mehrling’s claims regarding uncritical acceptance of efficient-markets and rational-expecatations theory?

    Perry Mehrling, a professor of economics at New York’s Columbia University, is the chair of the curriculum task force at INET. He says his graduate students at Columbia are growing increasingly frustrated by at the tendency to define the discipline by its tools instead of its subject matter – like the students in Paris a decade ago, they find little relationship between the mathematical models in class and the world outside the door.

    Prof. Mehrling believes that economics education has become far too insular. Never mind cross-disciplinary study – even courses in economic history and the history of economic thought have all but disappeared, so students spend almost no time reading Smith, Keynes or other past masters.

    “It’s not just that we’re not listening to sociologists,” Prof. Mehrling laments. “We’re not even listening to economists.”

    He says he has no problem with teaching efficient-markets and rational-expectations theories, but as hypothesis, not catechism. “I object to the idea that these are articles of faith and if you don’t accept them, you are not a member of the tribe. These things need to be questioned and we need a broader conversation.”

    What do you make of the creation of the World Economics Association (as an alternative to the AEA) and the new Institute of New Economic Thinking which were formed to challenge existing mainstream neo-classical economic paradigms? Hundreds of respectable economists and other academics have signed on to back them.

    As I mentioned, it was unorthodox economists who who saw the 2008 crisis coming as opposed to mainstream economists who enabled it. See the Revere and Dynamite Prize in Economics from the Real World Economics Review blog:
    http://rwer.wordpress.com/2010/05/13/keen-roubini-and-baker-win-revere-award-for-economics-2/
    http://rwer.wordpress.com/2010/02/22/greenspan-friedman-and-summers-win-dynamite-prize-in-economics/

    If unorthodox economists got it right on a prediction of enormous economic impact, and the mainstream economists were completely blindsided, can you see why our skepticism is justified? The economics profession does need a significant overhaul. I’m encouraged that the WEA, INET, Real World Economics Review and other forward-thinking organizations/journals are leading the way.

  14. INTP: This piece addresses the demonstrably wrong and anti-intellectual notion that economists are generally rabid laissez-faire ideologues. It isn’t a point-by-point rebuttal of Basen’s 3,000 word essay.

    Your points hinge on one issue: macroeconomic forecasting. It may surprise you to learn that macroeconomics is a relatively small part of economics, that forecasting is a relatively small part of macroeconomics, and that macroeconomic models tell us we should not be able to make such forecasts. You might note the strangeness of showing up on a health economist’s blog to chastise economists on macroeconomic forecasting.

    You should actually read some mainstream economics. Try economists like Joe Stiglitz and Paul Krugman, who are mainstream economists, not “unorthodox.” You will find the same methodological approaches in their papers as you do in other mainstream research. If you did even more reading you would find that mainstream economics evolves over time due to criticism and advances from within. It’s been many decades since what mainstream economists do could reasonably be described as “neoclassical economics,” that antique term is now largely just an internet pejorative. Modern mainstream economics is methodologically diverse, heavily empirical, and problem-driven.

    The self-styled fringe has never contributed anything of note to economic thought and is definitely not “leading the way” now. I know that won’t have any resonance coming from an evil mainstream economist like me, but for a Nixon-goes-to-China approach you might try reading Herb Gintis on the folks at the “real world economics review” (or whatever name they’re going by these days). Gintis is famously a long-time critic of mainstream economics, but his criticism is competent, informed, and always made with an eye towards advances rather than merely whinging about technicalities.

  15. Highlighting the conclusion of Herb Gintis’s piece cited immediately above:

    I am frankly saddened by the vapidity of the post-autistic economics movement. Who cares how hard the courses are? So what if you have to work a little? Why do you have to read Keynes in class. Are you incapable of reading him at home?

    What is the goal of this movement? It seems that the answer is: it has no goal. It is just a bunch of people fussing because the courses are too hard, and hoping for an alternative that would make the life of the economist more like that of the armchair philsopher, or the social critic who wants to get paid well for issuing arcane philosophical critiques of capitalism from the halls of academe, offering nothing in its place.

    Serious critics back up their criticism with an attempt to develop serious alternatives. Moreover, it is not just the post-autistic community that is disenchanted with received wisdom in microeconomics. The smartest young economics in each of the past four or five generations have revolutionized economic theory by developing alternative that have been incorporated in the contemporary economist’s toolbox. It is the kiss of death to listen to the nay-sayers, prominent in this book, who claim that all the Nobel prize winners in economics are worthless, that all new theory is just old wine in new bottles, and that the current body of economic theory is completely without merit. It is also the kiss of death to listen to some critique who claims we should immerse ourselves in the writings of dead old f-rts for inspiration.

    Note that Ira Basen’s research on academic economics doesn’t appear to have extended beyond reading the “post-autistic economics” web site (now apparently the “real world economics review”), which contains the same sort of material on which Gintis is commenting.

  16. Just a few comments.

    [blockquote]You should actually read some mainstream economics. Try economists like Joe Stiglitz and Paul Krugman, who are mainstream economists, not “unorthodox.”[/blockquote]

    Indeed I have tried them, and they don’t appear to have a very flattering opinion of the economics profession:

    “How did economists get it so wrong?” by Paul Krugman
    http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=all

    “Needed: a new economic paradigm” by Joseph Stiglitz
    http://www.ft.com/intl/cms/s/d5108f90-abc2-11df-9f02-00144feabdc0,dwp_uuid=73adc504-2ffa-11da-ba9f-00000e2511c8,print=yes.html

    The Globe and Mail article cited Stiglitz and Krugman.

    [blockquote]The self-styled fringe has never contributed anything of note to economic thought and is definitely not “leading the way” now.[/blockquote]

    It’s the “self-styled fringe” that saw the 2008 financial crisis coming as opposed to mainstream economists who were “obsessively playing Grand Theft Auto while the world around them was falling apart” as INET economist John Kay put it. Sounds like they made a pretty powerful contribution to me. If you mean “never contributed anything of note to economic thought” equivalent to ” never published in major economic journals”, I think the following interview with James Galbraith explains that:

    “The Politics and the Sociology of the Economics Profession – James Galbraith”
    http://ineteconomics.org/video/conference-kings/politics-and-sociology-economics-profession-james-galbraith

    Galbraith makes the point that “many economics institutions (especially journals and academic departments) are hierarchical and tribal by nature, and that sociology can exclude dissident views.”

  17. Another thing. You said:

    It’s been many decades since what mainstream economists do could reasonably be described as “neoclassical economics,” that antique term is now largely just an internet pejorative.

    You will have to tell the University of Notre Dame Department of Economics that.

    http://economics.nd.edu/about/

    We are a neoclassical economics department committed to rigorous theoretical and quantitative analysis in teaching and research. Members of our department have specialties in the areas of micro and macro theory, econometrics, labor, monetary, international, and environmental economics.<

  18. INTP, you ignored everything I said and just repeated your initial points.

    If you limit your readings in economics to anti-economics screeds, you’re going to come away with a very odd understanding of what economists do. If you have any genuine interest in the subject, please make the effort to learn something about it.

  19. I love this post I’ve read it a few times. I also skimmed the article by Dan Klein and Chalotta Stern. I was wondering what your take was on the part where they tried to explain the distribution on their graph partly on the basis that economists don’t know their own science and that in fact most expert findings do on individual questions support deregulation.

  20. Myths about the political beliefs of economists, as well as climate change scientists, are promulgated by the political machines and their media influence — not to mention corporate interests that sponsor “research” that supports their lobbying efforts.

    Hello?

  21. Tyronen: “They accuse virtually all taxation of causing deadweight losses to the economy.”

    Virtually all taxation DOES cause deadweight lossses to the economy. That criticism is like criticizing all physicists for believing that apples fall down. It’s probably true, but it’s not a terribly pursuasive criticism of physicists (frankly, I’d be worried about the physcist who suggests they don’t).

    Note, that isn’t to say that mainstream economists are anti-tax. They are generally very keen on taxes that DON’T cause deadweight losses (carbon taxes, pigouvian taxes, anyone?), and they generally recognize that while taxes cause deadweight losses, they also have benefits (i.e., they finance public services which would otherwise be under-provided by the market, they help finance welfare improving redistribution, etc.). Recognizing the reality that most taxes DO cause deadweight losses doesn’t mean you shouldn’t levy taxes, that’s a judgement call about . It does mean that those costs should be taken into account in deciding to levy taxes, or in deciding which taxes to levy. Not recognizing that point is a recipe for disastrous tax policy.

    Case in point, one of the reason why the scandinavians can fund their social safety net is because countries like Sweden generally raise a good chunk of their income from taxes with relatively low deadweight costs (i.e., taxes on employment income, value-added taxes on consumption, etc.) and a relatively small chunk of their income from taxes with high deadweight loss (i.e., taxes on capital). In contrast, the US raises (or tries to raise) a good chunk of it’s revenue from taxes with high deadweight loss (corporate income tax, taxes on investment income) and raises very little revenue from low deadweight loss taxes (the US doesn’t have a VAT). End result: With existing tax systems, the Swedes can raise a ton of tax revenue without wrecking their economy (quite the contrary, Swedish businesses are highly competitive), the US can’t (and that’s not a coincidence – inefficient taxation is a means of keeping government small.). Is the fact that Sweden follows the sensible advice of pretty much every professor of public economics make it a bastion of right-wing economic thought? Does the fact that most professors of public finance (regardless of their political pursuasion) look at the US tax system with despair, mean that the US is a bastion of raving socialists? Or is it evidence that in financing your social welfare system, it pays to take the advice of experts who know what they’re talking about.

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