Source: NPR
Episode 452: How Much Should We Trust Economics?
April 19, 201310:30 PM

Category: Really, really bad calls, Taxes and Policy, Video

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “How Much Should We Trust Economics?”

  1. dsawy says:

    First of all, we should quantify what we mean by “economists.”

    Macro-Economists (and macro-economics) should not be trusted at all. Most of this part of the field is outlandish nonsense.

    Specific trade, market segment or field-specific economics have some actual useful results and predictive skill. I’ve dealt with agricultural economists who were very skillful in their predictions and analysis of specific ag commodity or trade issues.

    But macro-econ? What a load of hand-waving BS.

    The larger problem for the entire field is that the practitioners are not “professionals” in the legal sense that doctors, surveyors, lawyers, CPA’s and professional engineers are ‘professionals.’ There’s no licensing or verification to insure a minimal level of competence. There’s no way to hold economists, who are by and large academics, accountable for their mistakes, outlandish lies and simple BS. This results in mistakes, BS and nonsense being promulgated as policy advice and “conventional wisdom” that leads a lot of people (and perhaps entire countries) down blind alleys, dead ends and into very poor decisions.

  2. The Window Washer says:

    I’m dying laughing when it hit the Elvis song.

  3. RW says:

    The answer is deceptively simple on its surface at least: You probably don’t know enough economics to assess validity so you should probably trust economists in the same way you trust bloggers; they possess acknowledged expertise and, whether they say what you like to hear or don’t, they tend to shoot straight more often than not and they acknowledge error or flaw when they commit it.

    • RW says:

      Oh yeah and lack of association with Pete Peterson, the Koch Bros, Heritage Foundation, et al is probably a reasonably fair indicator too.

  4. ilsm says:

    The uninitiated cannot tell the snake oil.

    Media economists sell austerity as economic theory, cooking their “data”, work for Humbug Factories.

    Corporate funded humbug is not new: Federation for Economic Education dating to the 1940′s.


  5. pdzxc says:

    I have an idea how the poor professors feel. Part of my job involves forecasting sales, costs etc. I recently made a somewhat sizable mistake due to a dumb spreadsheet error. I quickly ran the mental calcs that I’ve learned from experience – is the error small enough relative to the other numbers, or are the numbers changing fast enough that I can let the air out of my error slowly over time? And other such calculations that people who earn their living using spreadsheets are surely familiar with. Some people are surely wondering why world class professors like this don’t have some brown-nosing grad student check their work. I didn’t. I wondered why they don’t make it a policy to update their work often, so they have a back door when errors like this inevitably occur. My recent error has nearly been corrected – just a few more weeks of correcting course and it will all be a thing of the past. Maybe I should offer the professors some tips on how to survive spreadsheet errors.

  6. wisegrowth says:

    If you need statistics to show a principle of economics, it is never as good as having a basic solid equation. In my research, I only use basic mathematics to develop relationships between the concepts. Then I look to see if the data support the equation. It is always nice when the data leads me to another truth.
    Economics is real and good. You just need good powerful equations based on principles, not statistics.

  7. Carl C says:

    Science isn’t easy, and scientists are often wrong.

    This is a reality that many in media choose to ignore, but its obvious if you pay attention. Every day we see the latest “do this and you’ll live longer” claim, which most of us have learned to take with a grain of salt. When our doctor tells use we have cancer, we go get a second opinion. Similarly, economists and physicists read the first reports of a new phenomenon with skepticism. And rightfully so – a disturbingly large percentage of new research findings are eventually overturned.

    But this is not an indication that science is ‘broken,’ or that scientists have failed. The fact is that science is so hard that even the best and brightest among us don’t get it right every time. And they know it. So they submit their work for peer review, then publish it for an even wider audience. Their peers publish ‘opposing’ papers refuting their work. It often takes decades and tens or even hundreds of research papers before the field comes to a consensus on an issue. Reinhart and Rogoff is likely to be a similar battle, in which Herdon, Ash, and Pollin is only the first volley.


    BR: The topic at hand is not science, but economics. Learn the difference if you want to post comments here.

  8. RW says:

    Jonathan Portes pitches in and I agree:

    Which (macro)-economists are worth listening to?

    This is a fair question. My answer to it is that policymakers and the public should listen to economists who fulfill two critera: first, they have made empirically testable predictions …that have proved, by and large, to be broadly consistent with the data; and second, they base those predictions on an analytic framework (not necessarily a formal model) that is persuasive. In other words, getting it right alone is not enough; it should be possible to show your workings – to explain why you got it right. Otherwise, your predictions may be interesting, but they tell you little about how to formulate policy.

    My shortlist (apologies in advance to those I’ve omitted) of economists commenting on macroeconomic policy who I think qualify is something like the following: Krugman, Delong and Wren-Lewis on fiscal policy… Adam Posen on monetary policy… Paul de Grauwe on sovereign and eurozone debt… Martin Wolf on private sector savings and public sector deficits… Richard Koo on the implications of a “balance sheet recession”…. [E]ach have clear analytic frameworks for thinking about the economy, and have used them to make empirically testable claims; and have largely been vindicated….

    NB: Those who have been paying attention know that some schools of macroeconomic thought (and some economists) have proven significantly more reliable than others. I have mentioned before how fortunate (I mean literally, it not only made me money it prevented some bad mistakes) I was to stumble upon Paul Krugman’s original (1999) “The Return of Depression Economics” during a long airport layover circa 2001.

  9. Biffah Bacon says:

    I think R&R are not important as economists in the sense that they are accomplished econometricians with a track record of apt and accurate predictions. They are proscriptive authority figures designed to appeal to market demographics who are impressed by certain social cues. Ivy league male lead, bald, glasses, tweedy, sells the product. State school woman, matronly but not unattractive, sweetens the hits. Parent like figures posturing with an air of pleasant authority and a “plausible, sensible” outlook with enough obfuscated number manipulation to make it pass shallow review.

    Ward and June tell Wally and the Beaver that there will be no after school snacks nor lunches until their grades improve; they shrug and accept this pronouncement because it must be their own fault somehow.

  10. RW says:

    Brad DeLong expands upon Jonathan Portes’ piece on (macro)-economists worth listening to.

    Marking My Beliefs About Which Economists Mark Their Beliefs to Market to Market

    Jonathan came up with a small …whitelist of economists whom one should presume are to be taken seriously–because they have a coherent framework for looking at the world, and have broadly been correct in their forecasts since the world changed in 2007. …

    And he sets forth a very small greylist of people whose analytical framework is neither clear nor transparent: …

    And he presents a blacklist of institutions: …

    But he does not present a blacklist of individuals–a list of economist-goats, of people using a badly-flawed framework who have been repeatedly proven wrong since 2007 and have failed to mark their beliefs to market, …He suggests that readers come up with such a list.

    So here is my start: …