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U.S. Economy

Besides Gold, Economists Don't Agree On Much

Besides Gold, Economists Don't Agree On Much

Photograph by Robert Churchill

Professional geographers agree that you can’t fall off the edge of the world by sailing too far in the wrong direction. Economists as an academic discipline have had more trouble coming to agreement on what works and what fails in their world. Stimulus or austerity? Looser money or tighter money? The seemingly unresolvable fights in academia are an embarrassment to a profession that aspires to the gravitas of, say, chemists or physicists.

The squabbling reached a new height of awkwardness over the weekend at a major meeting in San Diego, where leading economists couldn’t even agree on whether they disagreed. Some scholars said a panel of experts organized by the University of Chicago’s Booth School of Business showed a remarkably strong consensus among top economists on key issues. Yet Paul Krugman, a Nobel laureate from Princeton University and New York Times columnist, was having none of it.

“We are, despite what the panel says, deeply divided and very, very ideological,” Krugman said. Agreeing with him was Justin Wolfers of the University of Michigan, who said “it’s crystal clear” that ideology matters on certain core questions such as the pros and cons of fiscal stimulus.

The debate occurred on Jan. 5 at the annual meeting of the American Economic Association, which draws thousands of academic economists from the U.S. and other countries. It concerned 80 questions asked of a panel of 41 distinguished economics professors at seven top universities, described by the Booth school’s Initiative on Global Markets as “a group with impeccable qualifications to speak on public policy matters.” The panel included old, young, left, right, female, male, macro, and microeconomists. Among them were University of Chicago’s Austan Goolsbee, a former Obama administration adviser, on the left and Stanford University’s Caroline Hoxby and Edward Lazear on the right.

Roger Gordon of the University of California at San Diego and Monika Piazzesi of Stanford said they couldn’t see any serious divisions in the panel based on gender, age, political leaning, or any other observable characteristic. They considered that good news for the profession. “We’re ‘social scientists’!” Gordon wrote in a slide presentation.

Wolfers said those researchers were missing the effect of political leanings by categorizing most of the group as neither left nor right. He came up with his own subjective categorization of all 41—in one case identifying a professor as left-leaning because he wore a tie-dyed shirt on his Facebook (FB) page. Using that categorization, Wolfers (a ponytailed leftie) said that even if the 41 economists on the panel weren’t cleanly split overall—they were unanimously against returning to the gold standard, for example—there were striking gaps on macroeconomic policy between what he called “Team Blue” and “Team Red.”

Krugman said the panel would have been even more divided if it had reflected the entire spectrum of academic opinion. He also said only two of the 80 questions asked of the panel got at the profession’s disagreement over macroeconomic policies. “This is a large part of what the world counts on us to do,” he said.

Then again, maybe the world isn’t counting on academic economists that heavily. Another paper presented at the same session showed that the public doesn’t see the world the way economists do. What’s more, being told what the academically “correct” answer to a question is doesn’t change their minds. Said Robert Hall, an economist at Stanford and the Hoover Institution: “The average American thinks economists are the masters of an alien religion. It’s really deeply shocking.”

Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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