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Opinion

Economists Are Cheating Their Profession

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Many economists genuinely want to make their field more scientific — grounded in empirical evidence rather than in theory or, worse, ideology. Yet a recent article by four prominent academics demonstrates the extent to which ideology remains a problem.

My Bloomberg View colleague Justin Fox has highlighted the motivated reasoning in the article, penned by a team of conservative economists including R. Glenn Hubbard of Columbia Business School and John Taylor of the Hoover Institution at Stanford University. They argue that the current economic stagnation has nothing to do with a hangover from the financial crisis, and that policies such as lower taxes and cuts in social spending would markedly boost growth. They say this follows from objective analysis of data on past crises and recoveries.

As Fox notes, the analysis actually rests on a conveniently biased selection of data. It includes among past financial crises several moderate downturns that most economists don’t think of as crises, and rather bizarrely counts the grinding decade of the Great Depression as a “rapid recovery” from the recession of 1929.

Worse, the article projects a completely unjustified sense of certainty. “Economic theory and historical experience,” it boldly asserts, “indicate economic policies are the primary cause of both the productivity slowdown and the poorly performing labor market.” This willfully misrepresents current thinking. Economists hold diverse views on the roots of the recent malaise, and remain divided and uncertain about the fundamental causes of growth.

The authors have every right to express their views and opinions in forceful terms. But when professional economists write as experts and claim theory as a basis for their views, they also have a duty to present that theory — and other economists’ thoughts about it — honestly. Their failure to do so is “unprofessional,” as University of California at Berkeley economist Brad DeLong rightly put it. It doesn’t reflect the honest, evidence-based approach that most economists aim for.

The question, then, is what, if anything, the profession will do about it. Does it have standards? If so, can it enforce them?

Just like regulators, economists can be captured by powerful corporations and individuals, as University of Chicago economist Luis Zingales has argued. Conservatives in particular have been successful in subverting research for their own ends, especially through the creation of think tanks and by funding economists adept at disguising ideological arguments in objective academic language. Concerted efforts date back at least to the 1980s. In her recent — and controversial — book “Democracy in Chains,” historian Nancy MacLean offers billionaire industrialist Charles Koch’s backing of libertarian economist James Buchanan as an example.

How can the profession combat such capture? Zingales has suggested public shaming, following the example of media efforts such as the film “Inside Job,” which exposed a number of prominent academics for pushing the benefits of modern finance while hiding considerable income from major Wall Street firms. Among the economists scrutinized was Columbia’s Hubbard.

Shaming seems appropriate. After all, public trust is a resource from which all economists benefit. If they want to preserve it, they should draw guidance from Nobel Prize winner Elinor Ostrom. She showed that successful management of such resources typically requires an effective means to maintain group standards and values — for example, by punishing and deterring self-serving behavior among individuals within the group.

Economists who present their opinions as fact, or who misrepresent the consensus, are cheating at the expense of the entire profession. They shouldn’t get away with it.

(Bloomberg)

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