When economists disagree

by Russ Roberts on July 30, 2007

in Economics, Podcast

In the latest EconTalk, I talk with David Henderson about whether it’s reasonable to presume that economists agree on various issues such as the minimum wage, trade, the causes of growth or the sources of inflation. I used to agree with David that in the area of microeconomics, there is much more consensus than in macroeconomics. Lately, I’m not so sure. At the end of the conversation, I raise the issue of incentives. As the market for talking economists has expanded, I believe that economists do more talking and that the reward for taking polemical stands has increased.

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Dale July 31, 2007 at 7:39 am

If what your saying is that you can find an economist to take your side of the argument (whatever it is), I could have told you that 20 years ago. All you had to do was observe any debate of any economic issue and you could see that both sides had trotted out an "economist" as an "expert".

tw July 31, 2007 at 8:58 am

I thought there was more depth to this conversation than Dale.

The main point of interest to me was how ideology may be trumping economic theory more and more among some economists, and how the increased communication channels (TV, radio, newspapers, Web, etc.) could be contributing to this trend.

Of course, I thought back to one point at the beginning of the podcast, where it's often the case that one economist's viewpoint is often 'balanced' by a journalist who finds a non-economist (union, thinktank, etc.) to argue the opposing viewpoint, focused on the results rather than the economic theory.

tiger July 31, 2007 at 9:48 am

Your point about ideology was right on and disturbing to me. I am an idealogue of the conservative, traditional and somewhat libertarian stripe. But, I fall on it whenever it suits me, even in an economic discussion. Your example about raising gas prices being an economic disincentive is but one idealogical battlefield. I think it's best not to mess with any prices either by market restrictions or the raising of taxes. But, it does provide a negative economic incentive to use less gas if you tax it more. Ideology aside that is economics. Sometimes I hate it….usually I love it though.

Lee Kelly July 31, 2007 at 1:45 pm

The problem is that libertarians are too easily sucked into the utalitarianist game, and suddenly the whole argument is about some vague and impossible to measure "common good."

I frankly couldn't care that the market doesn't always produce some arbitrary outcome that some suppose ideal, such as equality of wealth or better overall health. In fact, it largely misses the point of personal liberty altogether.

indiana jim July 31, 2007 at 1:45 pm

I think that academic economists make some of their greatest contributions when they are arguing about ideas in print. For this reason, I am saddened by the massive declines in the numbers of (and percentages of) pieces published in major journals that are comments, replies and rejoinders.

And for this reason, I am gladdened by blogs and by Dan Klein's Econ Journal Watch, a forum where economists go toe to toe in print.

Nathan Bowers August 3, 2007 at 2:23 pm

Excellent podcast. I highly recommend Henderson's book The Joy of Freedom. In one passage from that book that relates to this podcast he talks about how his boss Herb Stein (who knew better) went along with bone headed price controls.

I would imagine that being in power is even more corrupting than being on Fox News.

Mala August 28, 2007 at 10:21 pm

I din't understand the discussion around the minimum wage debate. Surely, some of the decrease in the consensus – the fact that only 74% of economists agree about the effect that increasing minimum wages has on employment – is because we've learnt over this period, that adjustment costs matter a lot. So firms, anticipating minimum wage increases, adjust well before the increase is implemented. So at least some of the lack of empirical evidence on this issue, is because of methodological reasons – if you simply do a difference-in-difference type of analysis, without taking account of the dynamic aspects of firm decisions, then you're unlikely to find any effect. Surely, some of the lack of confidence around this issue is because of this patchy empirical evidence.

Kenneth Duran December 18, 2007 at 1:48 pm

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