Sunday, May 22, 2011

Lies, Damn Lies and Empirical Evidence

In a comment at Crooked Timber, John Quiggin stated:
Most economists would regard it, on the basis of the empirical evidence, as being generally true for employment and generally false for energy.
Now, "most economists" is an empirical claim. Are there any survey research data backing the statement? The Sandwichman is skeptical and frankly finds the "most economists regard" formula somewhat suspect. Here is a list of things economists agree on Greg Mankiw published a few years ago. It is based on "various polls of the profession."
  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)
A few years earlier Robert Whaples published a similar list with some overlap. The thing about both of these lists is that they don't specify to what degree the generally agreed upon views were based on empirical evidence. See "most economists agree that a minimum wage increases unemployment among young and unskilled workers."

Or, in the Whaples survey "most economists agree that gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged" and "the best way to deal with Social Security's long-term funding gap is to increase the normal retirement age." I'm sure that's based on "empirical evidence" -- a selective interpretation of selected evidence.

Anyway, here is a collection of various things "most economists regard":
Most economists regard price as the driving force in the marketplace. Most economists regard division of labor and globalization as strategies that can continue to be expanded far into the future. Most economists regard monopoly as an exceptional case in a modern economy. Most economists regard competitive markets as the ideal type of market for economic activity. Most economists regard the free market as the best mechanism for allocating… Most economists regard their discipline as a science; since, in the common understanding, physics is the best developed of the sciences, economics ought to… Most economists regard deflation as bad news. Most economists regard this as highly unlikely. Most economists regard the general equilibrium approach as highly controversial for business cycle analysis. Many, if not most, economists regard the Paretian optimum as almost self… Most economists regard the spending spree that Americans indulged in throughout the postwar decades as an unambiguous blessing, on the assumption that more… Most economists regard the end to deflation as important for economic growth, although the Japanese economy has managed to achieve mild… Why, then, do most economists regard immiserizing growth, where growth actually hurts the growing country, as unlikely in practice? Somewhat inexplicably, most economists regard evidence about expectations drawn from public opinion surveys as scientifically contemptible… Truth be told, most economists regard Homo economicus as a useful approximation to plug into their models, not a representation of how… Most economists regard high unemployment and low income as distinct problems, arising out of different sets of causes and requiring different policies and… Significantly, however, the conference did not address the issue that if most economists regard the history of economics as unimportant, perhaps historians… Most economists regard this crisis as the worst for farmers since the 1920s and 1930s. Most economists regard free trade as largely positive because it reduces the need for domestic subsidies, encourages formation of capital investment… Most economists regard that method, called the payroll survey, as more reliable and comprehensive than the bureau's household survey… Most economists regard this as very unlikely, as long as… But most economists regard a substantially higher unemployment rate as appropriate, at least for now, because they believe so low a rate would mean… Most economists regard the formation and accumulation of capital as essential for industrialization. Most economists regard exchange markets as highly efficient, but information is costly, and some interval must pass between the receipt of new information… Nevertheless, most economists regard bribery as a bad thing because it encourages rent seeking behaviour. Most economists regard the problem of job creation mainly as a matter of encouraging more employment with the existing stock of capital…

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