economics experts examples

economics experts examples

The Impact of Economics Experts: Case Studies and Analysis

1. Introduction to Economics Experts

Economics experts play an important role in the formulation and implementation of government policies and the behavior of economic actors. However, relatively little work has been done to evaluate the impact of economics experts on government economic policy decisions and the real-world economy. This paper examines the ways in which economic experts exert influence and impact in the policy and real-world spheres and introduces readers to a new experimental methodology that is being developed to shed light on these important questions. Economists and government officials participating in a first conference organized by the initiative have undertaken to implement planned experimental surveys.

The contributors to the conference’s background paper prepared these remarks. “Experts” are sometimes the repositories of inconvenient truths: it was their “politically incorrect” vociferations about the state of the climate that drew attention to global warming. Economic experts can fulfill a similar role when they cast doubt on prevailing economic wisdom. They do this through speeches and interviews, the publication of popular articles and academic papers, and the writing and revising of textbooks. In this and other ways, economic experts continuously shape and express concerns and varying diagnoses about the evolution and performance of economies. Not all economic contributions convey “truths” known to their authors. Mauss (1994) has shown that, particularly when dealing with ambiguous questions, experts are often motivated to “obfuscate” rather than to illuminate the choices facing the government.

For other economic experts, policy advice is a business, and the quality of the different expert products can be found by watching the evolution of their prices. “Truth-telling” seems exclusively to affect their reputation, the “profits” they earn on their current portfolio of government and corporate customers, and the number of future customers. Some experts, in sum, earn their living by producing hidden or concocted information that weakens economic policy to the advantage or profit of government or corporate customers and, sometimes, to their own. How then can we distinguish “economic experts” that are not totally dedicated to truth-seeking from “bogus experts” apt to serve their self-interest first?

2. The Role of Economics Experts in Policy Making

Why are economics experts used in policy-making? The decision-making environment of policy analysis is not like that of newspapers, where almost anyone is free to express an opinion. In newspaper discourse, the possibility of publishing counter-arguments leads to wide representation of different opinions. Ideas make their way through a process of natural selection, and the soundest policies emerge on average. Positions that receive a consensus from well-prepared and informed experts all concentrate on the focus of the democratic decision, but the absence of other interests plays a counter-consensus role. Purposive opinion-making is a different matter. All interested persons receive a voice, and rationality of expressions should be the key to the outcome. If we take a decision-maker our raw opinions, we are like any other person in the street or flying into space without a spacesuit.

The decision-maker, on the other hand, is faced with hard questions, and the advantages of advice have to come from considerations of natural selection. If one is not knowledgeable, very few ideas can leak out, and the large cornucopia of uncertain predictions makes it easier for interested actors to select only what is favorable for their purposes. Product-oriented collusion may lead to a different outcome. In the context of purposive expression, the possible expert collusion scenario is given. But suppose, for the sake of argument, that somehow a selected group of well-informed persons is presented with a useful set of arguments on all sides of a dispute. These arguments are certainly of their own type. They are different, in that a referee function is envisioned. The message should be clear at this point: expertise is viewed as something like the result of journal articles that have gone through a refereeing process. Rather than representing each individual contribution, expert discussion is conceived more as the progress of economic science itself in action.

3. Economics Experts in Academia and Research

This chapter addresses the roles of knowledge production, scientific research, and expertise in universities and related non-profit research organizations like think tanks, management science research organizations, and social science research organizations. Using a problem-based approach, the chapter identifies the major tasks researchers and experts may need to know and deal with in imparting knowledge and understanding concerning growth, business cycles, productivity, real exchange rates, and market-based economic policies. In our problem approach, several stylized scenarios are developed with the goal of arriving at some generic conclusions, as well as developing policy insight in market policymaking.

This section attempts to define the important avenues of potential glass houses in which researchers live or work. The issues identified are broad and provide a first step in laying out a significant set of areas for empirical tests and areas requiring interpretation and constructive design. The sections define the players in an academically oriented economic research department, the collegiality of the fellow researchers, research partnerships, students and research assistants, grant-giving institutions, faculty alumni, as well as scientific and expert failures, limitations in understanding policy decisions, consulate processes that may come into play, and the outcome of specific policies. These areas are defined as close to the decision process, and then a reverse engineering process is applied to optimize outcomes.

4. Economics Experts in the Private Sector

When David Card of the University of California, Berkeley, shared the 1995 John Bates Clark Medal of the American Economic Association, one of five economists in a row to do research jointly with Janet Yellen, the most important event for him was not getting the medal, but “seeing business people spring from their seats to hug Yellen.”

It’s a great little story because it underscores what many observers know but still often forget: Research is a team effort, especially in fields as complex as economics. Yellen’s teaching and Card’s research findings – they discovered that modest increases in the minimum wage have no appreciable effects on employment – have made her work, and that of another staunch and vocal opponent of the state of California’s anti-immigrant Proposition 187, “a Johnny Appleseed,” according to Card, of practical and useful knowledge.

The high regard many economists enjoy in the corridors of power has as much to do with their constant reassessment of evidence – altering their conclusions with it – as with the integrity the conclusions suggest. This makes them coveted consultants, particularly in businesses that repeatedly make public decisions laden with social ramifications. Brown & Williamson, the cigarette manufacturer, sought the opinions of experts, including Campbell, on the impacts of curbs on smoking. Google publishes lists of the lecture series that many of its highly paid workers can watch any time. The names of high-priced speakers are almost entirely professional economists. Other companies hiring economists include Microsoft, Cisco, Ernst & Young, and law firms. In the 1980s, financiers used to hedge their forecasts by assuming the occurrence of a mismatch between import costs and export prices. The no-brainer guaranteed success would allow them to get away from their bearishness. Times have changed, and markets have changed. Instead of casting about for hawkishness, companies need help with all kinds of policy issues. Said Ed O’Sullivan, a Portland, Maine independent economic consultant, “The flow of work remains steady.”

5. Conclusion: The Influence and Importance of Economics Experts

This chapter has considered a range of cases in which prominent economists played a key role in policy debates and attempted to draw some general conclusions about the role of experts and expertise in economic policy. It has shown that economists, and in particular academic economists, often play a significant and visible role in helping to shape economic policy. In some high-profile cases, academic economists apparently single-handedly drove the debate, lending empirical support for the rather more amorphous concept of academic influence as measured by citations and ongoing media coverage.

At the same time, in many of the cases, our ability to provide a complete account is limited by the available evidence. Most of the discussion is based on the public record, supported to a greater or lesser extent by interviews or other personal communications with at least one of the participants in the events described. In a few of the cases, I have relied heavily on secondary sources or previously published material. There may well be interview subjects who had quite different views of these events, as well as participants who chose to remain silent. It would be especially interesting to conduct a systematic survey of policymakers and other informed participants, asking about the role of academic economists in various policy debates and about the extent to which particular individuals were influential and, crucially, why. In any case, I hope that these case studies provide some interesting information about how economic policy debates unfold, the role that experts play, and how their activities might be influenced.