Group Discussion: Should Skeptics Defer to the "Economic Consensus"?

*NOTE: I shifted this meetup from our usual time in Saturday afternoon to Sunday afternoon, since this is Thanksgiving weekend and I assume many people will be away. I'm hoping that some of our members are back in Philly by Sunday so they can attend.

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Following on the heels of our group discussion on Nov. 12th covering the philosophical issues underlying "expert consensus", this discussion will focus on the expert consensus in economics. Most skeptics favor the expert consensus when it comes to the hard sciences, but the skeptic community often splits when it comes to taking the consensus view in the social sciences.

The skeptic community also splits on the political aspect of economic policy. Polls of the skeptic community tend to show a mix of secular conservatives & libertarians who prefer free market or "neoclassical" economics, liberals/social democrats who take a "Keynesian" approach & favor a social market economy, and socialists & anarchists who oppose capitalism & take a "Neo-Marxian" approach to economics. Check out the 2014 survey results from the Less Wrong forum, a popular internet hangout for rationalists, as well as the data from a Discover Magazine article of the political orientation of atheists:

http://lesswrong.com/lw/lhg/2014_survey_results/

http://blogs.discovermagazine.com/gnxp/2012/10/atheist-conservatives-and-libertarians-are-not-rare/#.WBi1LoWcGUk

In this discussion, we'll consider how the issue of deferring to expert consensus applies to the issue of the economics. First, we'll consider whether economics should be considered a true "science". If economics is not a "science", can we simply dismiss the views of economists and argue that anyone who urges us to educate ourselves on economics is making the "Courtier's Reply"? Second, we'll consider whether ideology or incentives may distort the views of economists. Third, we'll look at how polls of economists show us some issues where there's a relatively strong consensus, and we'll deduce from this what type of economy most mainstream economists take as their best model. Lastly, we'll raise the question of whether it could be logically & normatively justifiable to diverge from the economic consensus in some cases.

I dug up as many articles as I could find on economics from skeptic blogs, and I created a bibliography of them in this meetup page's Discussion section - https://www.meetup.com/Philly-Skeptics/messages/boards/thread/50323188

In the following outline, when I cite one of the articles from that bibliography, I've followed it with the number of the article listed in parentheses. (I didn't cite all of the articles listed in the bibliography here, but they're all worth reading if you want to get an overall sense of how the skeptic community looks at economic issues.)

1. Should We Consider Economics To Be A "Science"? If So, What Kind of Science Is It and What Does That Imply?

The question of whether or not to consider social sciences to be "true sciences" has been discussed occasionally in the skeptic community. Both Michael Shermer and Massimo Pigliucci have addressed this issue and have pointed out that the social sciences may not be as "hard" as the natural sciences but they're still our best resources for understanding human society in a rational manner (7, 8 ,9).

Economics is typically classified as a "social science" because it studies human beings, and social sciences are in turn typically referred to as "soft sciences" due to having less methodological rigor, exactitude & objectivity than natural sciences like physics, chemistry & biology. However, several natural sciences that deal with large complex systems like ecology & climate science are often also referred to as "soft sciences" or intermediate between the hard & soft sciences (40). Although some economists draw conclusions from laboratory experiments on consumer behavior, most macroeconomists rely on "natural experiments" where different social groups are exposed to different conditions naturally, but the process arguably resembles random assignment and statistical controls are used to try to isolate the variables (41).

Economics spans the divide between the predictive & descriptive sciences, pure & applied sciences, positive & normative sciences, and experimental & historical sciences, although it tends to be closer to the second type in each of those pairs (42, 43, 44, 45). Adam Ozimek, an economist at Moody's Analytics, points out that aspects of the economic discipline can also be considered akin to a financial version of engineering & moral philosophy (12). To the extent that economics studies complex systems that display emergent & chaotic properties, economics can be considered a "complexity science" (46), and since despite this complexity the stakes are often high & decisions urgent, economics can be considered a "post-normal science" (47).

Adam Ozimik explains how the status of economics as a "science" should effect our level of skepticism if we're consistent: "[If] you’re going to hold economics research to an extremely high burden of proof, then you should be prepared to subject all of your beliefs to such standards. What this will leave you with is mostly weak beliefs about the world for a lot of stuff that matters to you, whether it be about medicine, history, biology, psychology, criminal justice, climate science, or economics. Maybe widespread weak beliefs are a better approximation of the truth, I don’t know, but I do know very few people do or are willing to reason like that consistently. Maybe they should. But even here the vast majority of humanity has more belief changing to do than economists" (12).

After describing how economics is a mix of theorizing & empiricism that advances slowly & fitfully, Ozimik concludes: "The point here is that in the long-run economic paradigms and methodologies are judged by their ability to explain the real world. Even if individual contributions within the field may contain what looks like un-scientific analysis, the field proceeds as a science. Yes, it is a big field, and it isn’t hard to point to parts of sub-fields that are lacking in empiricism. But to wave you’re hand at economics in general and say it’s unscientific is to diminish a lot of important and useful work by researchers who’ve spent more time thinking hard about causality and empiricism than almost anyone who would make such a criticism" (12).

2. How Skeptical Should We Be of Economists' Ideology & Motives?

There's been a recent debate about political bias in the social sciences, and two prominent skeptics have weighed in. Michael Shermer claims liberal bias in the social sciences is a serious problem (3), while Massimo Pigliucci argues it's not a big problem at all (4).

Three researchers (Zubin Jelveh, Bruce Kogot & Suresh Naidu) recently did a large-scale research project to determine whether economists’ political leanings influenced their research results. First of all, they did find that an economist’s research area is correlated with his or her political leanings - for example, macroeconomists and financial economists are more right-leaning on average while labor economists tend to be left-leaning. Economists at business schools, no matter their specialty, lean conservative. However, they did not find an indication that the ideology of economic journal editors influenced the ideology of the papers appearing in their journals. Lastly, they checked to see if economists' political leanings influenced the way they reported numerical research results from fields that have direct impacts on public policy, e.g. government spending, minimum wage, tax rates, income mobility (5). The answer was yes, but several other commentators on their research like Kevin Drum noted that the political bias was slight and there was a lot of variance in the results which indicates "real-world error bars are pretty big" and "political ideology, as far as we can tell, just doesn't explain much of the variance" (6).

3. What Does the Current "Economic Consensus" Say on Various Issues? What Type of Economy Do Most Mainstream Economists Take As The Best Model?

GREG MANKIW & BRYAN CAPLAN'S POLLS:

Harvard economist Greg Mankiw's introductory textbook Principles of Economics has a list of positions where the American economics profession enjoys a fairly strong consensus (the % is the number of economists who agree):

• A ceiling on rents reduces the quantity and quality of housing available. (93%)

• Tariffs and import quotas usually reduce general economic welfare. (93%)

• Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)

• Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)

• The United States should not restrict employers from outsourcing work to foreign countries. (90%)

• The United States should eliminate agricultural subsidies. (85%)

• Local and state governments should eliminate subsidies to professional sports franchises. (85%)

• If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)

• The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)

• Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)

• A large federal budget deficit has an adverse effect on the economy. (83%)

• A minimum wage increases unemployment among young and unskilled workers. (79%)

• The government should restructure the welfare system along the lines of a “negative income tax.” (79%)

• Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

http://gregmankiw.blogspot.com/2006/11/consensus-of-economists.html

Mankiw also mentions that Robert Whaples surveyed PhD members of the American Economic Association and it matches a lot of the above points and found widespread agreement on 3 more proposals:

• 77.2% agree that "the best way to deal with Social Security's long-term funding gap is to increase the normal retirement age."

• 67.1% agree that "parents should be given educational vouchers which can be used at government-run or privately-run schools."

• 65.0% agree that "the U.S. should increase energy taxes."

• One issue that failed to generate consensus in this survey was the minimum wage: 37.7% want it increased, while 46.8% want it eliminated.

http://gregmankiw.blogspot.com/2009/02/news-flash-economists-agree.html

GMU economists Bryan Caplan & Gary Klein had an interesting discussion a few years ago over a research project that Klein conducted where 299 economists were asked about government action on 17 policy issues, and they only showed consensus on 4 of them (international trade, prostitution, immigration & abortion) all favoring less government intervention. The other 13 issues show no clear consensus, though on 5 of them there's a trend not quite strong enough to be called "consensus" - for 2 issues (illegal drugs & gambling) it leans away from more government intervention, but for 3 others (discrimination, the EPA & public school funding) it leans in favor of more government intervention. Overall, Klein's research shows more ideological diversity among economists than other academic fields, but as he points out, "once can imagine something worse than a lack of consensus" - i.e. consensus on the wrong policies.

http://econlog.econlib.org/archives/2013/02/an_amazing_cons.html

http://econlog.econlib.org/assets_c/2013/02/klein1.html

SUMMARY OF THE UNIVERSITY OF CHICAGO'S IGM EXPERTS PANEL:

In 2011, Brian Barry & Anil Kashtyap at the University of Chicago created an economic experts panel titled the "Initiative on Global Markets" (IGM) that have been regularly polling 40 of the leading economic experts in the US on a variety of current issues in economics. You can find their poll results here:

http://www.igmchicago.org/igm-economic-experts-panel

Overall, you can see the expert consensus appears to center around a mixed economy with both free market and social welfare elements, and some government interventions are widely thought to be beneficial (e.g. a carbon tax). It's interesting to note their humility on several major issues (e.g. $15/hr minimum wage, Greece's 2015 bailout referendum), even as non-experts proclaim certainty on these same issues. Essentially, the IGM Experts Panel's rulings closely reflect the wider state of mainstream economics in the early 21st century - i.e. a mixture of "Neo-Keynesian economics" that developed in the 1950s-1970s and the free market principles from "neoclassical economics" (a.k.a. "neoliberalism") that were implemented as a cure for stagflation in the 1980s & 1990s. This mixture is known as the "neoclassical synthesis": https://en.wikipedia.org/wiki/Neoclassical_synthesis

If you want to see how the mainstream media has covered the poll results of the IGM Experts Panel, see Charles Wheelan's article at US News and Patrick Brennan's article at National Review - they offer a succinct summary of many of the IGM Experts points of strong consensus:

http://www.usnews.com/opinion/blogs/charles-wheelan/2014/03/10/ben-bernanke-bitcoin-and-other-points-of-economic-consensus

http://www.nationalreview.com/corner/389242/poll-economists-unanimously-think-uber-good-thing-consumers-patrick-brennan

4. In What Cases Could It Be Justifiable To Diverge From The Economic Consensus?

Last time in our discussion of expert consensus, we saw that most skeptics think that laypeople should typically defer to the expert consensus; however, there were a couple counter-arguments from other skeptics.

We looked at an article where Julia Galef suggested 2 possible ways to check the expert consensus in a field where you're not an expert yourself: (1) find people who are experts outside of the field in question but are experts in the particular methodology used by that field and see how they judge whether that field is applying the methodology soundly, and (2) see if the field make testable predictions and has a good track record of correct predictions.

We also looked at an article where Richard Carrier argued that simple polling all the scholars in a field to determine the expert consensus isn't valid because not all of them have necessarily considered the strongest case against the consensus, and of those that have some may have argued against the contrarian position in a way that's illogical or with false claims. Only when we reduce the pool of relevant experts to those who've made good arguments against the best contrarian arguments can we determine how strong or weak the expert consensus is.

In general, someone with enough skill to judge the expert consensus in the way that Galef & Carrier describe would probably have to have significant academic training. Massimo Pigliucci & Aaron Adair both commented on the difficulty with judging the expert consensus without having enough knowledge of the field in question. For skeptics, perhaps the best places to look for contrarian views on economics that are less likely to mislead you into pseudoscience are the various schools of "heterodox economics" that incorporate ideas from the natural sciences like thermodynamics, evolution & ecology:

https://en.wikipedia.org/wiki/Thermoeconomics

https://en.wikipedia.org/wiki/Evolutionary_economics

https://en.wikipedia.org/wiki/Ecological_economics

NORMATIVE & POSITIVE BELIEFS IN THE CONSENSUS:

It's important to note that most, if not all, economic issues have both an objective & positive (descriptive) aspect that - given perfect information & no bias - we should all agree upon, as well as a subjective & normative (prescriptive) aspect that will vary based on one's moral beliefs. This means that an economist's position on issues is often partly a function of his or her values, and isn't necessarily "wrong" in a scientific sense if the public accepts the expert analysis of a situation but espouses different values from the experts and thus choose a different policy.

As you can see from the IGM Experts Panel's responses to the "Taxing Capital and Labor" questions from October 2012, 75% of them agreed with this statement: "Although they do not always agree about the precise likely effects of different tax policies, another reason why economists often give disparate advice on tax policy is because they hold differing views about choices between raising average prosperity and redistributing income."

http://www.igmchicago.org/igm-economic-experts-panel/page/10

As Pete Klenow put it in his comments, there's more agreement about positive claims and less agreement about normative claims, and several other IGM experts note that this is mostly a debate over income heterogeneity - i.e. "efficiency vs equity trade-off". This is another way of saying that we face the question over whether to maximize economic productivity in the hopes that a "rising tides raises all ships" eventually, or to maximize economic equality by redistributing wealth to the poor who have higher utility for it:

http://www.economicshelp.org/blog/2473/economics/efficiency-vs-equity/

ECONOMIC TRADE-OFFS FORM A MORAL LANDSCAPE:

So can economics - or science in general - tell us not only how the world works but also what we should do from a moral perspective? Sam Harris has argued in his book, The Moral Landscape, that science can help determine human values by allowing us to understand the conditions under which human beings thrive.

https://en.wikipedia.org/wiki/The_Moral_Landscape

However, in an essay entitled "The Limits of Reasonable Discourse," Massimo Pigliucci explains that when people disagree on values this may make it impossible to arrive a perfect agreement on political issues even all parties involved in the discussion are rational. He borrows the idea of a "fitness landscape" from evolutionary biology, where a three-dimensional plane with hills & valleys of various heights & depths represent more & less optimal environments for an organism. Massimo includes the following diagram of a fitness landscape:

http://4.bp.blogspot.com/_ZIDZKrVb3LQ/TKetb3LSzSI/AAAAAAAADrI/B0BBOuXfZRw/s1600/FitnessLandscape.jpg

Massimo explains: "In the graphic example above, there are three peaks: one is taller, the other two are of about equal height. The taller peak represents the optimal solution across the landscape, while the other two stand for suboptimal but viable solutions. If we were talking about politics or ethics, this would correspond to saying that one political or ethical system is in fact “best” (under whatever criteria one is using) and therefore rational, while two more are also rational, but not quite as good. So reasonable people could make an argument for one or the other, or the third, of the proposed solutions, particularly when practical considerations may exclude, or make less likely, the implementation of the optimal solution represented by the highest peak.

Moreover, in many cases there may not even be a highest peak, but a number of alternative strategies that achieve more or less equal results. Rational people, then, could defend any or all of those strategies without necessarily being able to settle on a particular one as the obviously best choice. This would not mean that there was no point in having a rational discussion about it, because reason would still be helpful to avoid the many valleys or flat parts of the landscape, those that do not correspond to sufficiently viable solutions to whatever problem is at hand" (10).