Most economists are their own skeptics. Don’t forget the old joke about economists having three hands. I read a lot of economists recognizing multiple interpretations of any event. Usually a field is ripe for satire when it takes itself too seriously, but my read is that economists—as a group—have been among the least dogmatic of the academic disciplines. Yes, there are certainly some strongly opinionated economists; Milton Friedman springs to mind. But even he larded his writings with acknowledgements of uncertainties.
Sure, line all the economists in the world end to end, and you still wont reach a conclusion…..
I think that if you sit down with an economist and ask them about the uncertainty in economics, they will acknowledge it, that said, they do seem more than willing to give advice without really knowing the risks involved. And even when they do explain the risks, its often in a language that is hard for many people to understand.
Maybe its that the public puts too much faith in what they have to say. Maybe its that we ask the wrong questions. It seems to me that if you ask someone ‘how to win the lottery?’ and they tell you that ‘you should buy lots of lottery tickets’, and state that there is still a high degree of uncertainity in the lottery even when you buy lots of tickets, that that doesn’t quite go far enough.
It seems like there is still a role for someone to ask economists to make predictions, and the state the odds, and then measure the accuracy stated, and then go back to the public and explain that when the odds are higher than the payout then its not a good bet. Going back over the last year, it really seems that the public has repeatedly bet on the ‘best’ economic advice, and repeatedly the bets have not paid out.
I remember as a newly minted 21 year old, I once went to vegas and had a great plan for beating the house at roulette. It was easy I thought, start at $1, then just double the bet every time you lose a round and eventually you’ll get everything you lost. I mean seriously, how many times can the wheel come up red, 5, 7 times in a row maybe, as long as I have enough to get through 10 times in row on the same color, surely I’ll win.
Despite my brilliant plan, the odds were of course against me in the end. A costly lesson, that I quickly went home and modeled in Excel only to find that I could have brought $1M to vegas, and before I made any sort of meaningful gains, I’d lose the whole thing. And, yes, to lose a$1M it has to come up the same color some 20 times in a row, but eventually it does, something that experience doesn’t teach you the easy way.
My fear is that we(as a society) often take economic advice in somewhat the same way.
Public: Dear Mr. Economist, what’s the best way to win at roulette?
Economist: Ok, here’s what you do, start with a $1 bet, then double it each time you lose and eventually you’ll win, in fact, the more money you start with the less likely it is you will lose. Of course there’s a chance that it comes up red 20 times in a row, but that risk is low.
Public: Makes sense let’s do that, and sure, we’re luckier than 20-30 reds in a row, and if it does happen 30 times in a row, then it must be that the casino is cheating and we can prosecute the greedy casino owners.
Politician: Yes, if it comes up red 30 times in a row, I think we have a good case against the greedy casino. Surely its more likely that they are crooked than that red comes up 30 times straight.
I don’t blame this all on economist, but clearly there is a disconnect within the public between understanding the cause and effect in basic economics. It just seems very odd that skeptics have time to debunk spoon benders, back pokers, palm readers and star gazers, but no time to walk the public through the really tough part of economics.