Saturday, November 28, 2015

A wise comment

Scott Sumner passes on a wise comment from his blog:
...the main problem in America is that the public, including its highly educated members, is social-scientifically ignorant. Most people I talk to about policy do not even realize that there is anything non-trivial about policy analysis. They want the government to make sure that four phases of rigorously designed RCTs be performed before drugs are made available to the public, for fear of unintended consequences of intervening on a complex system like the human body, yet they think they understand the consequences of highly complex interventions on human societies by introspection alone. Not only do they think they understand the consequences of alternative policy choices, but they're so confident that their understanding is right and that its truth is so obvious that the only explanation for disagreement is evil intentions.  
When I point out that on virtually every policy issue, at least somewhat compelling arguments for many conflicting points of view have been made by relevant experts, people usually react in disbelief or denial, or immediately retreat to questioning the motives of these experts ("of course they say that, they're on the payroll of Big Business" or whatever). These patterns of speech and behavior are uniformly distributed across the political spectrum, even if intelligence and knowledge of well-established facts is not. Even many experts in particular areas of social science evince no awareness of the lack of expert consensus on almost anything in their field, and give the impression of unanimity to an unknowing public.
(Emphasis in the original.) The rush to bulverism (evil intentions or corruption of people who disagree) is particularly noticeable in economic commentary.  Uncertainty about policy is especially strong in macroeconomics and finance.  That doesn't mean anything goes. Many arguments do violate basic budget constraints or suffer other obvious logical flaws.

How do you know economists have a sense of humor? We use decimal points.


  1. Bastiat's "That Which is Seen, and That Which is Not Seen" should be required reading for all politicians.

    I would quit my job and work for the first candidate who promised not to change anything during their first year in office. I even have a name for the new party: Leave Everything the F#ck Alone Party. I don't care if it leaves bad policies and programs in place. All that ever happens in the current system is we get new bad policies and programs. However, the policy changes introduce friction by requiring everyone to readjust, which costs time, money and energy. Just leave it the f#ck alone and let everyone find their optimum position in the current system. Its amazing what people can do if you aren't moving the goalposts all the time.

    And let's not forget that all bad government programs begin with having the money to fund them.

  2. Excellent word, "bulverism." John Cochrane has used it before, but now maybe it will stick in my vocabulary.

    BTW, the noted commenter also used the word "deontology," which I have use to describe certain monetary schools. Possibly schools that attach importance to rules, as opposed to results. I did not say the Taylor Rule, or the 0% Inflation Totem, but there is an element of deontology about such regimes.

    But I have no bulveristic comments about the people behind such deontological schemes.

    I just think robust economic growth is good, and monetary policy, in this time and place, should shoot for Full Tilt Boogie Boom Times in Fat City.

    Inflation is dead, so let it rip.

  3. So people Prof. Sumner (and, by implication, our host) disagree with or otherwise don't like are "social-scientifically ignorant"???

    Did you guys all get your economic degrees from GMU? - - - or are on the payroll of the Mercatus Center?

    1. It would help me a lot if you would supply a few examples of social science aware politicians who implemented well-crafted policies, ones without severe, unintended consequences. Maybe some that were studied to prove their effectiveness.

    2. Thanks for the nice bulverism. I presume it was intended ironically.


    3. OK, Here are a few examples of social science aware politicians who implemented well-crafted policies:

      FDR: Took the USA off the Gold Standard
      FDR: Signed the FDIC-creation bill into law
      HST: Restrained the Fed from increasing interest rates right after WW2 ended

  4. Dr. Cochrane: Thanks. Of course I agree that it is not "anything goes". There is a lot we do understand, and that should most certainly constrain policymaking.

    Anonymous: The comments were mine, not Scott Sumner's. The claim is not that anyone who disagrees with me is ignorant. It is that serious engagement with the social sciences impresses one with how little we understand about the social/political/economic realm. We have many, many insights, but these rarely lead to reliably and precisely accurate predictions of the consequences of interventions. As a result, policymaking is, to a larger degree than many people realize, a matter of experimenting based on educated guesses. The claim that many people are social scientifically ignorant is based on the observation that the vast majority of policy commentators, as well as ordinary people, seem to be of the opposite view, that we know the answers, we just have to fight the (dumb/evil) opposition to see it through. "Ignorant" is perhaps not the most polite term, but I would be happy to settle for "naive" if that's any better.

  5. "The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts" Bertrand Russell

    1. Socrates came to a similar conclusion. After the Oracle at Delphi proclaimed him to be the wisest man in Greece, he set out to prove her wrong by talking to various people that claimed they had true wisdom; lawyers, politicians, academics. He soon realized they all thought they knew the truth but none really did. His epiphany was that a truly wise man knows he has little wisdom. Intellectual humility is the hallmark of the truly wise.

  6. Alas, the challenge in debates of policy importance leads typically inexorably to the continued "need" for intervention by experts, or at least the self-appointed experts that do not engage or tolerate dissent and who increasingly sit atop a vast byzantine behemoth that they themselves fail truly to comprehend but which the impartial spectator can hardly began to imagine and thus winds up hopelessly deferring to the self-appointed experts. Working in healthcare, I see this firsthand, and ObamaCare is just one more beast thrown into the fire (admittedly a rather large one). The process goes something largely like this: CMS decides that there needs to be one more tweak to somehow drive simultaneously the triple aim of healthcare: to improve quality, improve access, or decrease costs. To do so, apparatchiks create a 2,000 page federal register posting that is full of jargon and links to hundreds of other previously posted 2,000 page federal register documents. Health care organizations trying to comprehend and react to all of this have little recourse but to hire an army of consultants and try to achieve scale through mergers to more effectively deal and negotiate with the government and others in the increasingly regulated and concentrated system. Ultimately, the experts fail to understand the complexity of what they have promulgated and fail to understand all of the unintended consequences of their actions. An incentive on cost reduction through bundled payments leads to hospital merger frenzies over here and a program to reduce payments based upon readmissions means more patients held in the ER or observation status rather than admitted to receive the care they need over there. Failures begat more failures as the tyranny of the experts call for more changes and lay the blame for failure on "entrenched interests" and consumers too insipid to know what is good for them.

  7. To paraphrase Mencken from 1917:

    "For every complex problem there is an answer that is clear, simple, and wrong"

    One of the problems with public debates is that there are rather a lot of people running around claiming to be experts who are not. If the public is leery of self proclaimed "experts" it is only a prudent response to having experienced that many of the people claiming to be experts are ill intentioned charlatans.

    Some of the charlatans don't even know they are charlatans. The Dunning-Kruger effect is at work through out politics and the social sciences.

  8. John, how do you draw the line between bulverism and legitimate conflict of interest concerns? Are you going to believe Philip-Morris' lung cancer research with no more skepticism than you would lunch cancer research from an uninterested 3rd party? How about Exxon Mobil research on greenhouse gasses?


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