You’ve heard all the jokes before: If you laid all the economists in the world end to end, they still wouldn’t reach a conclusion; put 10 economists in a room and you’ll get 11 opinions; economics is the only field where two people can share a Nobel Prize for saying opposite things.
While the first two are purely speculative, that last one actually happened, in 1974.
It’s true that academic economists love to argue with each other. A proper economics seminar is almost bloodsport, with everyone testing whether a paper’s methods can withstand rigorous analysis.
But it’s also true that economists generally agree with each other on big core issues. There is professional consensus, driven by decades of rigorous theoretical work and tested with ever-better statistical methods.
That consensus is too hard to see from the outside – and especially when it’s always easy to find some economist willing to take a contrary position.
Surveys of economists in America and Europe, and more recently in Australia, have helped. They show where economists agree and the strength of any consensus in different policy areas.
New Zealand needs it, too.
The New Zealand Association of Economists and the New Zealand Initiative last year set an Economics Expert Survey. We invited Distinguished Fellows, life members, and past presidents of the Association of Economists, and winners of the annual NZIER Economics Award, to serve as an expert panel.
Next, we asked the panel whether the average New Zealander would be better off if a larger number of highly educated foreign workers were allowed to migrate to New Zealand each year – again drawing on a question used in the IGM survey. And, again, economists agreed.
In New Zealand, 88 per cent of the expert panel agreed or strongly agreed that more immigration by highly educated foreign workers makes the average New Zealander better off; 12 per cent were uncertain, and none disagreed. In America, 89 per cent agreed or strongly agreed, and none disagreed.
The first survey results were released earlier this month, with more surveys to come.
We first asked the panel about rent control, using a question modelled on the IGM Expert survey so we could compare New Zealand economists to their American counterparts. Economists on both sides of the Pacific agreed: Rent controls have not had a positive impact on the amount and quality of affordable rental housing in the place where they have been used.
Finally, we asked whether our panel agreed with a core proposition of so-called Modern Monetary Theory: That governments able to borrow in their own currency can finance as much real government spending as they want by creating money. Like their American counterparts, not a single one of our panellists agreed.
Why does any of this matter?
Public debate on economic questions is a mess.
Because economic policy is often politically contentious, few academic economists are willing to weigh in. It takes a lot of time, buys a lot of frustration, and pro-vice chancellors often wish you wouldn’t.
A small country like New Zealand then gets a small cohort of economic commentators who answer journalists’ phone calls and emails for comment. Different journalists have their preferred economists on different topics.
But if journalists can find at least one economic commentator willing to take either side of politically contentious economic issues, it can be hard for readers to tell whether there is any underlying expert consensus.
It is too easy to conclude that the unwelcome side of an argument is just that one economist’s view, rather than an international professional consensus among subject specialists who have spent their lives studying the field. An “ideological burp,” as a finance minister once dismissed sound Treasury advice.
Those on the left might dismiss something from one of my columns, while those on the right might dismiss Auckland University’s Tim Hazeldine – even if we’re saying the same thing.
The expert survey should help in checking whether there is a consensus.
Stories on rent control should now include mention that over 80 per cent of local expert economists disagreed that rent control helps rental housing availability, and that most of the rest were uncertain. Even if you can find an economic commentator who supports rent control, the broader context matters.
Stories on immigration could check the professional consensus and remind readers that not a single surveyed expert thought that the average New Zealander would be made worse off if more highly educated foreign workers were allowed in. A future survey will have to check whether local economists agree with their American counterparts that greater low-skilled immigration can also be beneficial.
And stories on Modern Monetary Theory could just be spiked as the economic equivalent of Andrew Wakefield’s debunked studies claiming vaccines cause autism.
There are certainly areas where the experts disagree. But economics enjoys strong consensus on core matters. Hopefully, the ongoing expert survey will help bring that consensus to the fore.