Back then, in 2013, I visited a panel...
Back then, in 2013, I visited a panel on “What Do Economists Think about Major Public Policy Issues?”, which took place in the course of the 2013 ASSA meeting. In this session Luigi Zingales presented a highly interesting and relevant paper on the differences in views between economic experts and the general public, which found the following:
“The topics most covered in the economic literature, where economists agree among themselves the most, are also the topics in which their opinions are most distant from those of average Americans. This difference does not seem to be driven by knowledge, since informing people of the expert opinions does not have much impact on the responses of ordinary Americans.”
While in my view this finding speaks in favor of the economic intuition of the general public, the panel was puzzled to explain, why the latter would not trust the economic experts even when they are informed beforehand of their opinion. The discussion focused on the question of ‘taxes vs. regulation” in environmental policies and CO-reductions, as this single item revealed the greatest distance between economic experts (an astonishing 92.5% in favor of taxes over regulatory standards) and the general public (where only 22.5% sided with the “experts”). Eventually, some discussant suggested that economics does not have the same credibility as the natural sciences, because it lacks behind in terms of empirical success and well-corroborated theories.
This claim was immediately turned down by the session chair Orley Ashenfelter, himself a former president of the AEA, who found himself uttering, that “this can never be the main reason, as physics also has its problems. Just look at climate change.”
While I would not argue that this kind of implicit denial of climate change is representative for mainstream economics, it provides some intuition on why most mainstream economists do not seem to recognize the fact that climate change comes as a fundamental game changer for the global economy. Even more ambitious works like Nordhaus’ “Climate Casino” sidestep this role of climate change as a potential game changer and, hence, reject more fundamental strategies - like a MaxiMin approach to environmental protection or a focus on improved regulation - and opt for the traditional economists toolbox consisting of taxes and ‘cap&trade’-approaches. This dogmatic fixation on market-based instruments directly follows from conventional economic reductionism, which perceives nature and the environment not as a foundation for any economic activity, but, rather, as something residing outside of economics, which only comes into play as an ‘external’ effect.
Having said that I would speculate that the gap between economic experts and the general public on this specific question will remain stable in the upcoming years - which is much different from what can be said about earth’s climate.
All the best,
Jakob