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Wednesday, February 22, 2012

Should Researchers Hide Results from the Public?

One of the reasons I started this blog almost was to try to correct the distortion of economic ideas by people masquerading as economists in pursuit of political goals. Ideas were presented in a misleading, distorted, or incomplete way in an attempt to sway the broader public toward a particular political agenda (tax cuts paying for themselves and Social Security were particular sore spots).

Economics is not the only discipline with this problem as the debates over issues such as global warming illustrate well, but I didn't realize some people think the answer to this problem is to shield research from the public. This is from a discussion of the way in which ideas about quantum physics are used to mislead the public:

For some scientists, the unfortunate distortion and misappropriation of scientific ideas that often accompanies their integration into popular culture is an unacceptable price to pay.

But I think this is the right response:

I share their irritation, but my strongly held view is that science is too important not to be part of popular culture. Our civilization was built on the foundations of reason and rational thinking embodied in the scientific method, and our future depends on the widespread acceptance of science as THE ONLY WAY WE HAVE to meet many, if not all, of the great challenges we face. Is the climate warming and, if so, what is the cause? Is it safe to vaccinate children against disease? These are scientific questions, in that they can be answered by the analysis of data, and therefore the answers are independent of the opinion, faith or political persuasion of the individual. ...
The key words in the above paragraph are “widespread acceptance”. In democratic societies, progress is made through persuasion, and science has a most persuasive story to tell. ...

The problem that economists have, particularly macroeconomists, is that data rarely settle the issue. This is something I wrote on this about a year ago:

Why can’t economists tell us what happens when government spending goes up or down, taxes change, or the Fed changes monetary policy? The stumbling block is that economics is fundamentally a non-experimental science, particularly in the realm of macroeconomics. Unlike disciplines such as physics, we can't go into the laboratory and rerun the economy again and again under different conditions to measure, say, the average effect of monetary and fiscal policy. We only have one realization of the macroeconomy to use to answer important policy questions, and that limits the precision of the answers we can give. In addition, because the data are historical rather than experimental, we cannot look at the relationships among a set of variables in isolation while holding all the other variables constant as you might do in a lab and this also reduces the precision of our estimates.
Because we only have a single realization of history rather than laboratory data to investigate economic issues, macroeconomic theorists have full knowledge of past data as they build their models. It would be a waste of time to build a model that doesn't fit this one realization of the macroeconomy, and fit it well, and that is precisely what has been done. Unfortunately, there are two models that fit the data, and the two models have vastly different implications for monetary and fiscal policy. ... [This leads to passionate debates about which model is best.]
But even if we had perfect models and perfect data, there would still be uncertainties and disagreements over the proper course of policy. Economists are hindered by the fact that people and institutions change over time in a way that the laws of physics do not. Thus, even if we had the ability to do controlled and careful experiments, there is no guarantee that what we learn would remain valid in the future.
Suppose that we somehow overcome every one of these problems. Even then, disagreements about economic policy would persist in the political arena. Even with full knowledge about how, say, a change in government spending financed by a tax increase will affect the economy now and in the future, ideological differences across individuals will lead to different views on the net social value of these policies. Those on the left tend to value the benefits higher, and place less weight on the costs than those on the right and this leads to fundamental, insoluble differences over the course of economic policy. Paul Ryan will never see eye to eye with Obama.
Progress in economics may someday narrow the partisan divide over economic policy, but even perfect knowledge about the economy won’t eliminate the ideological differences that are the source of so much passion in our political discourse.

So it is not at all clear to me that the strong divides in economics can be settled with the data. It is certainly problematic with the data we have -- it's just not able to discriminate well between competing models, and as noted above even perfect data wouldn't settle all the isues. It's not completely hopeless:

...the ability to choose one model over the other is not quite as hopeless as I’ve implied. New data and recent events like the Great Recession push these models into unchartered territory and provide a way to assess which model provides better predictions. However, because of our reliance on historical data this is a slow process – we have to wait for data to accumulate – and there’s no guarantee that once we are finally able to pit one model against the other we will be able to crown a winner. Both models could fail...

I think the Great recession has, for example, provided evidence that the NK model provides a better explanation of events than its competitors, but it is far from a satisfactory construction and it would be hard to call its forecasting and explanatory abilities a success.

    Posted by on Wednesday, February 22, 2012 at 12:57 PM in Economics, Methodology | Permalink  Comments (45)


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