Scott Sumner  

Am I an ideologue?

Will Paul Krugman Say He's Sor... I Changed My Mind About Bettin...

Adam Ozimek has a good post showing that economists are not ideologues, and that they change their mind when new information comes in. So I tried to think of some examples that would apply to me. I'll start with early in my career, and then more recent:


I favored a guaranteed annual income in college, and switched to favoring a low wage subsidy in grad school. I was convinced by theoretical arguments, not empirical data.

I favored Friedman's k% money growth rule in grad school, and switched to favoring NGDP targeting in the 1980s, as velocity became unstable. My views moved away from Friedman and Schwartz's account of the Great Depression, as I began researching that area.

More recent:

I became less confident that modest increases in the minimum wage would lead to substantial job loss, due to studies such as Card and Krueger. I still believe minimum wage laws have costs apart from job loss, such as reduced working conditions, and would still prefer a low wage subsidy targeted at adults. But I now think the job loss effects are much less clear than before.

I've recently become less confident that tight money leads to lower interest rates (but not this week!!) I still think that a very tight money policy leads to low interest rates, but less extreme tight money policies seem to raise long term rates more often than I had expected. I seemed to underestimate the liquidity effects of QE. I now see it as a completely open question, not well understood.

I've become less confident of the supply-side effects of state income taxes. I still think that a lack of state income taxes helps explain why places like Texas, Washington, Tennessee, South Dakota, Nevada, Florida, etc., tend to grow faster than their immediate neighbors. But I now think that in many cases the advantages of urban living in places like New York and California overwhelm modest tax cuts in places like Kansas. I've been especially influenced by the recent reversal of fortune between (urban) Massachusetts and (rural) New Hampshire, something I never would have predicted. At the national level I'm still a moderate supply-sider, more influenced by the stylized fact that Europe is poorer than America, than by the stylized fact that the economy did well in the 1990s. But I don't discount the latter experiment, which explains why I am only a "moderate" supply-sider.

The Hive Mind has made me view IQ as being more important in economic development, as well as in savings rates, good governance, etc., than I had assumed.

I'm less in favor of intellectual property rights than before, and was growing increasingly worried about their impact on economic equality even before this recent study came out.

Most often my views just get nudged slightly this way or that, as there is already so much evidence that new evidence is rarely earthshaking. Thus Tyler Cowen's recent interview with a hedge fund guy made me slightly less confident in the EMH, but didn't really shake my view that it's a useful approximation of reality.

And one final point. The complexity of the world makes it hard to do empirical tests. Tyler mentioned that the relative performance of China and Eastern Europe made him less confident that mass privatization was a good idea. I don't see the evidence that way, for a number of reasons:

1. The parts of the former Soviet bloc that privatized faster tended to do better, or at least less bad.

2. China's a very different place, which started from a position of low-income peasant agriculture. The SOEs have been the weakest part of the Chinese growth story, and it is the private sector that has done best.

When problems are very complex, such as economic development, I'm skeptical of "models". To me, the most sensible approach is to admit how little we know about linkages, and look at each issue on a case by case basis. In that case, theory would play a major role. The presumption should always be in favor of privatization, deregulation and free markets, except where there are pretty well-established exceptions, such as pollution regulations or income redistribution. There is no well established evidence that SOEs make sense, so countries should get rid of them. China probably did well despite its SOEs.

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CATEGORIES: Economic Methods

COMMENTS (11 to date)
Henri Hein writes:

We are all ideologues. That is OK. I would rather live in a world of humans with opinions and ideas than one populated with automatons that carefully re-evaluates all their thoughts with each new factoid. (Though maybe, if I was one of those automatons, I would immediately change my mind.)

Human stubbornness can be exasperating, but it is necessary to promote knowledge. Good ideas tend to be initially resisted. If Darwin had been asking around what he should be thinking, we wouldn't have "Origin of the Species." I read recently about the early efforts to implement hospital sanitation and how it was resisted by a intransigent medical profession.

For even good ideas to take root, it requires the originators to pursue them doggedly. The cost of this is we also get people with bad ideas doing the same thing.

Greg G writes:

No, you are not an ideologue Scott. In fact, you are the one of the most eclectic and independent minded economists I have ever read.

I often wonder if you are right, but I never wonder if you are an ideologue.

Da5id writes:

I would be curious to read some of the arguments that caused you to favor a low wage subsidy over guaranteed annual income.

As I really like the idea of guaranteed annual income, but haven't read much at all about a low wage subsidy.

Could you point me to some papers/articles/books to start educating myself on the theories behind a low wage subsidy? Thanks!

Otis writes:

China's economic reform (especially in the agricultural sector) in the 80s was as fast as Eastern Europe's.

Scott Sumner writes:

Henri, I suppose it depends how one defines the term.

Thanks Greg.

Da5id, Good question, and I'm afraid I have not kept up on the literature in that area. Years ago I used to like the stuff on creating a high employment economy by Ed Phelps.

As for myself, I noticed that many public policies discourage work effort. In contrast, wage subsidies encourage work effort. So it seemed like a good "second best" policy.

A guaranteed annual income is an appealing idea, but I have trouble making the numbers work. How much? Would kids get it too? What about cost of living by region? Would it replace Medicaid? These are not easy questions.

Otis, That's right, and 80% of Chinese lived there at the time.

Mark writes:

Scott, are you familiar with Neumark and Washer's critique of Card and Krueger's study (in fact, Neumark and Washer wrote a whole book analyzing the literature on min. wage increases which is worth reading). I think it's true that raising minimum wage has little effect on employment whatsoever, but that's because of the smallness of magnitude in most increases; it has little effect positive or negative; by the same argument lowering minimum wage a little wouldn't have significant effects on wages either, imo.

More to the point, how would one test how 'ideological' a person or people are? Not a rhetorical question.

I suppose you could put to someone an obscure policy question with two positions, a progressive and conservative one, as determined by having 'ideological' progressive and conservative 'experts' research the issue and come to conclusions (of course we would pick an issue where they tend to divide along ideological lines).

Then we expose out subject to the 'issue' briefly, but without giving them enough time to research and determine which position is supported by progressive or conservative consensus; we merely tell them which position is the progressive position, and which is the conservative position... some times. But for some 'issues' we lie to them and reverse the positions. We may even show them brief defenses of the positions for progressive or conservative reasons. Then, we ask the subject to take a position, and we tally up on how many issues (or how many subjects on one issue) tended to adopt the position ostensibly favored by his or her favored camp, including even when we lied and reversed the consensus to them.

Some way, though, you have to expose the subject(s) to an issue or set of issues and see how much whatever position they take is influenced by their association of it with some general 'ideological' position. Obviously this would require one to find a whole bunch of obscure little 'issues' which don't obviously bend one way or the other way, as you obviously can't tell someone that gun control is a conservative position, show them conservative defense for gun control, and expect them to believe you're not trying to manipulate them to see how it effects their opinion. So high profile issues wouldn't work.

Scott Sumner writes:

Mark, It's possible to make judgements about large groups of people. For instance, look at how liberals and conservatives react to the scientific debate over global warming. In a non-ideological world you'd expect their view of the science to be uncorrelated with their general views on government regulation.

On the minimum wage, yes I've seen some of the counterarguments, and agree it's an open issue. Just to be clear:

1. I still think the minimum wage causes some unemployment, even at $7.25. Indeed a very recent study just confirmed that.

2. I still think a $15 minimum wage would be a disaster.

3. I still favor abolishing the minimum wage.

andy writes:

I became less confident that modest increases in the minimum wage would lead to substantial job loss, due to studies such as Card and Krueger.

yes I've seen some of the counterarguments, and agree it's an open issue.

I have seen this told by more people and I don't get the logic. My feeling was that the Card and Krueger study was just plainly "wrong" in the sense, that it didn't warrant the conclusion such as "minimum wage doesn't cause unemployment". It seems to me that it shouldn't persuade you - if something persuaded you it shouldn't have been this study. Unless you find the criticism of this study flawed. Do you this the critics are wrong?

ThomasH writes:

The biggest change in my thinking has been the loss of confidence in the Fed. I thought that inflation targeting made a lot of sense and that the Fed was committed to it. 2008-16 showed that they are committed only to inflation rate ceiling targeting. I see the theoretical advantages of NDGP targeting over inflation (price level trend) targeting, but since the first has not been tried, it's hard to be sure that NGDP targeting if subject an inflation rate ceiling would be any better than inflation targeting.

The debate over the minimum wage has persuaded me more than ever that minimum wages should be replaced by an EITC that yields an equivalent income.

In general I have moved from a position that almost any income increasing reform -- trade, regulatory or carbon taxation -- was good because the marginal distribution of income (consumption, actually) was "good enough" to wanting to have a higher certainty that the marginal income from the reform is not unduly concentrated. (Obviously this does not apply to some "obviously" regressive interventions such as weakening trademark, patent and copyright restrictions, shifting from corporate to personal taxation[neutral more than regressive], farm subsidies, ethanol mandate, etc.)

I've also become much more sensitive to infringements on liberty in the name of our so called "Wars" on "Terror," "Drugs" and "Crime."

Finally, I've shifted from vague acceptance of the personal income tax or wanting minor reforms such as replacing deductions with partial tax credits and indexing of capital gains, to one of supporting a progressive consumptison tax that raised less revenue from the bottom half of the income~= consumption distribution than the present income tax.

Although not a change, I had not realized until the Great Recession how radical my belief in having NPVs guide government expenditure decisions was.

In other words I've moved from being a liberal Republican to a Right of Center Democrat.

Mark writes:

"Mark, It's possible to make judgements about large groups of people. For instance, look at how liberals and conservatives react to the scientific debate over global warming. In a non-ideological world you'd expect their view of the science to be uncorrelated with their general views on government regulation."
True, in a rational world people's opinions on many of the major political issues would note be nearly so well correlated with each other.

But with your example, there's a clear interest at stake: the reality of global warming increases the credibility of arguments for state intervention in the economy in some manner; conservatives can clearly see their economic position more threatened by it, progressives clearly see their economic position advantaged by it; so I'm not sure it meets the standard I want my hypothetical social experiment to meet: that, just the belief that a position is held by one's co-ideologists is sufficient to convince one to assent to that position. Conservatives and progressives clearly, to some extent, line up in accord with their own interests; but to what extent, independent of self-interest, is it just 'intellectual camaraderie' that motivates people to adopt opinions?

I also think there's a big social component to it. Politics is largely a social activity. I feel guilty about not giving people the benefit of the doubt that there beliefs are 100% sincere, but I always wonder if this isn't what drove Paul Krugman further to the left over the years; if he didn't just get worn down by being the only progressive at the New York Times cocktail parties who opposed raising the minimum wage, just as one would get worn down being the only conservative at the National Review, um, gun range parties (?) to believe in global warming.

J Mann writes:

FWIW, I used to think that stage hypnosis was almost entirely a fraud purported by the participants and the hypnotist, but this week, I changed my mind.

Richard Feynman's chapter on his hypnosis experience in Surely You're Joking, Mr. Feynman, is, IMHO, pretty darned convincing.

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