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What Do Economists Actually Know?

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What Do Economists Actually Know?

Turns out, not as much as you – and they – would like to think

NewCo Shift,

5 min read
5 take-aways
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What's inside?

An economist explains why you should take economists’ predictions and assessments with a grain of salt.

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7

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Recommendation

Politicians and journalists frequently call upon economists to make sense of a complex and highly unpredictable world. But the fine print that should qualify any economist’s answer is that no one actually knows for sure. In this article, EconTalk podcast host Russ Roberts provides plenty of reasons to doubt the predictive capacity of economists. Certainly, the assertion that economics isn’t a precise scientific discipline is not new. Many scholars, most notably Nassim Taleb, have argued the case elegantly. But this article is a useful reminder to approach economic predictions with a grain of salt. getAbstract recommends it to decision makers who rely on economic forecasts and to overconfident economists. 

Summary

Journalists and politicians ask economists to provide guidance on complex questions such as how to determine the consequences of increasing the minimum wage. Or, why did the 2008 financial crisis happen? Often, different economists – all of them citing empirical evidence – end up with opposing conclusions. Even when economists reach a consensus on an issue, their unanimity may hinge on shared biases, and their predictions may not bear out.

Though economists often present their discipline as a science, economic forecasts lack the specificity and precision of mathematical conclusions...

About the Author

Russ Roberts is a research fellow at Stanford University's Hoover Institution. He is the host of the EconTalk podcast and author of How Adam Smith Can Change Your Life.  

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