Patients seem to trust their doctors—but they definitely don't trust economists. That’s illustrated in a new paper by Chicago Booth Professor Luigi Zingales and Paola Sapienza of Northwestern University—described in the Economist’s January 12 issue—which finds that when economists strongly agree on an issue, ordinary Americans tend to hold the opposite view.
For example, Sapienza and Zingales found that about three out of four Americans believed that a “Buy American” policy is good for manufacturing employment, while only 11 percent of economic experts agreed. Nearly all economists agreed that the North American Free Trade Agreement (NAFTA) has helped Americans prosper, but only half of ordinary Americans thought so. Based on responses to 19 questions, Sapienza and Zingales found a striking 35 percentage point gap, on average, between the share of economists and the public agreeing on a particular economic issue.
Why do they disagree? One possible explanation is that economists, owing to their training and experience, understand economics more than the average American. After all, 41 senior faculty at the most elite research universities in the United States represented the economists’ side in this research paper. (Economists’ responses were collected from the Economic Experts Panel, a regular survey run by Booth’s Initiative on Global Markets. The public’s responses were taken from the Chicago Booth/Kellogg Financial Trust Index, a survey of a representative sample of American households.)
However, Sapienza and Zingales didn’t find much evidence that the differences in opinions between the two groups were driven by economists’ superior knowledge of economic issues. For example, only one of four Americans agreed that a carbon tax is a less costly way to cut carbon dioxide emissions than imposing fuel efficiency standards on carsOne would expect that many would change their minds if they were told that nearly all economists (92 percent) thought that a carbon tax is better. However, Sapienza and Zingales found that only three percent revised their views after learning what the experts thought, suggesting that the average American’s views were based on informed reasoning.
Moreover, when asked what would happen to car prices when mandatory car standards take effect, 70 percent of average Americans said they expect car prices to increase. People, non-economists, seem to understand that both carbon dioxide emissions policies come with a cost—they just prefer to pay higher car prices rather than higher gasoline prices.
In that case, what’s driving the opinion gap? Another possible factor is that economists, who are trained to be more precise and feel more scrutinized by their peers, tend to answer questions in a more technical way. For instance, to economists, a statement that says that “the 2009 stimulus package led to a lower unemployment rate in the following year than if the policy had not been put in place” is not the same as one that says “the benefits from the stimulus package exceeded the costs.” The public may interpret both statements as largely the same.
Yet another possibility is that economists are trained to look at overall sums of welfare benefits and welfare losses in certain groups when considering the impact of a policy. By contrast, individuals are more likely to assess a policy from their own perspectives, focusing on how a policy has impacted them or people they know.
But the explanation that seems most consistent with survey responses is that average Americans do not trust many of the assumptions underlying economists’ views. Most ordinary Americans surveyed feel that carbon taxes are an expensive way to reduce emissions, probably because they think the government is unlikely to spend the additional revenue wisely, certainly not as wisely as people would do so themselves. Experts, meanwhile, use a standard economic assumption that the additional revenues raised by carbon taxes somehow will be given back to consumers. If the public doesn’t believe in this assumption, then it becomes very hard to convince people that a carbon tax is the best available option.
There may be other explanations for public skepticism of economics, and the paper suggests that a lack of faith in government seems to be important. But for economists to gain credibility with the public, they may have to rethink—or better explain—some of their most basic, underlying assumptions.