In an all-too-common gesture of blog-civility Brad DeLong has decided that I’m an idiot because he thinks I’m asking for some sort of balance in viewpoints on economics regardless of the soundness or lack thereof of the views. Put differently, it seems that Brad thinks that my earlier post was saying that we should grant some credibility to Prescott’s outlandish claims because Paul Krugman has said some outlandish things before.
That is not at all what the earlier post was saying. The only substantive economic statement in the post dealt with the effects of monetary policy. Here’s exactly what I said regarding that statement: “Prescott is wrong.” Now, I realize that in any statement there is always some room for interpretation but there doesn’t seem to be a lot of room in that statement.
The main point of my earlier post is that we should think a bit more before immediately turning to Nobel laureates for policy analysis. We should ask ourselves why we are soliciting their opinions. It could be that we turn to them because “hey, they won a Nobel Prize; let’s see what they have to say.” It could be that we turn to them because we think “oh, they have a Nobel Prize and therefore they are going to know better than most other economists about economic issues.” I worry that some people think that the Laureates sknow better about all economic issues than people who haven’t won a Nobel Prize, or people who just work in the industry or in the private sector….
Now, unquestionably, when you consider the Nobel laureates, you are looking at some of the smartest people in our field. If you want to get an opinion, talking to a smart person is definitely not a bad thing to do. But it doesn’t mean that it is the best thing to do. Again, let me use Paul Krugman as an example. I’ll try to be very careful to avoid offending Brad’s delicate sensibilities. I’m not using Krugman as an example because I think his analysis is particularly flawed (or flawed at all). I’m using him as an example because he is very prominent in the popular press and because he finds himself in this position a lot. Krugman is asked to weigh in on all sorts of areas. For instance, Paul Krugman has said many things about health care policy. That’s fine. Paul is really smart and he knows a lot about economics. Moreover, I think he tries hard to keep up to date on the details of current policies. You could do a lot worse than asking Paul Krugman for his opinion. That said, Krugman doesn’t really have any particular expertise about the economics of health policy. (At least I don’t think he does.) There is nothing wrong with getting the opinions of a smart informed economist but that’s really all you are getting when Krugman starts talking about health policy. The same thing is true when he talks about the minimum wage. Krugman knows about the literature on the minimum wage; I’m sure he is very interested, as most economists are, in the research on the minimum wage but he’s not an expert on that area. In any case, he is the one who is asked to write about the minimum wage. Why? Because he has a Nobel Prize.
Interestingly, in Brad’s post he inadvertently gives a very good example of what I’m talking about. He presents an example of Robert Lucas talking to the Council on Foreign Relations on issues surrounding bailouts and the financial crisis (and also testifying to Congress about fiscal policy). Like Krugman, Lucas is also very, very smart. In fact you could argue that Lucas has looked deeper into the field than any other economist in the latter half of the twentieth century. (There is really no way around it – Lucas’s work is incredibly significant to the development of modern economics.) In any case, there he is talking to the Council on Foreign Relations about bailouts. Why? Does he know anything about bailout policies? Not really. But then why is Lucas being asked to give his opinion? Because he has a Nobel Prize.