How Economists Form Their Views: Reaction to Professor Pryor's Millennium Survey

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OLAV VELTHUIS [*]

ABSTRACT. This comment is in response to Frederic L. Pryor (2000). "The Millennium Survey: How Economists View the U.S. Economy in the 21St Century." The American Journal of Economics and Sociology. 59 (January), pp. 3-33.

Professor Pryor's essay is thought provoking and provides a refreshing contrast with the research of the majority of the academic economists he surveyed: the essay is both empirical in its approach, and highly informative about the economy. The most interesting questions that the essay poses, however, are not so much concerned with the way economists view the U.S. economy in the 21st century. They have more to do with the production, distribution and consumption of knowledge about the economy: why does Pryor find, on average at least, that hardly any differences exist between current trends and economists' future predictions? How do we explain the fact that academic, business, and government economists revealed hardly any differences in the predictions they make (which is to me the most interesting and surprising finding of the study)? Are the sources these economists rely on similar, do permanent flows of information between the three spheres of the government, business, and academia cause a common stock of knowledge, or is the convergence pure coincidence? To be sure, these questions point at the more fundamental question: what did these economists base their predictions on?

As far as academic economists are concerned, there is no need to argue that the predictive power of economic models is marginal (see e.g. Ormerod 1994, Hodgson 1988), while being an academic economist can hardly be equated with having a thorough understanding and empirical knowledge of the economy. A well known study conducted in the late 1980s by David Colander and Arjo Klamer showed that graduate students hardly valued knowledge about the economy (Colander and Klamer 1990); judging from a recent article in the New York Times about graduate education in the United States, in which Princeton economist Alan Blinder among others expressed his concern about the lack of interest among graduate students in the actual functioning of the economy, the situation has not changed in the mean time. [1]

There is, in other words, hardly any reason to have much faith in the predictions of the academic economists that Pryor surveyed; it is plausible that academic economists base their predictions on other sources than their own research. The fact that their predictions do not differ significantly from the ones made by business and government economists confirms that hypothesis. Either academic economists base their predictions on knowledge produced by government and business economists, or another external source of knowledge exists that all three groups rely on, In the latter case, newspapers and magazines are the most plausible source of distribution of knowledge about the core indicators that the survey focuses on.

To account for these issues, the study would have been enriched enormously with a control group of non-economists. My somewhat provocative hypothesis would be that the predictions of professional economists will not turn out to differ markedly from those of non-professionals; furthermore, I have my doubts if in 2050 the predictions of professional economists will turn out to be more accurate than those of laymen.

To be sure, Pryor recognizes the fragile basis on which some of the predictions must have been made. …