Clarification: It's Macro that's Embarrassing

I’m slamming macro below. Even then, I think we know a fair amount, as is implied by my hedging. Economists are useless when it comes to many fundamental questions important to policy, not all. I think micro counts as a science, especially empirically-focused experimental micro. My rhetoric is overbroad, so my apologies to empirically-oriented micro people. 

In another excellent Economix post that I missed (thanks Gherald L), Princeton’s Uwe Reinhardt makes a version of my point, showing how easy it is for macroeconomists to cherrypick estimates of, say, the responsiveness of workers to changes in marginal tax rates to support what they’ve already concluded. The moral of Reinhardt’s story deserves emphasis:

So there you have the flexibility, shall we say, that economists enjoy when they apply their professional skills to affairs of state in what may seem, to outsiders, like purely scientific analyses.

In the first lecture of my freshman economics course at Princeton titled “The Art of Siffing Among Seasoned Adults,” I demonstrate how seasoned adults routinely structure information felicitously(i.e., “sif”) to further their own agenda, and I point out that economists can be among the most skillful practitioners of this art.

“If at the end of this course you still trust me,” I warn them, “I have failed in my mission. When economists advise on public policy, the operative mantra is Caveat Emptor!”

I am sad to teach it, but consider it fair and full disclosure.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center