Tuesday, September 20, 2011

"It seems that we need some kind of sociologist"

That's from Paul Krugman's presidential address to the Eastern Economic Association.  He argues that macroeconomics has regressed by abandoning Keynesian theory, and offers some speculations as to why before concluding that we need a sociologist.  Well, I'm a sociologist and I'm here to help.  Actually, I don't think that surveys are all that useful in answering this kind of question, and I know of only one survey of economists, from 1996.  Still, I wanted to take a look.  I began by constructing an index from questions about whether tax cuts are good or bad for the economy, whether it would be better for more or fewer workers to be union members, whether high taxes are holding the economy back, whether government regulation is holding it back, whether high taxes are a big economic problem, and whether the gap between rich and poor is a big economic problem.  The result is what you could regard as a measure of liberalism versus conservatism, although I didn't start out planning to create one.  I just began with a factor analysis of a larger number of questions, and this is the strongest pattern that emerged. 

My question was whether position on this index was related to age.  It was--younger economists were more "conservative."  The oldest economist in the sample (born in 1921) had a predicted value of 2.2; the youngest (born in 1969) had a predicted value of about -1.5.  By comparison, the average value of the index was 3.7 for Democrats, -0.7 for Independents, and -4 for Republicans.  So the difference between the oldest and youngest generations was about as big as the difference between Independents and Republicans--that certainly seems large enough to be of interest. 

I hoped to explore exactly when the change took place, but the sample was small, only about 200 cases, so it wasn't possible to tell much.  However, there was no discernible shift towards calling themselves conservatives or Republicans.  (There were more Democrats than Republicans, and most said they were moderate).  That is, it doesn't seem to have been a straightforward ideological movement. 

Krugman's hypothesis is that the cause of the change is internal--it results from the sort of models economists admire ("rigorous" rather than ad hoc).  Since I'm just speculating, I offer another--older generations of economists were influenced by the experience of the 1930s and 1940s, and younger ones by the 1970s, when you could plausibly argue that government efforts to manage the economy were the source of the problem, or at least making things worse. 

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