How do we know which economists to trust?

Brendan Burgess

Brendan Burgess

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Richard Tol had a very interesting piece in the [broken link removed] on Monday about celebrity economists.

I heard Joe Durkan on the radio this morning talking about the need to reduce the exchequer deficit to zero very quickly. As I happen to agree with this view, I thought he sounded reasonable. I know he has been around a long time, but I don't really know his record.

But he was balanced. Gave his views. He did not make personal attacks on politicians and other economists. He challended Morgan Kelly's arguments without attacking Morgan Kelly personally. It was very refreshing.

Only recently I watched an old debate on house prices between Jim Power and Morgan Kelly. I didn't see it at the time it was broadcast. If I had seen it, they both seemed equally persuasive although they had completely different forecasts.

David McWilliams forecast the housing price collapse. But it was he who convinced Brian Lenihan to guarantee the bondholders against the advice of the civil servants.

The best economic blog, in my opinion, is Seamus Coffey's. I had never heard of him apart from one reference on askaboutmoney. I have subsequently seen his analysis on factual issues such as "who are the bondholders?" I have seen him once on television. His excellent analysis gets very little coverage.

Brian Lucey has made a catalogue of astonishing errors. House price forecasts; selling the Anglo deposits, and wrong numbers in his debt forgiveness article. Maybe these are balanced by a very high number of instances of getting things right.

So which economist do I trust? I just don't know.
 
I'm reminded of the definition of an economist as someone who spends half their career developing a theory and the other half explaining why it didn't work.

Personally I'd be dubious about any economist who seems more interested in pushing their public profile rather then explaining/forecasting what is happening. I do wonder if some of them try to be sensational, simply to get their names in the paper, get paid for a TV appearance or to push a book/lecture. That would rule the likes of McWilliams out straight away.
 
It's like asking what used car salesman do I trust! The problem with economists is that they all have some form of bias whether it be from what they do for a living or from a ideological point of view. It's why if you give the same data to an economist from the ICTU and one from IBEC, they would both see different pictures even though both are very competent economists.

There is actually a letter from a reader in the Irish Times today on Tol's article. In it he says economics is a science and that economists should be judged by the results of their theories. It shows that lack of understanding out there of what economics is and why people latch on to people like Kelly and McWilliams because they were right once. Economics is not a science. It is a social science. Being right once does not mean you won't be wrong the next time you make a prediction.

To answer your question, I respect people like Philip Lane and Karl Whelan. Seamus Coffey is also good. Also Alan Ahearn will hopefully be allowed voice an opinion again without being branded a traitor.
 
I fully agree Brendan. Any economist can make a mistake, I don't have a particular problem with that, altho as you say, Lucey has made so many his forecasts have to be questioned. And any economist has a right to offer solutions, explain his position and then defend it. But no one has the automatic right to be credible just because of who they are, or to enter public debate and then retreat and refuse to answer questions or explain how s/he would implement them ( i.e. Kelly).

And there is a point where economics, politics and society meet. Economy's serve the public good, not the other way around. So it is idiotic to suggest policies that might work economically, but utterly fail to account for society, and the implications that such policies will have on people.

Rawls ( political science philosopher) suggested the importance of social freedom and the vitality of it as the "market place of ideas". Let the economists fully engage with each other, with society, and the political system, so that the public can judge and choose the best solution, accounting for all relevant facts, and not just economics. All social policy (including economics) requires a moral base, we relate to each other as moral beings, and thus the implications of policy needs to be taken into account. It is impossible to divorce morality, social policy and freedom from economics.
 
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It's a very good and timely article - the Google News app is particularly instructive.

I find Eoin Fahey's (KBC) presentation very measured and his views balanced, although I lack any expertise to analyse them in any depth.
 
Is it possible to see the table mentioned in Richard Tol's article?
 
Hard to know which ones to trust, but certainly the ones that force independent thinking have value.
I don't think we need to look to economists to predict our immediate future though. The decisions of our governments and councils over the last decade lead only to one outcome. The outcome is unavoidable. The only thing that is within our control is the scale of the mess.
To that end you can go with the views - take the pain now, it will be tough, but it will be soon over, and we'll be able to get on with our lives (Kelly, McWilliams etc.)
or
Continue making small changes here and there, tinkering with things, hoping that things are going to get better (Honahan, the government etc)

Things aren't going to get better any time soon. I'd prefer get the pain over with now. I am growing tired of drip-fed bad news.

But Kelly is right about one thing - Ireland has never been radical. So we will continue down the small change route, regardless of what we talk about here, or who publishes what - because that is who we are.
 
Economists frequently consider economic value.
What economic value would you put on the economic advice and opinions expressed by Kelly, McWilliams et al?
Consider the fact that for most people, the price they pay for such advice is zero (it comes free with newspapers, etc.). Is the economic value significantly above the price paid?
 
Hi Gulliver

An interesting idea, but I don't think it's a fair approach.

Their ideas are not free anyway. Morgan Kelly is paid by the taxpayer and David McWilliams is paid by the newspapers in which he expresses his opinions, so you are paying for them if you buy the paper.

Askaboutmoney is free. I might be biased, but I think it's economic value to people is above the price they pay.

Brendan
 
Brendan - for me personally, the marginal financial cost of getting the Kelly or Mc Williams opinion is zero - I read the newspapers and blogs, listen to radio, and watch TV, regardless of whether these opinions are there or not. It is arguable that there is a cost to me in terms of the expenditure of my (valuable) time.
I'm still wondering about the value side of the equation?

Askaboutmoney has a huge economic value in terms of providing every shade of opinion. So it is always possible to look back on AAM and find someone who predicted the outcome!!
 
Brendan Burgess said:
David McWilliams forecast the housing price collapse. But it was he who convinced Brian Lenihan to guarantee the bondholders against the advice of the civil servants.
Click to expand...

Is it not true that McWilliams did not argue for what was done but a much watered down version applicable to deposits and Lenihan went ahead on his own steam ?


Sunny said:
It shows that lack of understanding out there of what economics is and why people latch on to people like Kelly and McWilliams because they were right once.
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Morgan Kelly has been right more than once and, is publicity shy, the complete opposite of McWilliams. I have seen some outrageous, biased and very badly written articles doing an unfair hatchet job on Kelly in the past.
 
bullworth said:
Is it not true that McWilliams did not argue for what was done but a much watered down version applicable to deposits and Lenihan went ahead on his own steam ?

.
Click to expand...

Hi bullworth

What he said and what he has said since have been discussed at lenght in and in an even longer thread on politics.ie. In particular:

– and maybe I was naive, maybe I was stupid, maybe I was stupid to think we could behave like Swedes when we were actually Paddies…
Click to expand...
 
Brendan Burgess said:
So which economist do I trust? I just don't know.
Click to expand...

You won't go far wrong with Colm McCarthy in my opinion.

The guys who sold their souls to the banks during the boom would have a long long way to go before redeeming themselves.

Some others are trading off predicting the bust. If you were inclined to be a crank, non conformist or anti mainstream to begin with, realising property was overvalued at rental yields of 2% was not exactly rocket science and they should be admitting as much rather than trading off the sheep-like conformism of the majority of their peers.
 
Brendan Burgess said:
Hi bullworth

What he said and what he has said since have been discussed at lenght in and in an even longer thread on politics.ie. In particular:
Click to expand...

Hi Brendan.

Theres certainly a huge amount written about the subject of who said what to whom and when. It's kind of an overwhelming amount of information for me since I am not trained as an economist.
As someone perceived as knowledgeable in these matters, are you in a position to clarify whether the original accusation was true or false ?
 
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