by Mario Rizzo
I am always amazed that when many economists give policy advice the sophistication and logical rigor that the discipline so values gets completely lost.
There are many ways to interpret this. One is that the level of precision appropriate to theory and to applied economics is not appropriate to the “art” of economic policy. Of course, I would suggest that maybe this teaches us something about the ultimate value of sophistication in the theoretical product. Do the precise concepts of theory and applied economics have referents in the “real world”? Or is most of the precision lost when we try to understand the world and recommend policies? This is an important question.
However, here I am interested in the sloppiness of the policy-relevant discussions that even very good and respectable economists produce. One interesting example is a recent “Economix” piece in The New York Times by the Princeton economist Uwe Reinhardt.
I have two points: first, the confusing mix of science and value judgments; and second, the naïve analysis of the political process. Read the rest of this entry »