How Often are Economists Wrong? - Dilbert Blog

How Often are Economists Wrong?

Some of you poo-pooed my idea of surveying economists, pointing out that they have a bad track record of predicting the big things that matter, such as the credit crunch, or oil at $145 a barrel. Does that mean a poll of economists would be useless even if they all agreed?

As economists like to say, “It depends.”

First, let’s agree that even if experts such as doctors and lawyers and engineers are often wrong, that doesn’t mean they should be ignored. What matters is that consulting with experts produces a better result on average than whatever is the alternative. Depending on the sort of question being asked, economists are likely to be more reliable than the public at large.

If the question involves predicting the value of the stock market next year, economists aren’t any better than a monkey with a dart board. And they know it. But if the question is whether using food crops for ethanol could hurt the economy more than it helps, or whether free trade is a good idea, or whether a gas tax holiday makes sense, you would be wise to listen.

Economists are also historians when it comes to their field. They would know, for example, that government price controls would be a disaster because they have failed in the past. If doing X with the economy caused Y to happen the last three times someone tried it, wouldn’t you like to know it? Economists already do.

When you are talking about the global economy, making the right decisions just barely more often than before is a huge deal. So the bar is set low for economists. They only need to be right more often than the public and the politicians. Is that so hard?

I’ll blog again in a few days.