real world

James Mackintosh

Economists often seem to be living in a different world, not least when their forecasts of future recessions – or more precisely the lack of them – are examined.

Now two economists have confirmed that economists are on a quite different plane to the rest of the population, by exploring their views on policy issues facing America. Two Chicago-based finance professors, Paola Sapienza of Northwestern and Luigi Zingales of Chicago Booth, tried to identify issues on which economists generally agreed.

Only two issues garnered complete agreement: every single economist questioned (as part of a regular survey) said it was hard to predict share prices, and not one thought US healthcare was sustainable.

By contrast only a small majority of Americans (55 per cent) agree that share prices are tough to forecast, and two-thirds think US healthcare is financially sustainable.

This might just suggest that the average American hasn’t paid enough attention, since shares are patently hard to forecast (not necessarily impossible, as the efficient market theory beloved of so many economists posits, but certainly very difficult). Equally, even America’s politicians agree that healthcare spending at the current level is unsustainable; part of the original justification of Obamacare was to reduce costs, after all.

But the general pattern is continued on many other topics: the views of economists are furthest from the general public on those issues where the economists agree the most. Read more