Confirmation Bias in Policy Debate

by Will Wilkinson on July 7, 2010

In a post about Alberto Alesina and deficit reduction, Ezra Klein makes an excellent point:

Fairly few political commentators know enough to decide which research papers are methodologically convincing and which aren’t. So we often end up touting the papers that sound right, and the papers that sound right are, unsurprisingly, the ones that accord most closely with our view of the world. So Alesina’s paper gets a lot of conservative pickup, but if it had found the opposite, it would’ve been ignored by conservatives, or maybe torn apart by experts sympathetic to the conservative approach to austerity, even as liberals championed its findings.

This is one of the reasons I tend not to blog as much I’d like about a lot of debates in economic policy. I just don’t know who to trust, and I don’t trust myself enough to not just tout work that confirms my biases. This is also why I tend to worry a lot about methodology in my policy papers. How much can we trust happiness surveys? How exactly is inequality measured? How exactly is inflation measured? Does standard practice bias standard measurements in a particular direction? Of course, the motive to dig deeper is often suspicion of research you feel can’t really be right. But this is, I believe, an honorable motive, as long as one digs honestly. Indeed, I’m pretty sure motivated cognition, when constrained by sound epistemic norms, is one of the mainsprings of intellectual progress.

Anyway, I just wanted to say that Alberto Alesina was one of my favorite economists before Alberto Alesina was cool, and I don’t think his findings on deficit-reduction should be lightly dismissed.

HT: Reihan via Greader

  • Rick
    Much of economic research is based on correlations...but as we all know, correlation does not imply causation. Yet, many economists talk in terms of causality. So, a rule of thumb: any economist that implies causation is talking out his rump.

    The main exception is behavioral economics, which uses random assignment and can therefore establish causality.
  • 2 points: First, in general, economists don't really disagree on major issues. The current debate over fiscal stimulus is a rare exception. Second, there is a journal, the Journal of Economic Perspectives, that is essentially dedicated to providing easy-to-understand explanations of things like "Can we trust happiness research?" The articles are generally written by top people in the field. I think journalists would do well to check out articles in that journal if they're interested in topics that are not particularly timely.
  • Mfarmer
    It's not just spending cuts which can help the economy break out of stagnation, it's the signaling of a direction change. If businesses are confident that government is sincere about ending statist/Keynesian policies and allowing free market principles to work, then businesses will feel comfortable going forward and investors will have the information they need to act. It's not much different from the stagflation of Carter's malaise turned around by Reagan's Morning in America. It's also similar to a lender tighenting up on a company spending itself ito bankruptcy, but loosening up when new management takes over that restores financial sanity and makes the neessary cuts -- the austerity measures might not change things by afternoon, but there's confidence the new company is going in the right direction and can be trusted.
  • Pat
    Klein is funny. "That said, even as a matter of simple logic, I really don't understand the case for why a business would begin spending if the government announces major cuts this year."

    What's so hard to understand? When government spends less of your money, you can spend more of it yourself.
  • libert
    That might be true if there were a fixed supply of money (and other conditions, such as full employment, were met). But there's not.

    Businesses already have plenty of cash they can invest. Government spending or tax cuts won't cause this cash to evaporate--if anything it will add to it. Businesses are just sitting on their cash because there's no demand for their products to justify producing more.
  • Pat
    After government takes more money from people and leaves people less to spend on products from businesses, Keynesians think, "OMG, demand is down, we better have government spend more!"
  • joe
    Yep. C+G+I+X-M = GDP. Because "C" is doing a fantastic job right now keeping the economy afloat ::rolls eyes::
  • Pat
    Keynesians look at that formula and think that increasing G has no negative impact on C. "It's so easy, just increase G! "
  • kevindv
    Your observations are particularly good grounds for arguing that macroeconomic policy cannot be publicly justified. No reasonable person has conclusive reasons to accept the coercion involved in these policies because they all reasonably trust experts who radically disagree. Few if any macroeconomic regulations are ranked as improvements on the evaluative standards of all
  • If someone comes to a very controversial conclusion, but no opponent has assembled a convincing refutation, that grants the study a great deal of credence in my mind -- because there's no doubt that competing researchers with opposite biases have attempted to shoot it down.

    If, a few months from now (what's a paper's usual rebuttal time?) Alesina's results are still afloat, I'll think they're pretty reliable. Of course, I probably have a lower bound for "pretty reliable" than most people.

    Is this a perfect method? Nope. I just don't have a better one, short of doing the research myself.
  • Alex J.
    One hopes that, even if the layman can't judge the methodology of policy papers, an expert can make critiques of the methodology accessible. e.g. David Friedman's comments on the critiques of John Lott's concealed carry work. Though, even David Friedman commented that some of the statistical challenges were too technical for him to judge. If an issue gets enough scrutiny, there will be a chain from expertise to exposition, and the layman can go as far up that chain as he can. What's left I believe is deceitful expositors, rational ignorance and importantly, rational irrationality.
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