Economists and Public Policy

Abstract

Economists have a deplorable habit of giving emphatic advice on public policy without bothering - even if they live long enough after - to see whether their predictions of the effects of the policy were correct. It would seem that society would heed the truth that has survived empirical tests based on economist's advice. However, the community often pursues very different policies from those set forth by economists because it insists on taking into account the realities of a political process which the economists persist in viewing as an all-powerful God who shares their preoccupation with efficiency. The true account then is that the economists refuse to listen to the society, not vice versa. The Chicago Credo states that an economic actor generally knows better the environment in which he is acting and the probable consequences of his actions than an outsider, regardless of how clever the outsider may be. But this credo is often ignored by others. However, if the application of the credo were consistent, we would not ascribe incompetence in acquiring information on policy positions, or in acting upon it, blithely and almost routinely to the various economic agents.