American Economic Association Economists' Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics Author(s): Victor R. Fuchs, Alan B. Krueger and James M. Poterba Source: Journal of Economic Literature, Vol. 36, No. 3 (Sep., 1998), pp. 1387-1425 Published by: American Economic Association Stable URL: https://www.jstor.org/stable/2564804 Accessed: 12-06-2020 14:53 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at https://about.jstor.org/terms American Economic Association is collaborating with JSTOR to digitize, preserve and extend access to Journal of Economic Literature This content downloaded from 18.28.8.168 on Fri, 12 Jun 2020 14:53:25 UTC All use subject to https://about.jstor.org/terms Journal of Economic Literature Vol. XXXVI (September 1998), pp. 1387-1425 Economists' Views about Parameters, Values, and Policies: Survey Results in Labor and Public Economics VICTOR R. FUCHS ALAN B. KRUEGER and JAMES M. POTERBA' 1. Introduction sues. But is the popular image justified? Richard Alston, James Kearl, and Mi- W 5 7INSTON CHURCHILL is supposed chael Vaughan (1992), who conducted a to have complained that whenever large-scale (464 respondents) survey of he asked Britain's three leading econo- economists in all fields, concluded that mists for advice about economic policy, there is considerable consensus among he received four different opinions-two economists, but the questions in their from John Maynard Keynes. The image survey dealt primarily with positive eco- of economists in disarray about economic nomics, not economic policy. The seven policy is firmly embedded in the popular questions that were clearly about pol- mind, enhanced, no doubt, by the ten- icy-unconditional "should" questions- dency of many journalists to seek out ex- had a mean entropy score of 0.83, which treme opposing views on controversial is- indicates a very high level of disagree- ment.2 1 Fuchs: Stanford University and NBER. In a survey of 50 leading health Krueger: Princeton University and NBER. Po- economists, Victor Fuchs (1996) found terba: Massachusetts Institute of Technology and NBER. Fuchs acknowledges financial support considerable disagreement (mean en- from The Robert Wood Johnson and Andrew W. tropy 0.77) regarding major issues of Mellon Foundations through the NBER; Krueger health policy. The extent of disagree- from the Princeton Industrial Relations Section; and Poterba from the National Science Founda- ment was particularly striking when tion through the NBER. We are grateful to the compared with the high level of agree- survey respondents; to Claire Gilchrist who ad- ment (mean entropy 0.52) among the ministered the survey and served as secretary for the project; and to Deborah Kerwin-Peck who same economists about the determi- processed the data, prepared the tables, and made nants of health and the determinants of many editorial improvements. We thank the par- ticipants at workshops at Harvard-MIT, Princeton, and Stanford; and Kenneth Arrow, David Cutler, 2 Each question allowed three possible answers: Peter Diamond, Eric Engen, Martin Feldstein, disagree, agree, or agree with proviso. The highest William Gale, Daniel Kahnemann, Daniel Kam- possible entropy score is 1.0, indicating that re- men, Hirschel Kasper, Mark McClellan, Lincoln spondents were evenly split among the three an- Moses, John Pencavel, A. Mitchell Polinsky, Karl swers. A score of zero indicates at all respon- Scholz, and three anonymous referees. dents chose the same answer. 1387 This content downloaded from 18.28.8.168 on Fri, 12 Jun 2020 14:53:25 UTC All use subject to https://about.jstor.org/terms 1388 Journal of Economic Literature, Vol. XXXVI (September 1998) health expenditures. Furthermore, the estimates and 95-percent confidence small disagreement that did exist re- intervals for economic parameters; c) garding the positive questions seemed values questions (answered on a con- to play no role in explaining policy dif- tinuous scale) regarding income redis- ferences. This result is at variance with tribution, efficiency versus equity, and Milton Friedman's view (1953) that pol- individual versus social responsibility; icy differences can usually be explained and d) political party identification. The by differences in judgments about posi- two surveys, which are reproduced in tive economics. the Appendix, are very similar in form, This paper reports the results of sur- but nearly all of the policy and eco- veys of specialists in labor economics nomic parameter questions are specialty and public economics at 40 leading re- specific. Two policy questions, one search universities in the United States. about increasing AFDC payments and We ascertained their opinions of eco- one about eliminating the cap on OASI nomic policies in their areas of special- payroll taxes, and two economic pa- ization and measured the extent of rameter questions about the Marshal- agreement or disagreement. We also at- lian and Hicksian labor supply elastici- tempted to determine the extent to ties for men aged 25-54, were included which policy disagreement is related to in both surveys. differences in estimates of relevant eco- The surveys were distributed in the nomic parameters, and differences in summer of 1996 to economists special- values. We used the respondents' opin- izing in labor economics and public eco- ions regarding their 95-percent confi- nomics on the faculties of the universi- dence intervals3 for the economic pa- ties with the 40 leading economics rameters to determine how often the departments in the United States. The average best estimate, or most com- 40 leading economics departments were monly occurring estimate, falls within identified from Loren Scott and Peter these intervals. We also compared their Mitias's (1996) ranking of departments, individual uncertainties with the collec- which is based on publication records of tive uncertainties as reflected in vari- the faculty. Specialists at these universi- ation across respondents in the best es- ties were identified from listings in the timates of the economic parameters. American Economic Association direc- tory, college catalogs, the 1996 Pren- 2. Description of Surveys tice-Hall Guide to Economics Faculty, and by personal knowledge. All labor Four main types of questions were economists and public finance econo- used in both the labor economics and mists in the economics departments at public economics surveys: a) policy universities with a top-40 economics de- opinions to be answered on a continu- partment were sent a questionnaire. In ous scale from "strongly oppose" to addition, questionnaires were sent to "strongly favor"; b) quantitative best many labor and public finance econo- mists at the business schools and public 3 Respondents were asked to specify lower and policy schools at these universities.4 A upper limits of a 95-percent confidence interval and were told that these limits need not be sym- metrical around the best estimate. The term "sub- 4The labor economics survey was sent to all jective probability interval" might be more appro- self-identified labor economists in a number of priate than "confidence interval," but we use the different departments at these universities; the Tatter term in the paper because that was the one public economics survey, however, was mailed to used in the survey. all public economists in economics departments This content downloaded from 18.28.8.168 on Fri, 12 Jun 2020 14:53:25 UTC All use subject to https://about.jstor.org/terms Fuchs, Krueger, Poterba: Economists' Views-Parameters, Values, Policies 1389 separate covering letter for each survey ates such as views concerning redistri- explained the general purpose of the bution. The response rate was lower, survey and promised anonymity to the however, if the economic parameters respondents. Fuchs' secretary at the preceded the policy questions. We in- National Bureau of Economic Research terpret the results of the split-ballot ex- kept track of the responses in order to periment as providing mild support that facilitate the sending of a follow-up re- the questions elicited views that were quest after two months. A total of 65 not easily manipulated, although the re- replies (response rate 39 percent) was sponse rate is higher if less technical received for labor economics, and 69 re- questions are asked first. plies (response rate 66 percent) for public economics. There was no signifi- 3. Major Conclusions cant difference between the responders and nonresponders with respect to uni- Before discussing the survey results versity rank in either survey.5 Every in detail, we summarize our major con- question provided a "no opinion" op- clusions. First, both surveys reveal a tion; the percent responding "no opin- great deal of disagreement among ion" or not providing an answer to each economists about policy proposals in question is reported in the survey re- their areas of specialization. Only one sults. of the 13 proposals (a 25-cent per gal- In the labor economics questionnaire, lon increase in the gasoline tax) elicited we implemented a "split-ballot" experi- a strong consensus either in favor or in ment in which the order of the policy opposition. Second, policy positions are and economic parameter questions was usually more closely related to differ- randomly reversed in half the question- ences in values than to differences in naires. Except for one question-the estimates of what we judge to be rele- desirability of increasing AFDC bene- vant economic parameters. This is fits-the order of the questions had a clearly evident for both surveys in sim- statistically insignificant effect on the ple correlations among the different mean responses to the policy and pa- types of variables and in multiple re- rameters questions.