Outside the Beltway

Hearsay all the Way Down

Steven L. Taylor
59

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Paul Krugman:

I’ve gradually come to the realization that most of the commentariat doesn’t do what, say Martin Wolf or I do — grub around in published data, read reports, and all that. Instead, they rely on what they heard somebody say the facts are; hearsay economics.

Indeed, this clearly goes beyond economics to things like history and politics in general.

Granted, we are all guilty of this to one degree or another, but the real question becomes:  what percentage of what one thinks to be true is based on actual knowledge, and how much on hearsay?

Of course, the truly problematic part is that often the hearsay is based on hearsay:

And where do the reputable people get their information? Why, it’s what they heard somebody in their circle say. It’s hearsay economics all the way down.

Indeed.

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59 responses to “Hearsay all the Way Down”

  1. Moosebreath Avatar
    Moosebreath

    I suspect this was a reaction to his recent dust-up with Joe Scarborough.

    I think Jon Chait’s summary of the sort of argument Scarborough has with people like Krugman or Nate Silver hits the nail on the head:

    “Nerd: You are expressing a conventional wisdom that is at odds with the data but has gained currency by endless repetition among like-thinking elites.
    Scarborough: All my friends know you’re crazy!”

  2. matt bernius Avatar
    matt bernius

    what percentage of what one thinks to be true is based on actual knowledge, and how much on hearsay?

    Actually, I’d say it’s a step worse than that. What far to many people believe about a subject is based in their personal biases and buttressed by hearsay. And unfortunately, that hearsay is itself buttressed by a press which all to often believes that being objective means reproducing hearsay arguments to “tell both sides of a story.”

    See recent exchanges on Climate Change for a great example of this. You cannot be a scientifically based skeptic of the following three points: (a) that the global temperature is on a warming trend, (b) that this warming is occurring at an “unnaturally” fast and sustained rate, and (c) human activity is contributing to that warming activity.

    There’s a lot after that one can be legitimately (scientifically) skeptical about, but to continue to deny those previous points is to elevate hearsay over data.

  3. Steven L. Taylor Avatar
    Steven L. Taylor

    @Moosebreath: You are correct about the inspiration.

    @matt bernius:

    What far to many people believe about a subject is based in their personal biases and buttressed by hearsay. And unfortunately, that hearsay is itself buttressed by a press which all to often believes that being objective means reproducing hearsay arguments to “tell both sides of a story.”

    Agreed on all counts.

  4. Dave Schuler Avatar
    Dave Schuler

    I strongly suspect that many specialists have never read the fundamental, classic works in their own fields. How many economists have actually read The Wealth of Nations, Principles of Political Economy and Taxation, Capital, The General Theory of Employment, Interest and Money, and so on? My guess is there are a lot more economists than economists who’ve read all of them.

    Instead, they rely on the commentaries made by more recent people who have read them but probably haven’t read all of them, either. The level of specialization we have today practically requires it.

  5. Steven L. Taylor Avatar
    Steven L. Taylor

    @Dave Schuler: I suppose this could be true, but then again I don’t think that that is the same thing as what Krugman is referring to, yes?

  6. Steven L. Taylor Avatar
    Steven L. Taylor

    (the argument seems to be the difference between data-driven arguments based on understanding theory and arguments based on things people you agree with have said).

  7. Tsar Nicholas Avatar
    Tsar Nicholas

    You almost lost me at “Paul Krugman.” But the “hearsay” reference kept me going, since I’ve made part of my living keeping hearsay out of trial transcripts. And the economics references also kept me going, because in a former existence that was my thing. Sigh.

    In any case, Krugman is a funny guy — in the same vein in which Monty Python slapstick is funny — so here are some actual facts from actual reported data sets:

    12,332,000. That’s the number of unemployed people in America.

    4.7 million. That’s the number of long-term (> than 26 consecutive weeks) unemployed people in America.

    22,414,176. That’s the number of unemployed + underemployed people in America.

    13.8% – blacks
    9.7% – Latinos
    7.0% – whites

    Those are unemployment rates.

    Europe West with much higher crime rates and even worse demographic schisms is not a wellspring from which prosperity can flow. And that’s not hearsay. That’s based upon real, prima facie evidence.

  8. OzarkHillbilly Avatar
    OzarkHillbilly

    Granted, we are all guilty of this to one degree or another, but the real question becomes: what percentage of what one thinks to be true is based on actual knowledge, and how much on hearsay?

    and

    The level of specialization we have today practically requires it.

    One either believes the 99% of climate scientists who say that global warming is real and it is caused by human activities or you believe it is all one big conspiracy by the Tri-Lateral Commission for the institution of one world government under the auspices of the UN.

  9. Moosebreath Avatar
    Moosebreath

    @Tsar Nicholas:

    “Europe West with much higher crime rates and even worse demographic schisms is not a wellspring from which prosperity can flow. And that’s not hearsay. That’s based upon real, prima facie evidence.”

    So that’s why you reject the methods the Europeans are using to cut the unemployment rates, right? You’re opposing German and British-style austerity plans, surely?

  10. Dave Schuler Avatar
    Dave Schuler

    @Steven L. Taylor:

    I don’t think that that is the same thing as what Krugman is referring to, yes?

    It is. Dr. Krugman is in essence complaining that people won’t take what he says on his authority. But Dr. Krugman is himself a specialist. I accept his views as authoritative within his specialty which is trade. Not a general purpose authority, particularly in areas of macro, finance, or politics.

  11. Steven L. Taylor Avatar
    Steven L. Taylor

    @Dave Schuler:

    Not a general purpose authority, particularly in areas of macro, finance, or politics.

    I am not sure anything here is suggesting that Krugman (or anyone) be accepted as a general purpose authority. Further, I can accept that one might not wish to take Krugman as authoritative on anything,. However, it would be nice if one (generically speaking) had supportable evidence for why one thinks what one thinks, rather than simply assuming that what one’s co-partisans are saying is adequate evidence.

    I would re-submit that what you are describing (the notion that no one person knows everything) is quite different from someone who bases their opinions solely on what others have said, especially when the raw data raises questions about those opinions.

  12. MBunge Avatar
    MBunge

    @Tsar Nicholas: “That’s based upon real, prima facie evidence.”

    Can anyone decipher what point the Tsar thinks he’s making and how he thinks that evidence supports it?

    Mike

  13. Steven L. Taylor Avatar
    Steven L. Taylor

    @MBunge: I think he is asserting that the specific observations made in terms of a set of numbers provided are bad. And therefore Europe is bad (even though the numbers aren’t from Europe).

    QED.

    Or something.

  14. matt bernius Avatar
    matt bernius

    @Steven L. Taylor:

    However, it would be nice if one (generically speaking) had supportable evidence for why one thinks what one thinks, rather than simply assuming that what one’s co-partisans are saying is adequate evidence.

    More importantly, when faced with evidence that contradicts one’s point of view, it would be nice if the individual would seek out counter evidence, and if none can be found, change their point of view.

    Unfortunately, all too often we see some combination of either claiming that they don’t have the time to look up counter evidence or suggesting that it’s not their responsibility to look up counter evidence (or provide evidence that backs their initial claim).

    And usually this is followed by a constant ignoring of the evidence at hand and continuing to repeat the same, dis-proven point.

  15. Rafer Janders Avatar
    Rafer Janders

    Granted, we are all guilty of this to one degree or another, but the real question becomes: what percentage of what one thinks to be true is based on actual knowledge, and how much on hearsay?

    As always, Mark Twain already addressed this question back when he wrote “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

  16. Mikey Avatar
    Mikey

    @matt bernius:

    Unfortunately, all too often we see someone either (a) ignore the evidence at hand and continue to repeat the same, dis-proven point, or worse, (b) acknowledge that they don’t have any counter evidence and then proceed to ignore the evidence at hand and continue to repeat the same, dis-proven point.

    Motivated Reasoning

    “The processes of motivated reasoning are a type of inferred justification strategy which is used to mitigate cognitive dissonance. When people form and cling to false beliefs despite overwhelming evidence, the phenomenon is labeled “motivated reasoning”.

  17. john personna Avatar
    john personna

    I’ve considered it an unfortunate turn against expertise. Your doctor gives you advice, your friends will tell you to do otherwise. What the heck’s up with that?

    Global warming is all about rejecting expertise, and the idea that 20 years studying climate can teach you more than 20 minutes with Rush.

    Etc., Etc.

    (I try to balance by trusting genuine expertise, when I find it.)

  18. Septimius Avatar
    Septimius

    I’ve gradually come to the realization that most of the commentariat doesn’t do what, say Martin Wolf or I do — grub around in published data, read reports, and all that. Instead, they rely on what they heard somebody say the facts are; hearsay economics.

    Yeah. Especially when they rely on someone who routinely “shapes, slices, and selectively cites” his facts like Paul Krugman.

  19. KariQ Avatar
    KariQ

    @matt bernius:

    Actually, I’d say it’s a step worse than that. What far to many people believe about a subject is based in their personal biases and buttressed by hearsay. And unfortunately, that hearsay is itself buttressed by a press which all to often believes that being objective means reproducing hearsay arguments to “tell both sides of a story.”

    Too true. I can’t tell you the number of times I’ve looked into issue and found out what the facts are about something, shared what I learned (including links and sources), and been told “I don’t care. I know what I know.”

    Not that I’m immune to this myself, but I’m aware enough of it that I like to check up on myself when I’m about to say something and I’m not sure how I know it. (What, how do I know that daddy longlegs spiders have the most potent venom? I better double check that…)

  20. C. Clavin Avatar
    C. Clavin

    In which Tsar proves that statistics can be manipulated to amount to hearsay.

  21. Septimius Avatar
    Septimius

    @john personna:

    I’ve considered it an unfortunate turn against expertise. Your doctor gives you advice, your friends will tell you to do otherwise. What the heck’s up with that?

    Or, your doctor gives you advice, and you consult another doctor for a second opinion and he gives you different advice. How can that be? After all, they’re both experts and they have different opinions. Obviously, one is relying on medical expertise and the other listens to Rush Limbaugh. But, which one?

  22. David M Avatar
    David M

    @Septimius:

    Yeah. Especially when they rely on someone who routinely “shapes, slices, and selectively cites” his facts like Paul Krugman.

    I’m not sure why you would link to that, Okrent certainly comes out of it looking like a fool with an axe to grind.

  23. gVOR08 Avatar
    gVOR08

    @Dave Schuler: @Steven L. Taylor:
    Dr. K frequently comments on the fact that neo-classical critics of Keynesian econ seem to be unfamiliar with the founding texts of econ or with economic history. On his blog Saturday he was complaining that Tyler Cowen, amongst others, fails to see the harm in large hordes of corporate cash, which means Cowen believes Say’s law; whether Cowen realizes it or not. Keynes disproved Says Law in he 30s. There’s apparently reason to think Say didn’t entirely believe it when he said it, around 1803. But it keeps showing up.

    In my own field, engineering, I’d say Pareto’s rule applies. 20% of us are good at it, the majority aren’t. I doubt economics is much different.

  24. Stormy Dragon Avatar
    Stormy Dragon

    @Dave Schuler:

    How many economists have actually read The Wealth of Nations, Principles of Political Economy and Taxation, Capital, The General Theory of Employment, Interest and Money, and so on?

    Most physicists haven’t actually read Isaac Newton’s “Method of Fluxions” either. That doesn’t mean they never learned differential calculus. Specific works that are of historical note for originating for the initial development of a particular concept are often a terrible place to actually learn about the concept because they present it in an unrefined form that’s dificult to understand relative to more elegant formulations developed since the initial discovery.

  25. grumpy realist Avatar
    grumpy realist

    @Septimius: Well, there’s a great difference between going to two different accredited doctors and having one say “I think the data shows X” and the other one says “I think the data indicates Y”, which only means you might want to have more tests done. Contrast that with going to your next door neighbor who suggests you avoid all doctors whatsoever, because they’re all part of the medio-industrial complex and insists you can cure your cancer by a diet of pressed wheat juice and barking at the moon on alternate Sundays.

    Having experts differ is different than having an expert and a non-expert differ.

  26. john personna Avatar
    john personna

    @Septimius:

    I wasn’t talking about another doctor, I was talking about how everybody has an opinion they are ready to offer. I say I’m on lipator,people say “don’t take it!”

    So here’s the tricky question, since you asked this to me … you were just bagging on Krugman.

    What exactly is your economics education?

    You have a PhD I hope.

  27. grumpy realist Avatar
    grumpy realist

    (I consider this the Google effect. You google for info on something, read some “articles” and imagine that you have the knowledge of someone who has been working in the field for 20 years.)

  28. john personna Avatar
    john personna

    @grumpy realist:

    Exactly. Though certainly we can give economics a little more distrust than other fields, as it is one that breaks much more clearly on party lines. Republican botanists to not war with Democrat botanists.

  29. gVOR08 Avatar
    gVOR08

    @Dave Schuler: @Steven L. Taylor:
    I believe if you read Krugman regularly you will note that he doesn’t expect you to accept what he says just on his authority. He’s very good, often too wonkish, about laying out the facts and his reasoning. Where his analysis differs from others, he generally points out economic history that supports his position. Reality based econ, not faith based.

  30. john personna Avatar
    john personna

    @gVOR08:

    Cowen was weird and prickly in that argument. Top level, I’d say economists arguing about the one rule or equation which will explain the influence of money supply on this economy are all going to be wrong.

    It’s a flaw of their discipline that they think a simplification works for a thing like that.

    Money supplies are way up, corporate cash is way up, spending, growth, and inflation are all stubbornly resisting predicted action.

    IMO it’s all about the separate patterns on Wall Street and on Main Street.

  31. Ben Wolf Avatar
    Ben Wolf

    @gVOR08: Krugman parrots his share of unsupportable myths. Reference his dust-up with Steve Keen last year and the lecturing Krugman got from his own readers.

  32. gVOR08 Avatar
    gVOR08

    @Stormy Dragon: Modern physicists may not have read Method of Fluxions, but they seldom screw up basic calculus or say something that implies F does not equal MA. As Krugman frequently notes, economists do often ignore or screw up the basics.

  33. matt bernius Avatar
    matt bernius

    @Septimius:

    Or, your doctor gives you advice, and you consult another doctor for a second opinion and he gives you different advice. How can that be? After all, they’re both experts and they have different opinions. Obviously, one is relying on medical expertise and the other listens to Rush Limbaugh. But, which one?

    Well, there are a few answers to this situation — the simplest on is that you seek out additional doctors until you reach some sort of consensus. This happens in hospitals and among experts all the time. And again, consensus isn’t 100% agreement.

    But even before we get to that point, one needs to ask, are these all doctors in relevant fields to the question at hand. I love my Dentist, but I’m not going to get his opinion about a problem with my ACL.

    Going back to climate change, deniers often bring up the many scientists who signed the Oregon Petition and the writings of climate skeptic Dr. Freeman Dyson. What these people fail to mention is that the vast majority of the Oregon Petition’s co-signers are in fields that have nothing to do with climate research (the majority are Engineers, other co-signers include medical and veterinary doctors). Likewise, while Dr. Dyson is a staggering intellect, his areas of expertise have little to no crossover with climate science.

    There’s no question all of those people are experts — just not in the fields they are commenting on.

  34. john personna Avatar
    john personna

    @gVOR08:

    I’m not sure you’ve got that quite right:

    Keynesian economists, such as Paul Krugman, stress the role of money in negating Say’s law: Money that is hoarded (held as cash or analogous financial instruments) is not spent on products. To increase monetary holdings, someone may sell products or labor without immediately spending the proceeds. This can be a general phenomenon: From time to time, in response to changing economic circumstances, households and businesses in aggregate seek to increase net savings and thus decrease net debt. To increase net savings requires earning more than is spent, contrary to Say’s Law, which postulates that supply (sales earning income) equals demand (purchases requiring spending). Keynesian economists argue that the failure of Say’s Law, through increased demand for monetary holdings, can result in a general glut due to falling demand for goods and services.

    We think Cowen is arguing that some other opposing force is keeping growth in check … perhaps Cowen’s Great Stagnation.

  35. Ben Wolf Avatar
    Ben Wolf

    Say thought in terms of a barter economy. In his mind the only resson to obtain money is for the purpose of acquiring goods, therefore no one would save money because only goods are valued.

    He (and those who still support the dynamic he described) fail to understand money’s use as A) a means of accumulating claims on wealth and B) as a means of satisfying social obligations.

    To accept Say’s Assertion is to assume economic actors can see through time to determine all goods and services they will need in the future. There is no room for expectations or uncertainty.

  36. john personna Avatar
    john personna

    Related, Bartlett on corporate hordes, specifically overseas cash hordes. (He says he went to the store at http://www.microsoft.com and was billed from Luxembourg, possibly creating “offshore earnings” for that company.)

    The Growing Corporate Cash Hoard

  37. Dave Avatar
    Dave

    @Septimius: Did you really read the article you linked to? Krugman might be a bit of nerd who hates to be wrong, but you actually want that in an economist. And based on the article, Krugman is right. Okrent, however, appears to be something of a coward who holds grudges.

  38. Dave Avatar
    Dave

    @Ben Wolf: A bunch of MMT types coming out of the woodwork should not be considered a lecturing. And MMT is still too young and unproven for its adherents to be screaming about how standard macro is “unsupportable.”

  39. Mikey Avatar
    Mikey

    @john personna: It seems like Krugman didn’t actually read Cowen’s piece, but rather only Peter Dorman’s piece about Cowen’s piece…which would be quite ironic considering Krugman’s own position on “hearsay economics.”

    But maybe I missed something? You seem a lot more invested (LOL) in the discussion than I am. Most of what I read from Cowen is about what restaurants are good around here.

  40. stonetools Avatar
    stonetools

    Dr. K has a track record to look to. He’s been mostly right on in his economic forecasts over the past ten years, whereas his opponents -the Chicago School- have been mostly wrong. Based on that, I’m going to trust Dr. K over his opponents, absent strong evidence as to why I shouldn’t, in the same way I’m going with Nate Silver on political forecasting over Joe Scarborough.

  41. Stormy Dragon Avatar
    Stormy Dragon

    @gVOR08:

    I wasn’t disagreeing with Krugman, I was disagreeing with Schuler, who seems to be focussing education on having read specific books rather than having mastered specific concepts.

  42. Ben Wolf Avatar
    Ben Wolf

    @Dave: I have no idea what MMT has to do with anything. The Keen-Krugman debate was on endogenous money. Krugman still clings to the loanable funds framework, which anyone who has ever worked as a loan officer can testify against; that’s exactly what his readers did.

  43. Just 'nutha ig'rant cracker Avatar
    Just ‘nutha ig’rant cracker

    @Tsar Nicholas: You were an economist once, too? My gawd, what haven’t you done and more importantly, was there ever anything that you were good enough at to stay in the field of?

  44. Andre Kenji Avatar
    Andre Kenji

    Krugman is a superb economist, but his work in the NYT is lacking. He is a much better academic than a columnist.

  45. Just 'nutha ig'rant cracker Avatar
    Just ‘nutha ig’rant cracker

    @OzarkHillbilly:

    (c) human activity is contributing to that warming activity

    climate scientists who say that global warming is real and it is caused by human activities

    In fairness, you should admit that these two statements are not exactly synonymous and that the conflation of the second into the first is exactly the sort of thing that Matt (and Krugman) are talking about. But keep punchin’ at those evangelicals–eventually, you’ll change their minds.

  46. john personna Avatar
    john personna

    @Mikey:

    I read Marginal Revolution daily. I like it actually because Cowen is often brief and cryptic. You have to figure out the best interpretation of his message before think about responding. That usually works out pretty well, because he is smart and insightful.

    The first piece on this was kind of in the vein, which made it hard to understand exactly what he was arguing.

    Are corporate profits a sinkhole for purchasing power?

    He did start with a rather coy claim:

    I am confused by this argument.  I would understand it (though not quite accept it) if corporations were stashing currency in the cupboard.  Instead, it seems that large corporations invest the money as quickly as possible.  It can be put in the bank and then lent out.  It can purchase commercial paper, which boosts investment.

  47. john personna Avatar
    john personna

    (My comment there was in the same lines as above, that I think currents between Wall Street and Main Street are inefficient, especially in these strange times. In Time Magazine’s analysis two of the things they note are high corporate cash AND slowed bank lending. Here.)

  48. Dave Avatar
    Dave

    @Ben Wolf: As I remember it, the dispute you referred to actually involved several avowed MMT people on Krugman’s blog arguing Keen’s position. I just assumed you were one of them hence my knee jerk reaction.

  49. Mikey Avatar
    Mikey

    @john personna: I do read MR once in a while, mostly because Cowen is local to me and I think he’s interesting.

    And, of course, the restaurant thing, much more useful to me than to you.

    I’ve been thinking about what he wrote that set Dorner and Krugman off, and I’m not understanding why they didn’t address the substance of his initial claim. They just seemed to default to accusing him of pushing Say’s Law.

  50. john personna Avatar
    john personna

    @Mikey:

    Well that quote I put up is pretty much Say’s Law. They might have stuck on that. Also, I’m not sure his graph of personal consumption really shows a return to trend. It might just be the best Tyler, in his Great Stagnation pessimism, can expect.

    Related:

    The Richest 1 Percent Have Captured 121 Percent Of Income Gains During The Recovery

    Currents of money do not reach every shore.

  51. john personna Avatar
    john personna

    (I enjoy Tyler’s comments on food. His ethnic dining guide reinforced principles I already used out here on the west coast. I’ve long been a denizen of strip-mail, fist-generation immigrant, restaurants.)

  52. M. Python (L.Cap.) Avatar
    M. Python (L.Cap.)

    Both Sides? Well…

    Graham Chapman: I think all right thinking people in this country are sick and tired of being told that ordinary, decent people are fed up in this country with being sick and tired.

    All: Yes, yes…

    Graham Chapman: I’m certainly not! And I’m sick and tired of being told that I am.

    Not Sure?: Mrs. Havoc-Jones.

    Mrs. Havoc-Jones: Well, I meet a lot of people and I’m convinced that the vast majority of wrong thinking people are right.

    Not Sure?: There seems like a consensus there.

  53. Ben Wolf Avatar
    Ben Wolf

    @Dave: The dust-up was between Krugman and Post-Keynsians. The only MMT connection was that MMTers also accept Endogenous Money theory.

  54. Dave Avatar
    Dave

    @Ben Wolf: Yes, I think that’s true. What I remember most clearly was that several (one in particular) commenters on Krugman’s blog, who very loudly push MMT (annoyingly so), also often seem to mention Keen in the same breath. I think Keen is probably known more for his skepticism of neo classical economics and his views on endogenous money, which I guess makes him attractive to some of the MMT people, even though I don’t think Keen is actually an MMTer.

  55. Dave Avatar
    Dave

    @Ben Wolf: Looking at my reply, I think I should note that I think Keen considers himself a Post Keyensian, which you appear to state.

  56. Mikey Avatar
    Mikey

    @john personna: Seems like it would be pretty easy to test his claim that large corporations invest or bank the money upon which they are accused of sitting. If they do, he’s right, and the issue isn’t hoarding per se but whatever other factors he points to as responsible for discouraging others from accessing it.

    His reviews have led me to some of the best little restaurants, especially a little Szechuan place in a strip mall not far from my house. It’s as plain as an old shoe to look at, but man, their chili chicken will just blow you away.

  57. Ben Wolf Avatar
    Ben Wolf

    @Dave: Keen himself has in the past been skeptical of MMT, but has of late been working with the faculty at UKMC to develop a synthesis of his Minskyan model with MMT’s sectoral balances. There’s a video of a conference on the subject somewhere on YouTube.

  58. Craig Davis Avatar
    Craig Davis

    When I hear the words “the science is settled and N% of scientists agree” then I pose this question: “Since it is settled, nothing more can be learned, when do we stop ALL federal grants to climate scientists?” Is my question reasonable?

  59. Craig Davis Avatar
    Craig Davis

    @matt bernius:
    Matt, you’ve drunk too much of the media kool aid. “Legitimate” science is based on the scientific method. Many respected climate scientists do not support you points 1, 2, or 3. Their individual stances are based on their observations and interpretations of real data and careful, appropriately applied statistical analyses.

    “… hearsay is itself buttressed by a press which all to often believes that being objective means reproducing hearsay arguments to “tell both sides of a story.”” Are you seriously contending that misunderstanding of your view of “Climate Change” results from a press that is telling both sides of the story? You must be listening to other than the US big 3 free TV channels and the largest of the cable networks (minus Fox) to imagine that both sides of this story are presented equally. Would you mind telling us where you have found equal treatment of scientists on both sides of the debate? Thanks.

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