Tuesday, March 13, 2012 9:18am

Free Trade

Question A: Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: On average, citizens of the U.S. have been better off with the North American Free Trade Agreement than they would have been if the trade rules for the U.S., Canada and Mexico prior to NAFTA had remained in place.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Agree 1
Consider any tribe or group that was isolated from trade for centuries to see the long run results of autarky
         
Strongly Agree 9
         
Acemoglu Daron Acemoglu MIT Agree 8
Economists often understate short-term employment costs, which are significant and unequally distributed, but probably less than benefits.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 10
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 9
Gains and losses are not spread evenly. Retraining programs are an important part of trade policy.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 7
Bio/Vote History
         
Autor David Autor MIT Uncertain 8
Not sure how to compare the gains to consumers with long run effects on employment. They might both be positive!
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 4
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT --- ---
---
Bio/Vote History
Joined 11/2013 Uncertain 5
we don't know how much of the growing inequality has been due to trade. Trade is good for the world, but not always for rich country labor.
 
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton --- ---
---
Bio/Vote History
Joined 11/2013 Agree 6
 
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Agree 8
Bio/Vote History
         
Currie Janet Currie Princeton Agree 7
Bio/Vote History
         
Cutler David Cutler Harvard Agree 6
Note that not everyone is better off.
Bio/Vote History
         
Deaton Angus Deaton Princeton Uncertain 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 3
The "gains" are positive a general additive sense, but that does not avoid costs to some.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 6
Bio/Vote History
         
Einav Liran Einav Stanford --- ---
---
Bio/Vote History
Joined 11/2013 Agree 7
 
Fair Ray Fair Yale Strongly Agree 8
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 9
 
Goldberg Pinelopi Goldberg Yale Agree 10
General message of trade theory. But the question is how long the "long run" is.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Did Not Answer
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 7
Trade creates tremendous benefits but causes substantial job losses Do current policies fully compensate displaced workers? Probably not
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 8
liberalization has such large long-run benefits that it can fund short-run dislocation assistance
Bio/Vote History
         
Hart Oliver Hart Harvard --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 10
There is robust economic theory telling us that the overall gains from trade for any country are likely to be substantial.
 
Holmström Bengt Holmström MIT Agree 8
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 10
The world's endowment is allocated more efficiently under free trade, making the avg person better off. Individuals may face adjustmt costs.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 10
Aggregate gains from trade.
 
Kaplan Steven Kaplan Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 8
 
Kashyap Anil Kashyap Chicago Agree 9
Description of the gains is right, and long run employment might be higher too. We can try to compensate short run job losers.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 8
Jim Feyrer has some ingenious papers finding evidence of income gains from trade.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 8
Estimates used by CEA of the effect of complete free trade are as large as $500 billion per year - enormous even if off by a scalar.
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 8
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 8
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Agree 6
I agree with the statement as worded. There could be other, less desirable, impacts as well.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 5
Bio/Vote History
         
Samuelson Larry Samuelson Yale --- ---
---
Bio/Vote History
Joined 11/2013 Agree 8
It's always difficult to quantify "much", but the long-run direction is clear.
 
Scheinkman José Scheinkman Princeton Strongly Agree 9
Gains are sufficiently large to finance the compensation of workers in loosing sectors.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 9
If that's not right, almost all of economics is wrong.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 10
Evidence on this is overwhelming. Question suggests short-term adverse effects on employment, but why, and where?
 
Shimer Robert Shimer Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Agree 8
In theory the workers who lose their jobs can be compensated by the consumers who gain. In practice this often does not happen.
 
Shin Hyun Song Shin Princeton Agree 7
Bio/Vote History
         
Stock James Stock Harvard Agree 5
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 8
Nevertheless, there are winners and losers. Trade does not make everybody better off, and a good policy should take this into account.
Bio/Vote History
         
Thaler Richard Thaler Chicago Did Not Answer
Bio/Vote History
         
Udry Christopher Udry Yale Agree 7
This needs more nuance: most people win, and the winners gain a lot. But there are losers from trade who have not in fact been compensated.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Agree 6
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Uncertain 1
         
Agree 8
         
Acemoglu Daron Acemoglu MIT Agree 1
Bio/Vote History
         
Alesina Alberto Alesina Harvard Strongly Agree 10
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 7
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 5
Bio/Vote History
         
Autor David Autor MIT Agree 6
NAFTA was small potatoes relative to rising China trade. My hunch is that both costs and benefits were modest.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 3
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT --- ---
---
Bio/Vote History
Joined 11/2013 Agree 7
NAFTA is a rather unique trade intervention since it involved the main source of immigrants.
 
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton --- ---
---
Bio/Vote History
Joined 11/2013 Agree 3
 
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Agree 10
Bio/Vote History
         
Currie Janet Currie Princeton Agree 5
Bio/Vote History
         
Cutler David Cutler Harvard Agree 6
Bio/Vote History
         
Deaton Angus Deaton Princeton Uncertain 3
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
On "average" is an important qualifier.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 6
Bio/Vote History
         
Einav Liran Einav Stanford --- ---
---
Bio/Vote History
Joined 11/2013 Agree 4
 
Fair Ray Fair Yale Strongly Agree 8
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT --- ---
---
Bio/Vote History
Joined 11/2013 Agree 8
 
Goldberg Pinelopi Goldberg Yale Agree 9
See my answer to question A. However, short- and medium-run effects of NAFTA, especially on employment and wages in the US, unclear.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Did Not Answer
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 7
True for the average but complicated issues of social welfare functions here. better compensation for folks who do not gain might help
Bio/Vote History
         
Hall Robert Hall Stanford Agree 7
Not to mention benefits to Canadians and Mexicans! We should take a global perspective.
Bio/Vote History
         
Hart Oliver Hart Harvard --- ---
---
Bio/Vote History
Joined 11/2013 Agree 7
A partial movement toward free trade is harder to evaluate.
 
Holmström Bengt Holmström MIT Agree 8
The question is about averages. Distributional income and employment effects hard to measure, but probably significant.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 8
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Agree 10
Some lose but we gain on net.
 
Kaplan Steven Kaplan Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 8
 
Kashyap Anil Kashyap Chicago Agree 7
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 7 Bio/Vote History
         
Lazear Edward Lazear Stanford Agree 7
Although difficult to estimate, there is little evidence of negative effects of NAFTA and the positives are obvious.
Bio/Vote History
         
Levin Jonathan Levin Stanford Did Not Answer
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 8
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 8
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 8
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Agree 6
Such is the result of much of the empirical literature.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 3
Bio/Vote History
         
Samuelson Larry Samuelson Yale --- ---
---
Bio/Vote History
Joined 11/2013 Agree 8
 
Scheinkman José Scheinkman Princeton Strongly Agree 8
This is true about the average.
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 6
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley --- ---
---
Bio/Vote History
Joined 11/2013 Agree 8
Seems very likely, but distributional impact is a possible concern.
 
Shimer Robert Shimer Chicago --- ---
---
Bio/Vote History
Joined 11/2013 Strongly Agree 8
The majority of citizens are better off.
 
Shin Hyun Song Shin Princeton Agree 6
Bio/Vote History
         
Stock James Stock Harvard Agree 4
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 7
But the gains have probably been very small.
Bio/Vote History
         
Thaler Richard Thaler Chicago Did Not Answer
Bio/Vote History
         
Udry Christopher Udry Yale Agree 3
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Agree 6
The key word is on average: there are large distributional effects.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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