Richard Schmalensee

MIT

Personal Homepage

  • Howard W. Johnson Professor of Economics and Management
  • Director of the Center for Energy and Environmental Policy Research
  • Member of the President’s Council of Economic Advisers (1989–91)
  • EPA Environmental Economic Advisory Committee (1992–96; 1998)

Voting History

Inflation Target

Question A: If the Fed changed its inflation target from 2% to 4%, the long-run costs of inflation for households would be essentially unchanged.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
Hard to be very confident, particularly about the durability of the target.
Disagree 5

Question B: Raising the inflation target to 4% would make it possible for the Fed to lower rates by a greater amount in a future recession.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 5

Deficits

If the US reduced its fiscal deficit, then its trade deficit would also shrink.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
All else equal...
Uncertain 5

Infrastructure Spending

Question A: The US should increase spending now on roads, railways, bridges and airports (including new projects, maintenance or both).

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Our infrastructure is well below world standards.
Agree 7

Question B: The advisability of increasing federal spending on roads, railways, bridges and airports is independent of whether the US also enacts tax cuts that substantially lower revenues.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 5
Given that the economy is near capacity, a big tax cut on top of a big increase in spending would be unwise.
Disagree 6

Baumol’s Cost Disease

Because labor markets across different sectors are connected, rising productivity in manufacturing leads the cost of labor-intensive services — such as education and health care — to rise.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 8

Tax Reforms

Question A: Since 1980, whenever substantial growth effects have been required to make a tax reform plan revenue neutral, the actual outcome has invariably been a fall in tax revenue as a share of GDP.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Have a prior but don't know the evidence.
Agree 7

Question B: The tax reform plan proposed by President Trump this week would likely pay for itself through higher economic growth.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 4
Strongly Disagree 8

Border Adjustment Tax

Question A: Implementing a "destination based cash flow tax (including border adjustment)" of the type advocated by Speaker Ryan would substantially reduce the US trade deficit within the next few years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Disagree 4

Question B: Implementing a “destination based cash flow tax (including border adjustment)” of the type advocated by Speaker Ryan would substantially raise prices for US consumers.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Disagree 5

The CBO

Question A: Forecasting the effects of complex legislative actions is hard, so even competent, non-ideological and non-partisan projections could differ substantially from outcomes.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Strongly Agree 9

Question B: Adjusting for legal restrictions on what the CBO can assume about future legislation and events, the CBO has historically issued credible forecasts of the effects of both Democratic and Republican legislative proposals.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 7

High-Skilled Immigrant Visas

Question A: If the US significantly lowers the number of H-1B visas now, expected US tax revenues will rise materially over the next four years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 8
Hard to see how making the labor force smaller could raise tax revenues.
Disagree 7

Question B: If the US significantly lowers the number of H-1B visas now, employment for American workers will rise materially over the next four years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 7
There might be some effect, but not a material effect.
Disagree 6

Sports Stadiums

Providing state and local subsidies to build stadiums for professional sports teams is likely to cost the relevant taxpayers more than any local economic benefits that are generated.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
While there may be exceptions, this is a easy call -- particularly for football stadiums.
Agree 5

Trump and Share Prices

Question A: US share prices have risen since Donald Trump’s election victory at least partly because the policies he seems poised to implement are likely to increase US after-tax corporate profits.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Hard to imagine what else it could be.
Agree 6

Question B: US share prices have risen since Donald Trump’s election victory at least partly because the policies he seems poised to implement are likely to increase US real GDP growth.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 6
Share prices depend on profits, not GDP. Tax cuts plus more spending may increase GDP in the short run. but profits are what matter .
Disagree 5

Economic Policy Advice

The Council of Economic Advisors is likely to give the US president better policy advice if the Chair and Members of the CEA have published peer-reviewed economics research.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 5
Publication demonstrates training and quality of mind; necessary but not sufficient conditions for good economic advice.
Agree 7

100-Day Plan

Question A: If all of the “Seven actions to protect American workers” in President-elect Trump’s 100-day plan (see link) are enacted, it will more likely than not improve the economic prospects of middle-class Americans over the next decade.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
Strongly Disagree 6

Question B: If all of the “Seven actions to protect American workers” in President-elect Trump’s 100-day plan are enacted, it will more likely than not improve the economic prospects of low-skilled Americans over the next decade.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
These are not the most important of his proposals, of course.
Strongly Disagree 6

AT&T and Time Warner

A merger of AT&T and Time Warner would likely increase consumer surplus over the ensuing decade.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Disagree 4

Taxes and Mandatory Spending

Long run fiscal sustainability in the US will require some combination of cuts in currently promised Medicare, Medicaid and Social Security benefits and/or tax increases that include higher taxes on households with incomes below $250,000.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Agree 6

Import Duties

Adding new or higher import duties on products such as air conditioners, cars, and cookies — to encourage producers to make them in the US — would be a good idea.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 8
A terrible idea, for many reasons.
Strongly Disagree 7

Science, Technology and Immigration

Question A: Allowing US-based employers to hire many more immigrants with advanced degrees in science or engineering would lower (at least temporarily) the premium earned by current American workers with similar degrees.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Agree 6

Question B: Allowing US-based employers to hire many more immigrants with advanced degrees in science or engineering would raise per capita income in the US over time.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Agree 7

Brexit II

Question A: Because of the Brexit vote's outcome, the UK's real per-capita income level is likely to be lower a decade from now.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 5

Question B: Because of the Brexit vote's outcome, the rest of the EU's real per-capita income level is likely to be lower a decade from now.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 6
Agree 5

Universal Basic Income

Granting every American citizen over 21-years old a universal basic income of $13,000 a year — financed by eliminating all transfer programs (including Social Security, Medicare, Medicaid, housing subsidies, household welfare payments, and farm and corporate subsidies) — would be a better policy than the status quo.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 6
A properly designed negative income tax could be part of a better policy, but replacing everything is a bad idea.
Disagree 6

Inequality and Monetary Policy

The ratio of the 90th to the 10th percentile of the US income distribution has been unaffected by the Federal Reserve's unconventional monetary policies since the financial crisis.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 4

Cadillac Tax

The “Cadillac tax” on expensive employer-provided health insurance plans will reduce costly distortions in US health care if it is allowed to take effect as scheduled in 2018.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Agree 7

Breaking Up Banks

Question A: The four largest domestic US banks currently have around 40% of the industry’s domestic assets (an average of 10% each).  In early 1998, before Glass-Steagall ended and before Citicorp merged with Travelers, they held 13.2% (an average of 3.3% each). Thirty years ago, before interstate branching was fully permitted, that combined share was around 8% (an average of 2% each).
Capping US banks’ size so that no single bank could be larger than 4% of the sector's domestic assets would lower systemic risk in the US.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
The shadow banking system, which is important in this context, would change in response to such a rule, with unknown effects.
Uncertain 5

Question B: The US financial system would contribute more to the average American's welfare if the size of US banks were capped so that none could be larger than 4% of the sector's domestic assets.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
There would be somewhat more intense competition, which would be beneficial, but there would also be other difficult-to-evaluate effects.
Uncertain 4

Bureau of Labor Statistics

Question A: By providing important measures of US economic performance — including employment, consumer prices, wages, job openings, time allocation in households, and productivity — the Bureau of Labor Statistics creates social benefits that exceed its annual cost of roughly $610 million.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Strongly Agree 8

Question B: Cuts in BLS spending would likely involve net social costs because potential declines in the quality of data, and thus their usefulness to researchers and decision makers, would exceed any budget savings.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Strongly Agree 7

Trade and Toughness

An important reason why many workers in Michigan and Ohio have lost jobs in recent years is because US presidential administrations over the past 30 years have not been tough enough in trade negotiations.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 7
Disagree 6

Primary Voting

Question A: There is no perfect voting system. That is, no voting system can ensure that the winner will be the person who best represents voters’ wishes, including how intensely they favor or disfavor each candidate.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 10
Strongly Agree 8

Question B: One clear defect of a winner-take-all election with 3 or more candidates, and with each voter choosing only one candidate, is that a candidate who is strongly disliked by a majority, but strongly liked by a minority, can beat a candidate who is liked by a majority and disliked by relatively few.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Assumes a one-round, plurality wins system.
Agree 8

Oil Price Speculation

Large movements in monthly oil prices, either up or down, are driven primarily by speculators, as opposed to changes in the current (and planned) supply or demand for oil.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 8
Disagree 7

Brexit

Question A: If the UK opts to withdraw from the European Union, and assuming Scotland stays in the UK, the level of the UK's real per-capita income a decade later will be lower than if it remains part of the EU.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Uncertain 5

Question B: If the UK exits the EU, then it substantially increases the chances that some other current region of the EU will also exit within the following decade.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
If there are good economic arguments pro or con, they have not reached me.
Agree 6

China’s Growth

China’s growth model, specifically the unusually high investment rate and low consumption rate, is unsustainable.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Internal politics matters here and it is hard to be confident about future developments.
Agree 6

Christmas Spending

An annual December spending surge on parties, gift-giving and personal travel delivers net social benefits.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 6
Compared to no concentration? Externalities of both signs; who knows the net?
Agree 6

US Interest Rates

Question A: The Fed should raise its target interest rate when it meets in mid-December.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 5

Question B: The Fed should have raised interest rates sooner, rather than leaving them near zero for this long.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
Disagree 6

Quarterly Earnings

Question A:

Letting publicly traded US firms report earnings annually rather than quarterly would lead their executives to place more weight on long-term issues in their investments and other decisions.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
This is almost trivially true, since there would be no quarter-to-quarter considerations. But it is hard to imagine a big effect.
Uncertain 5

Question B: A switch from quarterly to annual earnings reports would, on net, benefit shareholders.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 3
Perhaps a touch less short-termism but a lot less timely information. Hard to see a net gain.
Uncertain 5

Standardized Tests

Comparing their students’ average gains on standardized tests over the school year makes it easier to predict which teachers — all else equal — are more likely to improve their student’s long-term life outcomes.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
Plausible, but ...
Agree 5

Poverty and Measurement

Question A: The association between health and economic growth in poor countries primarily involves faster growth generating better health, rather than the other way around.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Uncertain 5

Question B: The decline in the fraction of people with incomes under, say, $1 per day is a good measure of whether well-being is improving among low-income populations.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
Obviously not a perfect measure, but intuitive and should capture major trends.
Uncertain 5

Health Insurance Subsidies

Question A:

Expanding health insurance to more people through the ACA’s public subsidies and Medicaid expansion will reduce total healthcare spending in the economy.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
A big switch from reliance on emergency rooms to prevention could do this, but this does not seem likely.
Disagree 6

Question B: Expanding health insurance to more people through the ACA’s public subsidies and Medicaid expansion will generate gains in the health and well-being of the newly insured that exceed the costs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
This is, of course, the rationale for the program, and it is not implausible.
Agree 6

$15 Minimum Wage

Question A: If the federal minimum wage is raised gradually to $15-per-hour by 2020, the employment rate for low-wage US workers will be substantially lower than it would be under the status quo.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 1
Lower, probably; substantially lower, not clear at all.
Uncertain 5

Question B: Increasing the federal minimum wage gradually to $15-per-hour by 2020 would substantially increase aggregate output in the US economy.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 5
Not a plausible stimulus package.
Disagree 5

Greece’s Referendum

The median Greek citizen will be better off if there is a “yes” vote in the July 5 referendum on whether to accept the terms of the bailout package offered by Greece's creditors.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
More likely than not, I think, but far from certain.
Uncertain 5

Currency Manipulation

Question A: Economic analysis can identify whether countries are using their exchange rates to benefit their own people at the expense of their trading partners’ welfare.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Uncertain 5

Question B: Bank of Japan monetary policies that result in a weaker yen make Americans generally worse off.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
Disagree 5

Nash Equilibrium

Behavior in many complex and seemingly intractable strategic settings can be understood more clearly by working out what each party in the game will choose to do if they realize that the other parties will be solving the same problem. This insight has helped us understand behavior as diverse as military conflicts, price setting by competing firms and penalty kicking in soccer.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Even a confirmed behavioralist has to admit that this analysis is often informative, if not always definitive.
Strongly Agree 8

US Median Income

The 9% cumulative increase in real US median household income since 1980 substantially understates how much better off people in the median American household are now economically, compared with 35 years ago.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
The official indices and deflators undervalue quality change and new goods. A small annual bias makes a big difference over 30+ years.
Agree 7

California’s Drought

Californians would be better off on average if all final users in the state paid the same price for water — adjusted for quality, place and time — even if, as a result, some food prices rose sharply and some farms failed.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
There would be losers and serious adjustment costs, not all economic, so it is hard to be confident about "on average".
Agree 7

Raising Interest Rates

The Fed should wait until its preferred measure of inflation (Core PCE) is clearly rising — and not just forecast to rise — before it begins hiking interest rates.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Uncertain 5

Local Tax Incentives

Question A: Giving tax incentives to specific firms to locate operations in a city or state typically generates local benefits that outweigh the costs to the city and/or state providing the incentives.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
I doubt it but don't recall seeing anything rigorous on this.
Uncertain 5

Question B: The US as a whole benefits when cities or states compete with each other by giving tax incentives to firms to locate operations in their jurisdictions.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 7
Unless the firm would otherwise locate abroad, the only net effect is less tax revenue. The EU bans state aid for this reason.
Disagree 5

Vaccines

Question A:

Declining to be vaccinated against contagious diseases such as measles imposes costs on other people, which is a negative externality.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Strongly Agree 9

Question B: Considering the costs of restricting free choice, and the share of people in the US who choose not to vaccinate their children for measles, the social benefit of mandating measles vaccines for all Americans (except those with compelling medical reasons) would exceed the social cost.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Children are not choosing for themselves here; this would just add to the set of harmful choices that parents are not allowed to make.
Agree 7

Greece

In 10 years, per capita purchasing power in Greece will be higher if — rather than continuing to service its debts over the next decade and complying with the budget rules currently in place — it refuses to accept a continuation of its current troika program and explicitly defaults on its debt held by the official sector.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
So much would seem to depend on the difficult-to-predict reactions of various strategic players with diverse interests and agendas.
Uncertain 5

Dynamic Scoring

Question A: Changing federal income tax rates, or the income bases to which those rates apply, can affect federal tax revenues partly by altering people’s behavior, and thus their actual or reported incomes.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Not always predictably, of course.
Strongly Agree 9

Question B: To the extent that a given tax change might affect revenues partly by affecting national-income growth, existing research provides enough guidance to generate informative bounds on the size of any growth-driven revenue effect.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 6
Uncertain 6

Question C: For large proposed changes in tax rates or the tax base, official revenue forecasts provided to Congress would probably be more accurate if the CBO and JCT tried to estimate fully how the proposed tax changes would affect growth-driven revenue.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 5
Uncertain 5

Textbook Prices

Question A: Most college professors who assign textbooks would not be able to guess, within 10% of the actual figure, the retail price that their students pay for new copies of those books.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Seems right to me, but only based on my own experience.
Agree 5

Question B: Since students can resell college textbooks or rent electronic versions, the net burden on students is substantially lower than retail prices for new textbook purchases would suggest.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
"Substantially" depends on those markets having few frictions, and I have no idea if that is the case.
Agree 7

Question C:
Even though the professors who select textbooks are different form the people who pay for them, the price of new edition college textbooks reflect classic forces of supply and demand.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Disagree 5

Oil Prices

The recent decline in oil prices will promote higher real GDP in the US over the next couple of years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Agree 7

Economists and Conventions

A US city hosting a big convention will enjoy a higher boost to incremental spending — holding the number of visitors and their average incomes fixed — if those visitors are auto dealers rather than economists.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Economists rarely try to impress each other with how much money they can spend. Auto dealers, by reputation, do this fairly often.
Agree 6

Trade Balances

A typical country can increase its citizens’ welfare by enacting policies that would increase its trade surplus (or decrease its trade deficit).

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
Disagree 6

Repatriated Profits

Question A: Lowering the effective marginal tax rate on US corporations’ repatriated profits for a year would boost US capital investment significantly.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
Hard to see how a one-year blip in domestic cash would cause a significant change in capital budgets
Disagree 5

Question B: Permanently lowering the effective marginal tax rate on US corporations’ repatriated profits, such as by moving to a territorial-based tax system, would boost US capital investment significantly.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
Depends critically on your model of investment behavior. I don't have one in which I am particularly confident.
Uncertain 5

Fast-Track Authority

Question A: By lowering bargaining costs, fast-track negotiating authority for the president makes it more likely that the U.S. can conclude major trade deals.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 7

Question B: Past major trade deals have benefited most Americans.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Positive aggregate benefits does not imply that most Americans benefit, but it seems likely in this case.
Agree 7

Amazon and Market Power

Question A: Amazon has monopsony power in the market for books that is significantly reducing the supply of books.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 6
Some monopsony power, sure; significant impact on supply, possible but not especially likely.
Disagree 5

Question B:
Amazon has sufficient monopsony power that regulatory intervention is likely to make consumers of books better off, taking into account implementation costs and the effect of intervention on incentives.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 6
Just because there's monopsony (or monopoly) power doesn't mean there is a regulatory fix, and I don't see one here.
Disagree 5

Piketty on Inequality

The most powerful force pushing towards greater wealth inequality in the US since the 1970s is the gap between the after-tax return on capital and the economic growth rate.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
The rapid rise in very high labor incomes seems to be much more important in the US.
Disagree 6

Taxi Competition

Letting car services such as Uber or Lyft compete with taxi firms on equal footing regarding genuine safety and insurance requirements, but without restrictions on prices or routes, raises consumer welfare.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Strongly Agree 8

Scottish Independence

Although there are many issues for Scotland’s voters to consider, one consequence of separating from the rest of the UK would be greater macroeconomic instability for Scotland for many years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Scotland would be poor when their oil runs out in a few years, but stability would seem to depend on currency, EU, other uncertainties.
Agree 5

Infrastructure (revisited)

Question A: Because the US has underspent on new projects, maintenance, or both, the federal government has an opportunity to increase average incomes by spending more on roads, railways, bridges and airports. (The experts panel previously voted on this question on May 23, 2013. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
This is a no-brainer as regards roads and bridges, but the federal government doesn't do railroads and rarely if ever does airports.
Agree 6

Question B: Past experience of public spending and political economy suggests that if the government spent more on roads, railways, bridges and airports, many of the projects would have low or negative returns. (The experts panel previously voted on this question on May 23, 2013. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 6
I could agree with "some," but "many" is not obvious. Also, railroads are privately funded.
Uncertain 5

U.S. State Budgets (revisited)

Question A: By discounting pension liabilities at high interest rates under government accounting standards, many U.S. state and local governments understate their pension liabilities and the costs of providing pensions to public-sector workers. (The experts panel previously voted on this question on October 1, 2012. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
I understand that many state & local pensions are underfunded, but I am very uncertain as to how this was/is done.
Agree 7

Question B: During the next two decades some U.S. states, unless they substantially increase taxes, cut spending, and/or change public-sector pensions, will require a combination of severe austerity budgets, a federal bailout, and/or default. (The experts panel previously voted on this question on October 1, 2012. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
Clearly there is a problem, but I'm not confident that it is generally (outside of Illinois) as serious as the language implies.
Agree 6

Fracking (revisited)

New technology for fracking natural gas, by lowering energy costs in the United States, will make US industrial firms more cost competitive and thus significantly stimulate the growth of US merchandise exports. (The experts panel previously voted on this question on May 23, 2012. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Natural gas prices are NOT determined in a world market. Prices in the US will be cheaper than those in most nations for a long time.
Uncertain 5

Economic Stimulus (revisited)

Question A: Because of the American Recovery and Reinvestment Act of 2009, the U.S. unemployment rate was lower at the end of 2010 than it would have been without the stimulus bill. (The experts panel previously voted on this question on February 15, 2012. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Agree 7

Question B: Taking into account all of the ARRA’s economic consequences — including the economic costs of raising taxes to pay for the spending, its effects on future spending, and any other likely future effects — the benefits of the stimulus will end up exceeding its costs. (The experts panel previously voted on this question on February 15, 2012. Those earlier results can be found here.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 6

Congress and Monetary Policy

Legislation introduced in Congress would require the Federal Reserve to "submit to the appropriate congressional committees…a Directive Policy Rule", which shall "describe the strategy or rule of the Federal Open Market Committee for the systematic quantitative adjustment of the Policy Instrument Target to respond to a change in the Intermediate Policy Inputs." Should the Fed deviate from the rule, the Fed Chair would have to "testify before the appropriate congressional committees as to why the [rule]…is not in compliance." Enacting this provision would improve monetary policy outcomes in the U.S.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 9
Not a hard call.
Disagree 7

Patents

Question A: All else equal, Patent Assertion Entities — which specialize in acquiring and asserting patents and are popularly known as “patent trolls" — promote innovation in the U.S.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
Not simple. Probably encourages independent inventors & small firms, but their weak-basis lawsuits are a tax on other innovators.
Disagree 5

Question B: Within the software industry, the US patent system makes consumers better off than they would be in the absence of patents.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
A sensible system for software patens would clearly be better than nothing. The current system? Not so clear.
Uncertain 6

Liquidity

There is a social value to having institutions that issue liquid liabilities that are backed by illiquid assets.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 8

Gary Becker

Question A: Employers that discriminate in hiring will be at a competitive disadvantage, if their customers do not care about their mix of employees, compared with firms that do not discriminate.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 6

Question B: Rising market wages are an important reason — over and above any changes in medical technology, social norms or preferences — why family sizes have fallen over the past century in rich countries.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
I get the theory, but I don't know how one can support a judgment about importance.
Agree 6

Net Neutrality II

Considering both distributional effects and changes in efficiency, it is a good idea to let companies that send video or other content to consumers pay more to Internet service providers for the right to send that traffic using faster or higher quality service.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
It is not generally good policy to restrict firms' product offerings, but there seem to be other considerations.
Uncertain 5

European Debt

The recent oversubscribed debt issues of Greece and Portugal suggest that sovereign default by any euro area country is unlikely in the foreseeable future.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Not my field, but this seems to be basing a strong conclusion on a weak evidentiary foundation.
Uncertain 6

College Athletes

If the NCAA let colleges pay athletes with more than scholarships (which currently may cover tuition, books, room and board), then top colleges in men’s basketball and football would pay most athletes substantial sums beyond full scholarships.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
Some schools would clearly pay some athletes a good deal more, but I have a hard time with "most."
Agree 7

Russia Sanctions

Past experience suggests that economic sanctions do little to deter the target countries from their course of action.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
I'm sure there are exceptions, but not many.
Uncertain 5

Supplying Kidneys

A market that allows payment for human kidneys should be established on a trial basis to help extend the lives of patients with kidney disease.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 7
How to deal with donors who don't understand risks, increased incentives to steal & import, perceived inequities...? Not simple.
Uncertain 7

Robots

Question A: Advancing automation has not historically reduced employment in the United States.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Agree 7

Question B: Information technology and automation are a central reason why median wages have been stagnant in the US over the past decade, despite rising productivity.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Uncertain 6

Innovation and Growth

Future innovations worldwide will not be transformational enough to promote sustained per-capita economic growth rates in the U.S. and western Europe over the next century as high as those over the past 150 years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 8
The surprises of the last 150 years should make clear the folly of trying to forecast the next 150.
Uncertain 6

Chairman Bernanke

Informed postmortems of Ben Bernanke’s Fed chairmanship will judge favorably the Fed's creative and aggressive policy initiatives from autumn 2008 through early 2009.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 7

Surge Pricing

Using surge pricing to allocate transportation services — such as Uber does with its cars — raises consumer welfare through various potential channels, such as increasing the supply of those services, allocating them to people who desire them the most, and reducing search and queuing costs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Uber is making a market, so this question just asks whether having price change to balance supply and demand is a good thing.
Agree 8

Bah, Humbug

Giving specific presents as holiday gifts is inefficient, because recipients could satisfy their preferences much better with cash.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 5
Generally, of course. But shopping takes time, and some gifts you would never have shopped for turn out to satisfy unsuspected preferences.
Disagree 7

Low-Skilled Immigrants

Question A: The average US citizen would be better off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 3
Very unclear how to think about the "average" citizen when there would likely be winners and losers.
Agree 5

Question B: Unless they were compensated by others, many low-skilled American workers would be substantially worse off if a larger number of low-skilled foreign workers were legally allowed to enter the US each year.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 6

Diversification

In general, absent any inside information, an equity investor can expect to do better by choosing a well-diversified, low-cost index fund than by picking a few stocks.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Not a great question: "a few stocks" might hit it big, "do better than" and "in general" are not well-defined.
Strongly Agree 9

Fed Policy

Question A: Enactment of the Senate bill to subject the Federal Reserve's monetary policy and discount window decisions to an audit by the Comptroller General of the U.S. would improve the Fed's legitimacy without hurting its decision making.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 7
Strongly Disagree 7

Question B: The Fed should not reduce its purchases of mortgage-backed securities and treasurys until there is clearer evidence of strong and sustained employment growth.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
Agree 5

Net Neutrality

Allowing Internet service providers to charge content companies for access to the ISPs' customers would provide net benefits to consumers.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
Disagree 5

US Fiscal Risks

Question A: If the United States fails to make scheduled interest or principal payments on government debt securities, even as an unintended consequence of political brinksmanship, US families and businesses are likely to suffer severe economic harm.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 6

Question B: With or without a default, current uncertainty over future taxing and spending policies of the US government is likely to depress private investment and hiring by enough to reduce GDP growth by at least a quarter of a percentage point over the next 12 months.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
The sign is clear, but the magnitude is a much harder call.
Uncertain 5

Capital Outflows

Experience over the past 30 years shows that for the typical emerging market nation facing rapid capital outflows, spending foreign currency reserves to defend its currency is a better policy for its citizens than not doing so.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Disagree 4

Student Credit Risk

Conventional economic reasoning suggests that it would be a good policy to enact the recent Senate bill that would let undergraduate students borrow through the government Stafford program at interest rates equivalent to the primary credit rates offered to banks through the Federal Reserve's discount window.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
Conventional reasoning may rationalize a subsidy, but it is not clear what the alternative is or why this formula might be optimal.
Uncertain 5

Savings Behavior

An effective way to increase savings rates of employees whose firms have defined contribution plans is to combine automatic enrollment in those plans and periodic automatic increases in their contributions (with the ability to opt out of either).

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 7

Fiscal Policy and Savings

Sustained tax and spending policies that boost consumption in ways that reduce the saving rate are likely to lower long-run living standards.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 7

Fogel on Slavery

Slavery in the United States was eradicated because of social and political events, not because it was an unprofitable institution for slaveholders.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 7

LNG Exports

Restricting US exports of liquefied natural gas would have adverse effects on the US economy.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 6

Infrastructure

Question A: Because the US has underspent on new projects, maintenance, or both, the federal government has an opportunity to increase average incomes by spending more on roads, railways, bridges and airports.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 6

Question B: Past experience of public spending and political economy suggests that if the government spent more on roads, railways, bridges and airports, many of the projects would have low or negative returns.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Depends importantly on whether earmarks play a significant role.
Uncertain 5

Charitable Deductions

Reducing the income-tax deductibility of charitable gifts is a less distortionary way to raise new revenue than raising the same amount of revenue through a proportional increase in all marginal tax rates.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 6

Bitcoin

A bitcoin's value derives solely from the belief that others will want to use it for trade, which implies that its purchasing power is likely to fluctuate over time to a degree that will limit its usefulness.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
This is a very new animal; hard to be confident about it.
Agree 6

High-Debt Countries

Countries that let their debt loads get high risk losing control of their own fiscal sustainability, through an adverse feedback loop in which doubts by lenders lead to higher government bond rates, which in turn make debt problems more severe.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 7

Trade Deals

Refusing to liberalize trade unless partner countries adopt new labor or environmental rules is a bad policy, because even if the new standards would reduce distortions on some dimensions, such a policy involves threatening to maintain large distortions in the form of restricted trade.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 3
In many, perhaps most cases I would agree, but I don't see how one can argue that the trade distortion is always more important.
Uncertain 5

Early Education

Using government funds to guarantee preschool education for four-year olds would yield a much lower social return than the ones achieved by the most highly touted targeted preschool initiatives.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Uncertain 4

Minimum Wage

Question A:

Raising the federal minimum wage to $9 per hour would make it noticeably harder for low-skilled workers to find employment.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
There would surely be some effect, but "noticeably" seems a reach.
Uncertain 5

Question B:

The distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Not the easiest call, but the minimum wage has been higher in real terms in the past, so this would not move us into uncharted waters.
Uncertain 5

Japan’s Deflation

The persistent deflation in Japan since 1997 could have been avoided had the Bank of Japan followed different monetary policies.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Must be directionally right, but recent US experience does not inspire certainty.
Agree 6

Debt Ceiling

Because all federal spending and taxes must be approved by both houses of Congress and the executive branch, a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Just read the paper.
Agree 7

Small Firms

The federal government would make the average U.S. citizen better off by using policies that directly focus more on increasing small business growth than growth of economic output overall.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 7
Disagree 6

Indexing

The annual indexing of Social Security benefits to increases in the consumer price index for urban wage earners and clerical workers (the CPI-W) leads to higher benefits than would be required to compensate recipients for genuine cost-of-living increases.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
Most agree that the CPI over-states inflation, but it is less clear that the over-statement is substantial.
Uncertain 6

Carbon Taxes II

The Brookings Institution recently described a US carbon tax of $20 per ton, increasing at 4% per year, which would raise an estimated $150 billion per year in federal revenues over the next decade. Given the negative externalities created by carbon dioxide emissions, a federal carbon tax at this rate would involve fewer harmful net distortions to the US economy than a tax increase that generated the same revenue by raising marginal tax rates on labor income across the board.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Agree 7

Ten-Year Budgets

Question A: Because federal spending on Medicare and Medicaid will continue to grow under current policy beyond the 10-year window of most political budget debates, it is easy for a politician to devise a budget plan that would reduce federal deficits over the next decade without really making the U.S. fiscally sustainable.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Agree 7

Question B: Comparing two plans that would reduce federal budget deficits by identical amounts in each of the next 10 years, one that did so partly by reducing significantly the long-term growth rate of Medicare and Medicaid spending would do more to make the U.S. budget fiscally sustainable than one that did not lower the growth of these spending programs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Agree 7

Bailouts: Banks and Automakers

Question A: Taking into account all of the economic consequences — including the incentives of banks to ensure their own liquidity and solvency in the future — the benefits of bailing out U.S. banks in 2008 will end up exceeding the costs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 6

Question B: Because GM and Chrysler were bailed out in 2008-09, the U.S. unemployment rate was lower at the end of 2010 than it would it have been if Congress and the executive branch had not intervened.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 6

Question C: Taking into account all of the economic consequences — including effects on corporate managers' incentives and on creditors' expectations of how their claims will be treated in future bankruptcies — the benefits of bailing out GM and Chrysler will end up exceeding the costs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Moral hazard seems less of a problem with non-financial corporations.
Uncertain 6

Big Banks

Question A: The U.S government should make further efforts to shrink the size of the country's largest banks — such as by capping the size of their liabilities or penalizing large banks more heavily through taxes or other means — because the existing regulations do not require the biggest banks to internalize enough of the "too-big-to-fail" risks that they pose.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 6

Question B:

The economic benefits to the U.S. of having a handful of banks with balance sheets greater than $1 trillion are small.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 5

Manufacturing

Question A: The federal government would make the average U.S. citizen better off by using policies that directly focus more on increasing manufacturing employment than employment in other sectors.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 9
This is the argument of the Physiocrats in modern dress. Picking winners, even broadly defined, is rarely good policy.
Disagree 6

Question B: Because firms and inventors do not capture the full returns from research and development, the government would increase the average well-being of Americans (and potentially of others too) by favoring R&D using the tax code.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
One would need to be careful to define R&D fairly narrowly. But it is hard to argue that there are no spillovers from comercial R&D.
Agree 6

Medicare

Question A: Consider one of two proposals for restraining future Medicare spending, each by the same amount: The method that President Obama enacted in the Affordable Care Act — reducing Medicare-related payments to private insurers and altering the payment system for doctors and hospitals — imposes risks on future Medicare patients because over time the supply of doctors, hospitals and insurers willing to offer them health services may decline in response to restrained payments.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 6

Question B: Consider the other of two proposals for restraining future Medicare spending, each by the same amount: The method that Governor Romney advocates — giving future seniors a fixed payment for premiums and letting private insurers compete with Medicare — imposes risks on future Medicare patients because competition may not be powerful to enough to offer future seniors the same quality of care that is currently promised without supplementing their premium support.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 6

Presidents and Jobs

Claims by incumbent presidents and challengers about how many private-sector jobs can be created in a four-year period by sector-level or other targeted policies should be viewed as rough guesses, because overall macroeconomic conditions drive aggregate employment in ways that dominate any net effects of polices that focus on specific industries or households.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 8

Taxing Capital and Labor

Question A: One drawback of taxing capital income at a lower rate than labor income is that it gives people incentives to relabel income that policymakers find hard to categorize as "capital" rather than labor".

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 7

Question B: Despite relabeling concerns, taxing capital income at a permanently lower rate than labor income would result in higher average long-term prosperity, relative to an alternative that generated the same amount of tax revenue by permanently taxing capital and labor income at equal rates instead.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 5

Question C: Although they do not always agree about the precise likely effects of different tax policies, another reason why economists often give disparate advice on tax policy is because they hold differing views about choices between raising average prosperity and redistributing income.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Agree 7

U.S. State Budgets

Question A: By discounting pension liabilities at high interest rates under government accounting standards, many U.S. state and local governments understate their pension liabilities and the costs of providing pensions to public-sector workers.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 7

Question B: During the next two decades some U.S. states, unless they substantially increase taxes, cut spending, and/or change public-sector pensions, will require a combination of severe austerity budgets, a federal bailout, and/or default.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Agree 7

QE3

Question A: Even if the third round of quantitative easing that the Fed recently announced increases real GDP growth over the next two years, the increase will be inconsequential.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Uncertain 5

Question B: Even if the third round of quantitative easing that the Fed recently announced increases annual consumer price inflation over the next five years, the increase will be inconsequential.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Uncertain 5

Question C:

Even if inflationary pressures rise substantially as a result of quantitative easing and low interest rates, the Federal Reserve has ample tools to rein inflation back in if it chooses to do so.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 5

Ethanol

Question A: Ethanol content requirements and protectionism against imported ethanol (which includes fuel from sugarcane) raise food prices without significantly reducing carbon-dioxide emissions.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 7

Question B: A direct disincentive to emit carbon-dioxide, for example through a carbon tax or an emissions permit market, is more efficient than requiring the use of corn-based ethanol fuels.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 10
One of the true no-brainers.
Strongly Agree 8

European Debt

Question A: Even if all the official-sector funding that Greece received from 2010 through August 2012 is written off, propping up Greece to buy time for the rest of Europe to prepare for Greek default has been better for citizens of the Eurozone outside of Greece than a policy that would have cut off funding sooner.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 5
Uncertain 5

Question B: A substantial sovereign-debt default by some combination of Greece, Ireland, Italy, Portugal and Spain is a necessary condition for the euro area as a whole to grow at its pre-crisis trend rate over the next three years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Disagree 5

Question C: Unless there is a substantial default by some combination of Greece, Ireland, Italy, Portugal and Spain on their sovereign debt and commercial bank debt, plus credible reforms to prevent excessive borrowing in the future, the euro area is headed for a costly financial meltdown and a prolonged recession.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 4

Trade Barriers for Sugar

The current trade barriers in the U.S. sugar industry raise the profits of sugar producers and make the typical U.S. consumer pay more for sugar and goods that use sugar as an input.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 7

Student Loans

Question A: Loans to students attending for-profit colleges are especially risky because students attending them have had default rates that greatly exceed those for comparable students attending public and non-profit private institutions.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Haven't seen numbers except in the press; don't understand the nature of "default" here.
Uncertain 5

Question B: Rules that tie each college's eligibility for federal student loans to its students' graduation rates and post-schooling employment outcomes would better protect taxpayers from losses on student loans.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Much could depend on the nature of the "tie." If this were done well it could also affect competition for students in a positive way.
Agree 5

Money Market Funds

Question A: The way in which money market funds normally trade – at one dollar per share, even though the per-share value of the assets backing them varies over time – made them vulnerable to a run in 2008 before they received taxpayer guarantees.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Haven't read or thought about these issues.
Agree 8

Question B: Taxpayers would be better protected if each money market fund in the U.S. were instead required to trade at its floating net asset value.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Uncertain 7

Question C: In the absence of floating net asset values, taxpayers would be better protected if each money market fund in the U.S. were required to set aside capital to protect against losses while holding back a portion of shareholders' cash for a time when they seek to withdraw all of their money.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
Uncertain 5

Obesity and Soft Drinks

Taxes or bans on large bottles of soft drinks containing sugar are not likely to have a significant effect on obesity rates because people will substitute towards consuming excessive calories in other ways.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Uncertain 5

Online Sales Taxes

Subjecting online sales from out-of-state vendors to the same retail sales taxes imposed on in-state sales would raise more tax revenue in the states making this change while reducing the pro-online bias of current policy.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Pretty hard to disagree with the question as phrased.
Agree 7

Cable-Satellite TV Fees

Consumers would not necessarily be better off if cable and satellite TV firms were required to offer a la carte pricing for individual channels, because the networks' programming charges and the satellite-and-cable fees could adjust in response to this rule.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 5

Healthcare and Taxes

Long run fiscal sustainability in the U.S. will require cuts in currently promised Medicare and Medicaid benefits and/or tax increases that include higher taxes on households with incomes below $250,000.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 5
Agree 8

Europe

Question A:

Assuming that Germany eventually agrees to backstop the debt of southern European countries, the eurozone as a whole will be better off if that bailout is unconditional, rather than accompanied by the labor market reforms and future budget controls that Germany is demanding of countries in return.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Disagree 6

Question B: If Germany fails to bail out the southern tier of Europe, its own economy will be hurt more — because of output and asset losses — than it would be by an unconditional bailout.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Uncertain 5

Question C: The main reason other eurozone countries need to worry about Greek banks losing access to ECB support is because the ensuing chaos in Greece could trigger bank runs in peripheral countries.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Did Not Answer
Agree 6

Laffer Curve

Question A: A cut in federal income tax rates in the US right now would lead to higher GDP within five years than without the tax cut.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Uncertain 5

Question B: A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 5
Strongly Disagree 7

China-US Trade

Question A: Trade with China makes most Americans better off because, among other advantages, they can buy goods that are made or assembled more cheaply in China.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 8

Question B: Some Americans who work in the production of competing goods, such as clothing and furniture, are made worse off by trade with China.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Agree 8

College Tuition

An important reason why private college and university tuition has risen faster than the CPI during the past few decades is because competition for faculty members — whose potential earnings in other sectors have steadily improved — has driven up their pay faster than their productivity.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Uncertain 5

Fiscal Cliff

If the fiscal changes that are planned under current US law take place next year — including Bush era tax cuts expiring, Medicare payment rates to doctors being cut, the AMT applying to many more taxpayers, and automatic cuts in defense and non-defense discretionary spending kicking in — then US real GDP growth in 2013 will be lower than it would be under the CBO's alternative fiscal scenario, in which the above changes do not occur.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 8
Agree 7

Fracking

New technology for fracking natural gas, by lowering energy costs in the United States, will make US industrial firms more cost competitive and thus significantly stimulate the growth of US merchandise exports.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Disagree 5

Cuba’s Economy

Cuba’s low per-capita income growth — 1.2 percent per year since 1960 —has more to do with Cuba’s own economic policies than with the U.S. embargo on trade and tourism.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 6

French Labor Policies

Question A: Reducing the minimum retirement age in France from 62 back to age 60, permanently, would reduce long-term French economic growth and substantially raise French debt relative to GDP over time.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Cutting real pension levels or providing serious incentives to delay retirement beyond 60 could mitigate the adverse impact.
Agree 7

Question B: France’s overall employment is higher today because of the 35 hour work week than it would be without a limit on weekly hours.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 8
I'm not sure why this policy has ceased to be a joke.
Disagree 6

Price Gouging

Connecticut should pass its Senate Bill 60, which states that during a “severe weather event emergency, no person within the chain of distribution of consumer goods and services shall sell or offer to sell consumer goods or services for a price that is unconscionably excessive.”

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 8
Seeks to prevent prices from clearing markets; never a good thing. Standard is hopelessly vague so increases risk for affected businesses.
Disagree 6

Security Screening

The former head of the Transportation Security Administration is correct in arguing that randomizing airport “security procedures encountered by passengers (additional upper-torso pat-downs, a thorough bag search, a swab test of carry-ons, etc.), while not subjecting everyone to the full gamut" would make it "much harder for terrorists to learn how to evade security procedures."

Vote Confidence Comments Median Survey Vote Median Survey Confidence
No Opinion
While this sounds plausible, I don't feel I know enough to have an opinion.
Uncertain 5

Ticket Resale

Laws that limit the resale of tickets for entertainment and sports events make potential audience members for those events worse off on average.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 2
Since no-resale rules may affect price structures, this may not be as simple as it seems.
Agree 7

Fannie and Freddie

Prior to the crisis, the benefits from the funding advantage that Fannie Mae and Freddie Mac had by virtue of perceived government support mostly went to their shareholders, rather than into substantially lower interest rates on residential mortgages.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 5

School Vouchers

Question A: If public school students had the option of taking the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools), most would be better off.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Uncertain 6

Question B: The main drawback to allowing all public school students to take the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools) would be that some students would not make an active choice and would be left with much worse peers and a weaker school.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
I am sure that is a drawback, but am less sure that it is the main one.
Agree 5

Too Big to Fail

Question A: The average size of the 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) would be substantially smaller if they did not have implicit government support.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 3
Uncertain 5

Question B: The 19 financial firms that just completed the Federal Reserve stress tests (i.e. the CCAR) are big primarily because of economies of scale and scope, rather than because of implicit government support.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 5

Gasoline Prices

Changes in U.S. gasoline prices over the past 10 years have predominantly been due to market factors rather than U.S. federal economic or energy policies.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
Agree 8

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.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
If that's not right, almost all of economics is wrong.
Agree 8

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.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 6

Bank Bailouts

Because the U.S. Treasury bailed out and backstopped banks (by injecting equity into them in late 2008, and later committing to provide public capital to any banks that failed the stress tests and could not raise private capital), the U.S. unemployment rate was lower at the end of 2010 than it would have been without these measures.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
It is hard to imagine the mess we would still be in if most of our large banks had failed.
Agree 6

Health-Care Licensing

Loosening current licensing restrictions on the range of services that nurses, physician assistants, dental hygienists and pharmacists are permitted to perform would help patients on balance, because the additional safety risks would be small compared to the decreased costs in waiting time and fees.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
This is surely true for a small relaxation; for a very large relaxation risks would surely outweigh benefits.
Agree 6

Short Selling

Bans on the short selling of financial securities, such as stocks and government bonds, lead to prices that are further, on average, from their fundamental values.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 7
If they have any effect, it's got to be in that direction.
Agree 5

Economic Stimulus

Question A: Because of the American Recovery and Reinvestment Act of 2009, the U.S. unemployment rate was lower at the end of 2010 than it would have been without the stimulus bill.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Agree 7

Question B:

Taking into account all of the ARRA’s economic consequences — including the economic costs of raising taxes to pay for the spending, its effects on future spending, and any other likely future effects — the benefits of the stimulus will end up exceeding its costs.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Uncertain 6

Rent Control

Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 8
Unless al the textbooks are wrong, this is wrong.
Disagree 6

Executive Pay

Question A:

The typical chief executive officer of a publicly traded corporation in the U.S. is paid more than his or her marginal contribution to the firm's value.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 4
While trends in CEO pay may suggest this, I know of no hard evidence, particularly none that bears on the "typical" US corporation.
Uncertain 4

Question B:

Mandating that U.S. publicly listed corporations must allow shareholders to cast a non-binding vote on executive compensation was a good idea. 

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 7
It is hard to see how a non-binding vote by generally uninformed shareholders is likely to have benefits exceeding its coss.
Uncertain 5

Inequality and Skills

One of the leading reasons for rising U.S. income inequality over the past three decades is that technological change has affected workers with some skill sets differently than others.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 7

Gold Standard

Question A:

If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 9
Strongly Disagree 8

Question B: There are many factors besides US inflation risk that influence the current dollar price of gold.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 6
Strongly Agree 9

Congestion Pricing

In general, using more congestion charges in crowded transportation networks — such as higher tolls during peak travel times in cities, and peak fees for airplane takeoff and landing slots — and using the proceeds to lower other taxes would make citizens on average better off.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 7
Strongly Agree 8

Carbon Tax

A tax on the carbon content of fuels would be a less expensive way to reduce carbon-dioxide emissions than would a collection of policies such as “corporate average fuel economy” requirements for automobiles.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Strongly Agree 7

Drug Use Policies

Question A: All else equal, making drugs illegal raises street prices for those drugs because suppliers require extra compensation for the risk of incarceration and other punishments.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Basic micro. Illegality also rules out some efficient forms of production & distribution.
Agree 8

Question B: The Netherlands restrictions on “soft drugs” combined with a moderate tax aimed at deterring their consumption would have lower social costs than continuing to prohibit use of those drugs as in the US. (Click here for a summary of the Netherlands restrictions.)

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 3
Not at all simple: evidence weak, hard to weight various kinds of costs.
Agree 5

Italy’s Debt

Question A:

Credible assumptions for inflation, GDP growth and primary budget deficits in Italy imply that either the Debt-to-GDP ratio in Italy would increase sharply if Italian interest rates on 10-year government debt remained at the November 30 level of around 7 percent or Italy would lose access to the bond market.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 1
Simply have not done the necessary quantitative work.
Agree 6

Question B:

Absent outside help to deal with runs, such as a pledge of fiscal support from Germany or an unlimited commitment by the ECB to buy bonds, there is no spending-and-tax plan Italy can announce that would be credible enough to hold its interest rates low enough to stabilize its Debt-to-GDP ratio.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 1
Simply have not done the necessary quantitative work.
Uncertain 5

Healthcare

There are no consequential distortions created by the tax preference that favors obtaining health insurance through employers.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 9
This is pretty basic, as is the fact that the distortions (econ speak for costs to society) are huge.
Strongly Disagree 8

Buy American

Federal mandates that government purchases should be “buy American” unless there are exceptional circumstances, such as in the American Recovery and Reinvestment Act of 2009, have a significant positive impact on U.S. manufacturing employment.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
There will surely be some positive effect, but I would be surprised if it were non-trivial.
Disagree 5

Tax Reform

Question A: Eliminating tax deductions for non-investment personal interest expenses (e.g., on mortgages), with reductions in personal tax rates that are both budget neutral and keep the burden of taxes by income group the same, would lead to more efficient financing decisions by individuals.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 8
Agree 7

Question B: Reducing the deductibility of interest expenses for non-financial businesses to equalize the overall tax cost of debt and equity financing, while using the extra revenue to reduce personal and corporate tax rates in a budget neutral fashion that also keeps the burden of taxes the same, would lead to more efficient financing decisions by firms.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 5
Agree 7

Stock Prices

Question A: Unless they have inside information, very few investors, if any, can consistently make accurate predictions about whether the price of an individual stock will rise or fall on a given day.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Agree 9
The evidence on this one seems overwhelming.
Strongly Agree 8

Question B: Plausible expectations of future dividends, discounted using a plausible risk-adjusted interest rate, explain well the level of stock prices for recently listed internet businesses in 1999.  

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 5
I haven't seen an analysis of this for dot.coms in aggregate, but many of their valuations were truly nutty.
Disagree 7

Exchange Rates

The Chinese government pursues policies that keep the renminbi's exchange rate vis à vis the dollar lower than it would be if the currency floated without those policies.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Uncertain 2
Not my terrain. I know little more than what I read in the unreliable press.
Agree 6

Education

Public school students would receive a higher quality education if they all had the option of taking the government money (local, state, federal) currently being spent on their own education and turning that money into vouchers that they could use towards covering the costs of any private school or public school of their choice (e.g. charter schools).

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 6
Many would of course benefit, but those in rural areas or with irresponsible parents wouldn't. Charters aren't magic.
Uncertain 6

Taxes

Question A: All else equal, permanently raising the federal marginal tax rate on ordinary income by 1 percentage point for those in the top (i.e., currently 35%) tax bracket would increase federal tax revenue over the next 10 years.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Agree 4
Agree 8

Question B:

The cumulative budget shortfalls in the US over the next 10 years can be reduced by half (or more) purely by increasing the federal marginal tax rate on ordinary income for those in the top tax bracket.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Strongly Disagree 4
Disagree 7

Monetary Policy

All else equal, the Fed's new plan to increase the maturity of its Treasury holdings will boost expected real GDP growth for calendar year 2012 by at least one percentage point.

Vote Confidence Comments Median Survey Vote Median Survey Confidence
Disagree 4
I expect a positive impact, as the Fed plainly does. But one percentage point seems implausibly large -- at least to a micro person...
Disagree 4

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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