Tuesday, February 10th, 2015 9:36 am

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.

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: 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.

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 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.

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
Acemoglu Daron Acemoglu MIT Agree 8
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Strongly Agree 10
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Agree 10
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 10
Well duh!
Bio/Vote History
         
Baicker Katherine Baicker Harvard Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Agree 7
The behavioral response might be small for certain tax code changes, though.
Bio/Vote History
         
Chetty Raj Chetty Harvard Strongly Agree 10
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Agree 9
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Agree 8
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Agree 10
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Agree 5
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 7
Bio/Vote History
         
Einav Liran Einav Stanford Agree 7
Bio/Vote History
         
Fair Ray Fair Yale Agree 6
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Strongly Agree 10
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Strongly Agree 8
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
duh
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Agree 7
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Agree 9
The only possible question is the magnitude.
Bio/Vote History
         
Hart Oliver Hart Harvard Strongly Agree 10
Consider an increase of income tax rates to 100%. Reported income would be close to zero after this.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Agree 9
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 10
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Strongly Agree 10
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Agree 10
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Strongly Agree 10
Lots of evidence for this in a number of papers.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Agree 8
some tax changes more salient than others, but people do respond when the stakes are important
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Agree 10 Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 8
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 9
Bio/Vote History
         
Samuelson Larry Samuelson Yale Strongly Agree 10
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Agree 7
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Agree 8
Not always predictably, of course.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Agree 10
Bio/Vote History
         
Shimer Robert Shimer Chicago Strongly Agree 10
This is a very weak statement!
Bio/Vote History
         
Thaler Richard Thaler Chicago Agree 5
Of course this is right. But magnitudes matter a lot.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Agree 10
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Disagree 5
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 6
More is know about static effects on labor supply, labor demand and investment than on productivity growth, which is key to long term growth
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 7
Bio/Vote History
         
Autor David Autor MIT Disagree 7
We're still debating the impact of TFRA 86 on economic growth. Clearly, our confidence intervals are infinite for these predictions.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 1
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Agree 5
The bounds might be wide, though.
Bio/Vote History
         
Chetty Raj Chetty Harvard Agree 10
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 6
"Enough" is the issue. We have models which provide estimates. There is a large cloud of uncertainty around these estimates.
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 5
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 8
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
Dynamic scoring: A back-of-the-envelope guide, N. Gregory Mankiw, Matthew Weinzierl, J. Pub. Econ. 2006
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 7
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 5
Bio/Vote History
         
Fair Ray Fair Yale Agree 4
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Disagree 7
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Disagree 9
go read it. it does no such thing
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 3
Taxes affect level of economic activity in long run But evidence doesn't exist for meaningful revenue predictions esp in near or medium term
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 4
A lot depends on the response of monetary policy, and there is no agreement on how much policy should or does respond to output changes.
Bio/Vote History
         
Hart Oliver Hart Harvard Uncertain 5
I doubt that we know enough. There are disagreements about the response of labor supply to moderate changes in income tax rates.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 10
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Uncertain 8
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 10
That work does not try to model the true economy. E.g., no model of corp inc tax uses a valid price of risk. Economists prefer ignorance.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 3
don't think we know for many types of changes
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 6
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
Maybe in some cases. Seems like a hard problem in general.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 6
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 7
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 8
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
It's always difficult to turn qualitative predictions into precise estimates, but existing research can surely be helpful.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 6
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Disagree 7
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 5
The bounds likely rule out some outcomes but may be very wide
Bio/Vote History
         
Thaler Richard Thaler Chicago Strongly Disagree 5
In most cases we know very little. Chetty et al Danish study finds tax effects explain 1% of saving, design 99%.
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 5
Bio/Vote History
         

Question C Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 4
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 4
I worry about increased scope for political influences on the forecasts.
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 5
Bio/Vote History
         
Autor David Autor MIT Uncertain 6
I feel that this type of projection is unwise: first-order impacts on policy but almost zero reliability. And it invites gaming.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Did Not Answer
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Agree 5
Bio/Vote History
         
Chetty Raj Chetty Harvard Agree 10
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 7
In theory they could provide many estimates under different scenarios. But picking one number or a likely range would introduce politics.
Bio/Vote History
         
Cutler David Cutler Harvard Disagree 6
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 3
I thought they had already done this at CBO. If not, the research indicates they should give it a try. The stakes are relatively large.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Did Not Answer
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 5
Bio/Vote History
         
Einav Liran Einav Stanford Agree 5
Bio/Vote History
         
Fair Ray Fair Yale Agree 4
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Agree 4
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Disagree 10
it would open the process up to political shenanigans of the worst kind
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Disagree 3
poor state of literature would open the door to "judgment" which seems likely to devolve to political wrangling and lots of uncertainty
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 3
Again, the response of other elements of policy, monetary and fiscal, needs to be factored in, and there is great uncertainty.
Bio/Vote History
         
Hart Oliver Hart Harvard Agree 6
The estimates would not be perfect but they would be better than assuming no response.
Bio/Vote History
         
Holmström Bengt Holmström MIT Uncertain 3
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Agree 6
It's wrong of them not to TRY because then they are knowingly getting things wrong. However, they could easily make a mess of it.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Agree 7
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Agree 10
It certainly would not be worse. Unfortunately, this is the kind of research that NSF kills.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 3
We know the direction and for certain types of changes might have some decent estimates. But politics could corrupt the process too
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 5
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 5
Possibly. They might also be less transparent and/or easy to criticize.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 8
The difficulties are that (a) knowledge of these has wide bounds and (b) communicating uncertainty bounds is virtually impossible.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 8
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
Behavioral responses will be most important for large changes, but the effects of large changes are particularly difficult to estimate.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 5
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 5
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Strongly Disagree 7
Bio/Vote History
         
Shimer Robert Shimer Chicago Uncertain 5
It depends on which estimates they used.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 3
If done honestly, maybe, but the temptation to tilt would be strong. It is the rare tax cut that increases tax revenues.
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 5
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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