Tuesday, October 30th, 2012 9:18 am

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.

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: 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.

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 Uncertain 7
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Uncertain 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Disagree 7
Bio/Vote History
         
Autor David Autor MIT Agree 5
Holding wages constant, manufacturing jobs appeal more to non-college males, the group whose employment rate is falling most rapidly.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Disagree 4
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Strongly Disagree 3
Bio/Vote History
         
Chetty Raj Chetty Stanford Disagree 5
Bio/Vote History
         
Chevalier Judith Chevalier Yale Disagree 8
The counter argument is knowledge or other spillovers in manufacturing.
Bio/Vote History
         
Currie Janet Currie Princeton Strongly Disagree 8
Bio/Vote History
         
Cutler David Cutler Harvard Agree 3
A caveat -- the auto bailout was manufacturing specific and more valuable than the equivalent policy spread across the economy as a whole
Bio/Vote History
         
Deaton Angus Deaton Princeton Disagree 7
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 3
Its not obvious that this policy addresses an important externality and has low unintended consequences.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 7
Most workers don't work in manufacturing, so such policies are apt to redistribute from the average person to manufacturing workers.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 5
It would make average Americans better off by focusing on and helping to finance investments in skills and training useful in manufacturing.
Bio/Vote History
         
Fair Ray Fair Yale Disagree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard Disagree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 10
depends what policy it is
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Did Not Answer
Bio/Vote History
         
Hall Robert Hall Stanford Disagree 4
Tremendously complicated. Many US manufactured goods have high profit margins, so correcting the distortion would help us and others
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 4
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Judd Kenneth Judd Stanford Strongly Disagree 8
The average American benefits from lower prices, not from any preference for manufacturing.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Disagree 5
Memo to Romney and Obama: there is nothing per se special about manufacturing (except maybe nostalgia).
Bio/Vote History
         
Klenow Pete Klenow Stanford Uncertain 7
Rents, externalities may be higher than in other sectors (evidence is not clear cut). Higher national saving (needed!) would help U.S. mfg.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Did Not Answer
Bio/Vote History
         
Levin Jonathan Levin Stanford Disagree 5
Don't see why gov't as a rule should directly subsidize manufacturing, though education, science, trade policy could indirectly benefit.
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 7
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Disagree 6
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 4
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Disagree 8
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 9
This is the argument of the Physiocrats in modern dress. Picking winners, even broadly defined, is rarely good policy.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 8
Bio/Vote History
         
Stokey Nancy Stokey Chicago Disagree 8
Governments are usually poor at "picking winners."
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
This or any other "industrial policy" is only as good as the implementation.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 6
Manufacturing vs. Others isn't an appropriate classification; instead provide a good overall environment, look for targeted externalities.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Uncertain 4
I depends what you mean with average citizen. Lower educated people would probably benefit at the expense of others.
Bio/Vote History
         

Question B 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 Agree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 4
Bio/Vote History
         
Autor David Autor MIT Disagree 5
Unclear if R&D credits induce R&D at the margin or mostly reward inframarginal R&D. I prefer govt fund basic research directly (NIH, NSF).
Bio/Vote History
         
Baicker Katherine Baicker Harvard Uncertain 3
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Uncertain 2
Bio/Vote History
         
Chetty Raj Chetty Stanford Agree 7
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 8
Same argument suggests role for public support of university research.
Bio/Vote History
         
Currie Janet Currie Princeton Uncertain 5
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Agree 6
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 6
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 4
If the positive R&D externality seems plausible, it makes sense to subsidize. There are some cases in which this has worked (universities).
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 7
More innovation is almost surely good, and more R&D spending may increase innovation.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 5
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 6
Bio/Vote History
         
Goldin Claudia Goldin Harvard Agree 5
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Strongly Agree 10
among many ways
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Did Not Answer
Bio/Vote History
         
Hall Robert Hall Stanford Agree 8
Nordhaus has shown how much leakage of ideas occurs into the worldwide public domain. Of course, the US would capture only a quarter of gain
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 6
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Did Not Answer
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 8
The relatively small cost of R&D subsidies is an effective way to support continued high American productivity.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago No Opinion
Not sure of the magnitudes of the distortions once we account for patents and other R&D policies
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 7
Caveat is that there are Type I and Type II errors in identifying research activities to receive special tax treatment.
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Did Not Answer
Bio/Vote History
         
Levin Jonathan Levin Stanford Uncertain 4
I'd be inclined toward policies fostering basic science and innovation that commercial applications can build on.
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 7
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Agree 5
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Agree 5
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Strongly Agree 8
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT 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.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Disagree 6
Bio/Vote History
         
Stokey Nancy Stokey Chicago Agree 9
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
Again impossible to say without details. Would prefer lower tax rate and broader tax.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Agree 7
Not just tax code. Other policies like advance market commitments and (of course) a thorough reform of patent policy.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Uncertain 4
If you tink of fundamental research is probably true. If you think about research in general, even the premise might be wrong
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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