There is a new survey of economic bloggers covering many key issues about the economy and the markets. The overall results are pretty negative about our future. Let us take a closer look.
Background
The Ewing Kauffman Foundation is an important source of research about innovation and entrepreneurial activity. The Foundation has embraced the concept of economic blogging as part of this mission. This is an important step, helping to provide visibility and a sense of gravitas for those of us who might otherwise be ignored.
The Foundation sponsors a quarterly survey of opinon and an annual conference of leading economic bloggers. This process of aggregating opinion and bringing bloggers together for extended face-to-face discussions is an important contribution to economic analysis. I have been invited to participate in the poll for several quarters, and to attend the last conference. I found the conference to be quite interesting and educational.
Two Groups of Bloggers
There is an important difference between two groups that I will call "economic bloggers" and "blogging economists". (Yes, I know that these do not seem to be exclusive subsets, but just understand that the first group lacks professional economic credentials and live with the terminology).
The blogging economists, with a few notable exceptions who get regular mainstream media attention, are factual, disciplined, careful in drawing conclusions, and use the tools of their trade in their analysis.
The economic bloggers often start with popular misconceptions about economic issues. While they cite many facts and often have appealing charts, the arguments lack a rigorous analytical method. The resulting stories and conclusions often play to pre-existing sentiment. The narrative is also much more aggressive, sassy, possibly profane, and always irreverent. The economic blogger group tries to drag down those who have accomplished something in order to imply their own equality.
Is it a surprise that the economic bloggers are more popular than the blogging economists? Briefly put, people do not want to learn, nor do they want to believe that the study of economics has anything to offer. It is more satisfying to read articles that cater to what they already believe.
Group Interaction
There was an extreme dispartiy in respect accorded by the two groups. The economic bloggers had a natural orientation toward respect because there is a certain civility in the professional and academic world. There is also a "blogger effect." The economic bloggers were popular. They had high rankings and many page views. In a conference of bloggers, this sort of popularity is important.
Briefly put, the professional economists are too courteous, too deferential, and act like a bunch of blogging wannabees. They are wimps, unwilling to call out obvious blunders by the non-professional bloggers.
The Survey
Let us apply this to the survey. I am taking one key question as an example, but there are many other good ones. The table below shows the question suggested by Mark Thoma, one of our featured sources.
I looked at a number of news stories about this question. They felt the lead was that the bloggers thought there was an effect! To quote Homer (no not that one): D'oh!
Anyone who thinks that the ARRA had no effect or a negative effect is a clueless bozo, without even the most rudimentary knowledge of economics. Even those who hate the stimulus bill and the particular programs chosen, should realize that it is impossible to spend that much money without having some employment effect.
Despite the popular reports, the key story here is not that most of those in the survey thought that the stimulus had a positive impact. The real story is that over a third felt it had a zero or negative impact. What were they thinking?? See Econbrowser for analysis. And why are the real economists not calling out the imposters on this question?
The Lesson
Like most readers and investors, I am a consumer of economic information and forecasts. I am not a card-carrying economist, but I am good enough to recognize the real thing and to sort out the imposters. I am often asked by readers how to find the best sources of information.
My working hypothesis on economic blogging is that there are three general categories of sources:
- Blogging economists who analyze data. This is the best source, but I give less credence to those with obvious political motives.
- Economic bloggers who dismiss the need for formal economic training. Theses sources may dazzle you with charts, but they are simply telling you what you already know and want to hear.
- Economic journalists. This is a swing group. Some journalists, notably Steve Liesman, make a strong effort to explain what is happening. Other journalists, perhaps under page-view pressure, go for the sensational conclusion.
You can gain an investment edge by looking for quality rather than popularity.
A Small Challenge
Most surveys provide not only a tabulation of results to each question, but some cross-tabs of opinion by demographic group. When you read opinions about health policy, for example, you usually see a breakdown between Republicans and Democrats or between likely voters and those less likely to vote.
I have questioned Kauffman on this issue. Why is the tabulation so superficial?
My hypothesis is that if you broke down the answers by professional background you would see statistically significant differences between the groups on several questions, including overall outlook, stimulus effect, and the accruacy of government statistics.
It would help Kauffman in fulfilling their mission if they provided a deeper analysis of the data. The incremental cost would be very small.
