Efficient Economist’s Pledge

Tuesday’s debate with Bryan Caplan was great fun; thanks Bryan for being such a gentlemanly and compatible discussion partner!  I don’t know when an official vid will be posted, but my amateur audio is here.  In before and after audience polls, Liberty vs. Efficiency got 42-10 before, and 25-20 after.  My argument and Bryan’s many responses inspired me to compose this pledge:

The Efficient Economist’s Pledge

I pledge to be an efficient economist, who helps clients find win-win deals to resolve social conflicts.

I need not accept all clients, but for the clients I do accept, my suggested deals should, if accepted straight or as a starting point for negotiation, get them more of what they want, relative to no deal.  I resist temptations to slant my advice to give hidden benefits to myself or my associates.  I accept my client’s situation and wants as they are, and unless asked do not preach to them on what they should want.  When actions conflict with words, I mostly infer wants from actions, and avoid needlessly exposing contradictions.

For individual clients, I suggest actions that try to best get them what they want. When I advise groups of clients together, I seek win-win deals for them all together.  That is, I seek ways to suggest deals with a high chance of putting each client in a situation where, given their limited info, they should expect to benefit from the resulting deals. And I seek the best deals; it should not be easy to find other deals which all should expect to get them even more.  When trading client expected gains against the chance each expects to gain, I consider how many are needed to clinch a deal.

I keep my clients aware of the benefits of making inclusive, early, and big deals.  Deals including more interacting parties can resolve more conflicts.  Early deals can avoid complicating private info and extreme outcomes.  Big deals have portfolio benefits; while every deal contains “efficiency” aspects, regarding the size of the pie, and “distributive” aspects, regarding how the pie is divided, distributive problems tend to cancel as deals are combined across diverse topics.  These cancellations lower costs of compensating transfers, allow more confidence that each party benefits, and let us focus on (inclusive early big deal) efficiency issues, where economists are strongest.  In the limit, efficiency alone may ensure that deals are win-win.

I volunteer honest assessments of the uncertainty in my advice, and of my and our track records for achieving this pledge’s ideals. If clients should expect to do as well by following simple deal heuristics, I tell them so.  And I am open to credible criticism suggesting pride or affiliation slants my advice; if we all saw all of us as reasonable, we would not knowingly disagree about what deals benefit whom how much.

I not only keep this pledge, I join with other efficient economists to credibly signal to clients that we keep it.  We make these pledges publicly, and we practice, develop, and monitor compliance with common standards that can reassure clients that we minimize the scope for corruptible personal discretion.  These standards include deal-evaluation criteria as well as standard assumptions and formats for models and data analysis.  I practice these standards, help develop better ones, call client attention to visible violations, and punish hidden violations.

We seek deserved reputations for achieving these ideals, and jealously preserve reputations when acquired.  We are delighted to have clients seeking our advice mainly to claim to others that our advice influenced them, but only if they do not misrepresent this influence.

I pledge to be an efficient economist, who loves his clients by finding them win-win deals. If loving this way is wrong, I don’t want to be right.

In the debate, Bryan was unwilling to sign any joint statement by economists that differed in any detail from his own best guess, and he saw no need to  consult others on what policies to favor, so he saw no advantages to consulting a group which had bound themselves to a rule in order to be more trustworthy as “neutral expert arbiters.”

Who is willing to join me in taking this pledge?  Even if you will not join, can you see any advantages from being able to get advice from people who do so pledge?

Reworded noon 18Apr.

Added 6Dec: I name this point of view “dealism.”

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  • Words are cheap.

  • I think the difference in before and after votes is simply that people didn’t understand that when you talk about efficiency you mean simply in demarcating the role of economists from the more nebulous “social good” role that most public figures are playing at.

  • The reasonable conclusion would seem to be to go with liberty unless you had a professional economist tells you otherwise. Unfortunately this opens the door for opportunistic economists to tell public policy setters what they want to hear (you should meddle more). I feel that this is exactly what keynesian economics represents.

  • It’s too easy to sign a pledge like this, and then ignore it – just like teenagers and virginity pledges.

    I think the pledge needs to have a requirement that it be prominently advertised by those that sign it (to current and prospective clients).

  • Greg Mankiw is a Keynesian (please, no Post Keynesians denouncing the bastard children of Hicks or Samuelson!) and I think he’d endorse liberty on most micro questions in dispute. I would expect though that people who are inclined to think there is a larger positive role for the government to play in general would be attracted to a successful school of thought that gives government a prominent positive role in the macroeconomy. It should also be remembered that its most notable opposites, the Chicago & Austrian schools, did not have nearly the reputation for libertarianism in their early days as they did after Keynes. Matthew Mueller ably made that point about the Austrians on his blog, which is unfortunately no longer on the internet to be linked to.

  • denis and George, I didn’t know if folks would agree that it would be good to commit to this pledge. If we can, then we can look more into how better to credibly signal our commitment.

    nazgul, your vote explanation is plausible. I’m certainly not saying to always trust economists no matter what.

    TGGP, I don’t understand how your comment relates to my post.

  • I agree that economists should stick to talking about efficiency; they don’t have a comparative advantage in figuring out what liberty would say. I was surprised to hear Caplan deny that this commitment would have benefits.

  • Robin, you’re right. But I can’t imagine a reason why this pledge would not be good in principle (ignoring its effectiveness).

    Bryan’s example of the Nazis seems to me to be an artificial world with only one major issue. I would argue that we are all minorities in some respect, i.e. each of those 2 trillion Nazis have at least one dimension in which they are a minority and for which they could be persecuted by a majority. So even they should value laws protecting the life and property of all minorities as insurance on a possible $100,000 loss in the future.

    Also, the word “efficient” will not persuade anyone who is not an economist because they will think it means speed, or worse a euphemism for cutting-corners. “Win-win” is much more better. In fact, in negotiation and conflict-resolution workshops, it is the approach advocated most. So if the pledge in translated from econospeak to english, I think more people would be persuaded it’s good.

  • The pledge is a bit like business managers pledging to maximise profits for shareholders. In isolation this could be bad for society – not everyone is a shareholder and we would rather they maximised consumer surplus.

    However, life is repeated game with many agents, and profit-maximising businesses seem to maximise consumer surplus in the longterm compared to other alternatives.

  • Imagine your client is a government wanting to implement reforms in an economy which is ailing because a previous government had introduced regulations favouring narrow interest groups at the expense of the rest of the community. It seems to me that an economist who had signed your pledge would have to restrict his or her recommendations to Pareto-efficient changes i.e. win-win changes which would compensate the rent-seekers for the loss of their ill-gotten gains. Is that what you intend?

  • Winton, if you are giving advice to assist a long term deal which was to consistently follow advice from people like you, then you only need to consider transfers to make that overall deal win-win in the long run. But yes if you are just consulted once you must take the no-deal status quo as given, even if you disapprove of how it arose, or else refuse to help this client.

  • TGGP

    Sorry, Robin, I was responding to nazgulnarsil’s comment on Keynesian economics.

  • how do you identify who has broken the pledge when empirical studies in economics are even harder than in medicine?

    should economists have malpractice insurance?

  • George, you are right, so I’ve added a phrase about making this pledge clear to clients.

  • I just reworded the pledge a bit, in response to various comments.

  • sternhammer

    I think I agree with all the principles in it.

    Robin could you explain more about your purpose in writing it? Who are you trying to persuade to do what?

    Is it to get other economists to agree to adopt efficiency as their goal, or to spread that same view more widely in society?

  • Re: For individual clients, I suggest actions that try to best get them what they want.

    This doesn’t sound efficient – it sounds partisan.

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