Abstract
In this paper we bring to data the hypothesis that differences in economists’ opinions on economic policy are related to differences in the school of thought (SofT) they belong to. Our analysis is based on a unique data set of survey responses from a representative sample of Italian economists. Two are the main results: First, differences in the SofT predict differences in economists’ opinions on economic issues, even controlling for individual, group, and community characteristics, spatial and knowledge heterogeneity, and political orientation. Second, dichotomous categorizations such as Mainstream vs Non-Mainstream or Orthodox vs Heterodox have poor explicative power as for economists’ disagreement on economic issues.
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Notes
The existence of small but significant differences between American and European economists has been confirmed by Frey and Eichenberger [1993], Mueller [1995], and Aiginger et al. [2001].
The only possible exception is Alston et al. [1992], which document different opinions between members of the American Economic Association and members of the American Association for Evolutionary Economists.
The details of the survey design can be found at https://sites.google.com/site/micdimaio/surveyofitalianeconomists.
For comparison, the response rate in previous surveys are: 27 percent in Klein and Stern [2007], 31 percent in Fuller and Geide-Stevenson [2003], and 34 percent in Alston et al. [1992].
Fifteen economists provided their own definition of their school of thought. We reclassify them according to similarity to other schools of thought.
The term Eclectic is often used in the Italian academy to indicate an economist that is difficult to classify into the traditional schools of thought. Several among the most prominent Italian economists have been considered Eclectic: Enrico Barone, Franco Modigliani, Federico Caffe, Paolo Sylos Labini. Recently the Governor of the Bank of Italy Ignazio Visco defined the influential economist and appreciated former Finance Minister Beniamino Andreatta as an “eclectic economist” during a ceremony to commemorate his work. The term Eclectic usually implies a positive assessment.
While we are well aware of the distinction discussed in Colander et al. [2003] between Mainstream and Neoclassical approach, we preferred to consider the two together, to minimize the possible confusion by the respondents who were not informed about the content of the debate.
The long-standing debate on the performance of the Italian economy in the last two decades is large and varied. The results from these studies indicate that the performance of the Italian economy has been worse than the average of the EU. In the last 15 years, Italy has faced sluggish economic growth, growing at a much lower rate than the rest of the European Union. While in 2000 the country was still close to the 3 percent EU growth rate, in the subsequent years the growth rate never reached 2 percent [OECD 2012]. Also per capita income, productivity, and export shares followed a negative trend [Daveri and Jona-Lasinio 2005]. In 2005, in deep political and institutional turmoil, Italy was labeled as “the real sick man of Europe” in a report by The Economist (http://www.economist.com/displayStory.cfm?story_id=3987219).
All the propositions (Causes and Economic Policies) that we included in the list are the ones discussed in the academic literature on the performance of the Italian economy during the last 20 years. This selection procedure minimize possible bias in choosing which Causes and Economic Policies) to include in the list. De Benedictis and Di Maio [2011] discuss the details on the methodology employed to select the essays from which the Causes and Economic Policies have been extracted.
To improve visual readability, we plot only the average opinion of SofTs with more than five respondents; Behavioral, Regulationist, and Austrian/Neo-Austrian schools of thought are therefore excluded.
Respondents could also select the option “No-Opinion.” Those cases (very limited: One or two depending on the specific economic policy) were excluded from the sample.
This is a dummy variable that takes value 1 if the respondent is working in a different region with respect to her/his birthplace, and 0 otherwise.
This covariate measures the respondent’s self-reported level of worry about the perspectives for the Italian economy.
This is a dummy variable that takes value 1 if the respondent is an empirical economists, and zero otherwise.
This variables measures the self-declared knowledge of the respondent of the debate on the causes of the decline of the Italian economy.
This is a dummy variable that proxies the respondent’s degree of knowledge about the Italian economy. The dummy takes the value 1 if the respondent declares that analysis of the Italian economy is one of the research topic of the respondent, and zero otherwise.
This covariate measures the respondent’s opinion on the fact that the Government should favor social mobility.
While all these considerations have guided our initial selection of variables, the final set of controls have been validated by a panel of expert on the Italian economy. See De Benedictis and Di Maio [2011] on the questionnaire and survey design.
In five cases, the model does not converge due to the fact that only three respondents belong to the category JEL15 (Economic Systems) of the variable JEL. As it is common in these situations, we simply run the full regression model dropping those observations from the sample.
We thank one Referee for suggesting us this robustness check.
For a discussion on the elements that define an Heterodox school of thought and for a brief historical account of heterodox schools, see also Backhouse [2000] and Coats [2000].
Di Maio [2013] uses a similar categorization to explore the differences in the individual, academic, and political characteristics of Mainstream and Heterodox economists and to measure and compare the between and within disagreement among the two groups.
This group closely resembles the definition of Heterodox as in Prychitko [1998]. Dow [2000] defines as Heterodox schools of thought the Post-Keynesians, the Institutionalist school, the Neo-Austrian school, Behavioralists, Social economics, Feminist economics. For a thoughtful discussion of the concept of heterodox economics, see also Lee [2008].
The propositions for which the SofT is not significant when using the polytomous variable SofT i are not considered because in these cases the dichotomy Mainstream vs Heterodox (for whatever definition we use to create the two groups) is always not significant (results available upon request).
For two of them (BCE monetary policy and Public investment in strategic sectors) all Outside-mainstream groups have a positive stance; for five of them (Immaterial infrastructure, Low competition, Low human capital supply among the Causes and More liberalizations and Reduce Labor Union power among the Economic Policies) all Outside-mainstream groups have a negative stance. Looking at the 95 percent confidence intervals, it is possible to observe that in no cases switching from one of the three group definitions to another one gives rise to a significant change of a positive orientation to a negative one, and vice versa. Still, some point estimates might change sign (as in the case of Dumping and unfair international competition and a couple of other cases related to the size of firms as a Cause).
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Acknowledgements
We would like to thank two anonymous referees, the editor of the journal, Edward Gamber, and Frederic Lee, Cristina Marcuzzo, Thomas Mayer, Paolo Pini for encouragement, helpful comments, and suggestions on a previous version of this paper. Luca De Benedictis gratefully acknowledges the hospitality of the Einaudi Institute for Economics and Finance (EIEF) during the very final stage of the research. We would like to thank the participants of the many seminars where we presented the results of this research, and we also thank all Italian Economists who participated in our survey and who answered to our follow-up questions. All the supplementary material on the Survey of Italian Economists can be found at the web page https://sites.google.com/site/micdimaio/surveyofitalianeconomists.
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De Benedictis, L., Di Maio, M. Schools of Thought and Economists’ Opinions on Economic Policy. Eastern Econ J 42, 464–482 (2016). https://doi.org/10.1057/eej.2014.66
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DOI: https://doi.org/10.1057/eej.2014.66