In the days just ahead of the Obama inauguration last week, there was a good deal of speculation in the press about the kind of recommendations the new administration’s economic team would be likely to make. In the midst of this, Princeton economist Uwe Reinhardt posted an essay that offered an unvarnished view of how political goals can infuse the statistical analysis and mathematical modeling of economists grappling with decision making under uncertainty–which Reinhardt points out is nearly always the case.
"Can Economists Be Trusted" discusses two analyses by of the effects of different forms of economic stimuli, tax cuts and increases in government spending. The analyses, which came to two different results, were the work of the same economist. This is, he declares, the "flexibility economists enjoy when they apply their professional skills to affairs of state."
This leads Reinhardt to "the art of siffing" (to "sif" is to Structure Information Felicitously) and leads me to recommend his paper on this topic if you are inclined to look father into the rationale behind any of the proposals competing for the affections of economic policy makers.
Reinhardt’s post prompted a number of other academic economists to bare their mathematical souls and try to home in on the real sources of bias in any economist’s decision evaluation. More on economists and trustworthiness up next.