Do we face a future without confidence in experts?

Summary: We depend on experts to tell us about the future, so that we can prepare for the threats it holds. But experts are fallible, and have the same incentives as all professionals to exaggerate their skills. What happens if events catch experts going too far beyond the state of the art? How might failed predictions public confidence in experts? This post considers two examples of scientists boldly putting their credibility to the test: economists and climate scientists, asking about one of the two possible outcomes.

Crystal Ball
The alternative to experts

 

This is a follow-up to Experts now run the world using their theories. What if they fail, and we lose confidence in them?

Sometimes we can learn by asking a simple question as a thought-experiment:

“During this year in Aarau the question came to me: If one runs after a light wave with the speed of light, we would have a time-independent wave field in front of him. However, something like that does not seem to exist! This was the first child’s thought experiment that has to do with the special theory of relativity. ”
— From Einstein’s “Autobiographical Sketch” (1955)

Learning from Einstein, let’s ask a far simpler question. Below are two pictures that might shape our future, on two levels.  First, they concern vitally important trends. Second, these are forecasts by highly respected institutions — both in different senses scientific institutions. What happens if they are wrong?

  1. Forecast of US economic growth (GDP)
  2. Forecast of global temperatures

Both mainstream economists and mainstream climate scientists are confident about the future despite the recent failure of their predictions. That does not discredit — let alone disprove — either science. It does suggest, however, the possibility that there are problems with their models. So what if events prove these forecasts wrong?

  • Might we lose confidence in climate scientists and economists? That seems likely.
  • Might we have less confidence in physical and social scientists?  That seems possible.
  • Might we place less value on expert opinion and more on ours and those we personally trust — no matter how little they know about the question under discussion? However unlikely, that would continue a trend already in motion — American’s distrust of experts — and probably have bitter consequences.

Let’s consider these in more detail.

(1)  Good news about he US Economic Recovery

Mainstream economists expect that by 2016 the US economy will return to its post-WWII growth track, catching up after eight years of underperformance. As shown in this graph from the CBO report The Budget and Economic Outlook: Fiscal Years 2013 to  February 2023, February 2013:

GDP Forecast

The CBO’s economists forecast of real GDP assumes 1.3%  long-term growth in Total Factor Productivity, continuing the resurgence since 2000 (see this report for details). Are these forecasts realistic? Let’s hope so, because they are the basis for liberal economists’ confidence about the government’s solvency and ability to pay its Social Security and Medicare obligations (without high inflation).

Here’s what we can expect for GDP (the forecasts 2014 and 2015-2018 look ambitious):

Magic 8 ball
Another alternative to experts
  • 2014:       +3.4%
  • 2015-2018:  +3.6%
  • 2019-2023:  +2.3%
  • 2023-2038:  +2.0%
  • 2023-2088:  +2.2%

Might there be a structural problem with the CBO’s economic model (which is similar to those commonly used by most economists)? The next graph shows the CBO’s increasing overestimation of growth since 2000 (which narrowed slightly during 2005-2008, perhaps due to underestimation of the real estate bubble’s effects). This is from page 36 of their January 2013 self-assessment of their work through 2008 (commendable that they publish this). Results for 2008-2013 would show how the gap continued to widen.

CBO: graph of 5-year Forecasts
From “CBO’s Economic Forecasting Record: 2013 Update”

This graph, and the other data in the report, disproves some common myths about the CBO’s work.

  • They are not always too optimistic.
  • Their forecasting ability is roughly similar to that of the Blue Chip Consensus forecasts.
  • Their two year forecasts are quite accurate (roughly the limit given the current state-of-the-art and today’s data availability and quality).

See our future through the eyes of the CBO’s economists in these reports:

Posts about future growth of America:

(2)  Global temperatures

This graph of the IPCC’s forecasts — past results and future projections — is from “How the IPCC’s projections match up“, Financial Times, 23 September 2013.

Global temperature
Actual data through July 2013

The causes and significance of the pause are subjects of intense research, on which basis climate scientists are estimating how long the pause might last. Some believe it will end soon. The longer estimates — a decade, perhaps even two — conflict with the dire predictions that have saturated the news media since 1998.  A long pause might have a decisive effect on public opinion, dooming large-scale public policy programs to reduce climate change and mitigate its effects.

For more about these things see:

(3)  For More Information

f you liked this post, like us on Facebook and follow us on Twitter.  See the all posts about experts.

(4)  Good news:  scientists of the future will become better forecasters

Scientist of the future

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19 thoughts on “Do we face a future without confidence in experts?

  1. your solutions of the past become your problems of the future. the generative process of expertise is a symptom of the omnipotence of your thoughts. you only know what you know by understanding what you did not know before

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  2. We have talked about this before Fabius. People, including myself, seem to have a very short memory about prediction failures, because we don’t take most predictions seriously. The problem is that powerful people use these psuedo-magical economic predictions to justify their decisions.
    Remember smart people are easier to con, because think they can’t be conned. Economic predicition are just entrail readings for smart people. What would happen if the news just reported the data, no mention of predictions?

    I’m not committing on climate models, I don’t know enough.

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    1. Ben,

      Your forecast is probably the smart bet: things will continue as they are. Those who believe in experts will still do so. Those who don’t, will not.

      But these things do evolve, and sometimes evolution takes a leap forward. The failure of these two very high profile experiments in forecasting might be such an occasion.

      As to the odds of this happening, I cannot say. I doubt anyone can reliably estimate the. This post looks at one possible outcome.

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  3. Economics is not a science. It is a discipline, similar to tai-chi or needlepoint. The reason for this is that economics is a subordinate part of the hierarchy of the equally mis-named political science. Not only the regime in power, but also the shadow regime or regimes, have their economic think tanks. Their job is to generate not predictions but scenarios, with scenarios that fit the political ambitions of the regime being the ones to be published while the less-favourable scenarios are strangled at birth. Even politically independent and highly respected economists like Dr Tim Morgan of Tullett Prebon can be substantially wrong and fail to spot economic turnarounds or reversals that were starting even as they wrote their latest report.

    Vis à vis experts in general, I’m afraid there is only one place to lay the blame for their deteriorating public image, and that is at the door of the media. I challenge you to watch or read ten prominent media sources today and find just one that does not carry an announcement starting with, “Scientists say…” or “Experts say…” This is a logical fallacy called the Appeal to Vague Authority and although through over-use its impact has been blunted, it remains the favourite tool of those media people whose enthusiasm exceeds their wisdom.

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    1. Mike,

      Your opinion is easy to test. Write down your forecasts for GDP and unemployment for each of the next three years. Compare your accuracy to that of the Fed staff, the CBO staff, and the Blue Chip survey. They are quite accurate. You appear to believe anyone can do as well. Perhaps even better! With practice, like needlepoint!

      Tell us how this works out.

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  4. FM i will claim again that economic forecasting is easyy but not to forecast how politics will change the economy in the future.
    Let’s say that Congress brings in minimum wage of $16 or $20. YOu would get completely different result in the future.
    Lets say that Congress brings in $16 minimum wage, 90% marginal tax above $500,000 and you would get low unemployment within 3 years and economy would have sustained growth.
    What if Congress also implements Job Guarantee program with decent wage with $16 minimum wage and organizes production and instalation of solar pannels and also organizes and pays for solar car produced with WWII kind of effort under newly printed money?
    There you have it all the problems of unemployment and CO2 emmissions solved.

    This video provides my understanding of economy, it is a great half hour video that perfectly explains economy under gold standard and with fixed exchange rate.

    Countries that have debts only in their own currency and flexible exchange rate like Japan, US, UK, Canada and Australia have many more options then this video shows.

    Another important info is about model of currency flow in fiat money system with banks and sectoral balance that is under construction. Steve Keen is creating computer model of a country’s currency flow that will have great forecasting power of the economic future called “Minsky”. He needs funds, not too much, to finish it and test it. Right now he has currency flow version with banks and two sectors only that can predict only limited and general trends.
    “Minsky” has the potential to trully forecast economic future of individual states.

    http://www.debtdeflation.com/blogs/2013/09/10/famous-models-of-chaos-in-minsky/

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    1. This is the best ever lecture from Steve Keen.

      Altough i have to addmit i have not follow Steve’s posts in several months so he might have even better ones. If this is way out of your paradigm, try going for psots from a year ago and build comprehension from there till that video.
      Btw, Steve got the award for correctly predicting GFC and the mechanism behind it.

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  5. Of course, it’s best of all to have confidence, not in experts, but in ourselves.

    Leaving that aside, and speaking of climate change, the Protestant Reformation happened to coincide with the Little Ice Age.

    Many now draw a connection. Medieval Christianity was deeply tied in with the cycles of the seasons, traditional lore. Devout persons, for example, spent much time contemplating Books of Hours, which directly tied in religious topics with the cycles of the seasons. There was a ritual year. The Church calendar was very important.

    One thousand years sounds like a huge sample upon which to form a basis of tradition; and the Church therefore concluded that its doctrines were carved in granite. In geologic terms, however, it was but an arbitrary nothing – and geologists will tell you that granite, too, will decay. With the coming of the Little Ice Age, the Harvest Moon no longer necessarily coincided with the harvest. And so forth. The times were out of joint. Star crossed lovers died rather than obtained happiness. Things were literally uprooted, as MacBeth discovered that Birnam wood could indeed move to Dunsinane.

    And so the old experts were challenged – particularly in the north, where the climate stress was most severe.

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  6. FM some experts will be wrong, others may develop more accurate ideas. It has been that way in history as well. Remember doctors used to use leeches as a cure and experts in the past were conflicted over whether the earth was flat or whether it was round, whether the sun revolved around the earth or vice versa.

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  7. you can see bits of how the word ‘confidence’ itself became twisted and static in relation to the decline of other…here in Carter’s speech…eventually becoming intellectual property itself…along with the video…then the youtube video…along with your memories

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  8. On the general question of “the collapse of reason and decline of collective meaning and purpose” and the need for a Holistic-Integral paradigm shift:

    (post-postmodernism = Holistic/Integral)

    http://beamsandstruts.com/bits-a-pieces/item/1153-pomo

    Joe Corbett says:

    … the dialectic of enlightenment is when the cold hard facts of reason that initially set us free from superstition and the oppressive relations of the feudal church become the chains of another kind of blind faith and social oppression: the cunning of scientific reason and its scholastic expertise that is used by ‘professionals’ to lead us into war and organizes auschwitz and global ruin for the twisted short-term benefit of a few.

    i think the postmodern leveling of knowledge is a continuation of this dialectic aimed at liberating us from the corrupt forms of modern expertise disguised as enlightened reason. the important thing is that the dialectic not stop at this stage of development.

    post-postmodernism on the other hand carries the dialectic one step further and is not content with mere leveling, but seeks to return (at a higher level) to an enlightened reason based on visionary or holistic reason rather than ‘the details of the devil’, so to speak.

    this is where an integral approach is necessary in the on-going liberation of consciousness from the material constraints of its own imperfection.

    … the rising tide of postmodernism, in the sense of the leveling of knowledge and the decline of expert opinion, is very much alive today and in fact we are literally drowning in the fragmented images of a shattered grand narrative of western progress through science and capitalist democracy.

    this time around however its not the politically correct halls of academia or the counter-cultural left that carries the postmodern banner but the neoconservative right-wing of tea party … anti-evolutionists, led by fox news and the corporate punditry of mainstream media, not to mention every internet blogger and talk-show radio host who spew their two cents into the information overload.

    its not that all of these agents are themselves postmodern, most of them are not, but this is the general systemic condition of postmodernity and the cultural logic of late capitalism where all knowledge, no matter how dubious or corrupt, is exploitable material and legitimate fodder for the public sphere. the consequent collapse of reason and decline of collective meaning and purpose are something we are all-too familiar with.

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  9. “What happens if they are wrong?”

    In the public sphere, surely it would make no difference, since we don’t listen to experts anyway. Our government is almost entirely faith-based: not faith in God, but in the ideology du jour.

    Would many experts in the conduct of war have recommended our recent military adventures?

    Criminology does not support The Caging of America.

    As Paul Krugman observes (Where Are The Austerian Economists?, September 23, 2013):

    Yes, you can find economists at right-wing think tanks and some international organizations making the austerian case, but again, I’m talking about economists with big independent reputations, justified or not. And I can’t think of any. That wing of austerianism has simply dissolved.

    And as far as we can tell, it makes no difference. Have Paul Ryan, George Osborne, Olli Rehn, Wolfgang Schäuble changed their tune even a bit? No, they’re busy claiming one quarter of positive growth as vindication.

    For those who like to think that serious economic debates matter, it has been a humbling experience.

    And Dr. Krugman again, on being wrong:

    The other day I found myself talking to a currency trader, who lamented the fact that all the experts had been wrong — they’d all predicted runaway inflation and a collapse of the dollar. The point was that even this guy believed that the people who have been consistently wrong about everything for decades are the “experts”; somehow they retain that reputation despite their record.
    Three Strikes And You’re, Well, Still Playing The Same Game, Paul Krugman, September 17, 2013

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  10. Jordan offers us an excellent example of how completely unfamiliar the average American is with basic macroeconomics. Jordan writes:

    Let’s say that Congress brings in minimum wage of $16 or $20. YOu would get completely different result in the future. Lets [sic] say that Congress brings in $16 minimum wage, 90% marginal tax above $500,000 and you would get low unemployment within 3 years and economy would have sustained growth.

    In reality, if congress raised the minimum wage to $16 or $20 per hour, this would merely accelerate offshoring and automation. Jobs not profitable to automate at $8 per hour minimum wage would suddenly become very profitable to automate. And jobs which would provide only a marginal return on capital over a 5-year or 10-year period after including inflation and exchange rate uncertainty would suddenly produce a large marginal return on investment when offshored to take advantage of the global wage arbitrage twixt $20 per hour (U.S.) and 50 cents per hour (the third world).

    Instead of sustained GDP growth, we’d see significant GDP decline at a $20/hour minimum wage because although corporate profits would rise, aggregate demand would collapse as vast numbers of middle-class workers saw their jobs offshored or automated. Corporate profits form only part of GDP. The rest of GDP comes from the goods and services sold to the middle class, which accounts for an estimates 70% of American GDP.

    Jordan also offers us a superb instance of the most remarkable characteristic of uneducated economic commenters on the web — namely, their love of a simple single solution. In some cases, this economic “magic bullet” involves returning to the gold standard (Ron Paul)…in other cases, the economic “magic bullet” boils down ot deregulating all business and eliminating the federal income tax (Paul Ryan). In yet other cases, as here, the economic “magic bullet” involves merely raising the minimum wage to some high level (Jordan).

    None of the economically uneducated people who comment on economics on forums like this seem to envision the possibility that economists might have contemplated the kind of cartoonishly simple solutions they propose, examined and modeled the likely consequences, and rejected these kinds of “one fix to solve every problem” schemes as grossly unworkable and simply disastrous in the real world.

    It’s a lot like the engineers who propose simple but ridiculous “solutions” to our broken political system, like radical Ayn-Rand-style libertarianism. None of these people ever seem to imagine that anyone might have thought through the likely consequences of their harebrained schemes, accurately concluded that the results would be an economic trainwreck, and dismissed these kinds of schemes as impractical for solid reasons.

    Unwittingly, Jordan shows us the dire future that lies in wait for us if we dismiss the expertise of experts without good reason.

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  11. “”The republic’s in trouble, we lie about everything, lying has become the staple.” And he implores journalists to do something about it.”

    http://www.theguardian.com/media/media-blog/2013/sep/27/seymour-hersh-obama-nsa-american-media
    Seymour Hersh on Obama, NSA and the ‘pathetic’ American media
    Pulitzer Prize winner explains how to fix journalism, saying press should ‘fire 90% of editors and promote ones you can’t control’

    http://www.theguardian.com/commentisfree/2013/sep/27/ron-wyden-nsa-systematically-deceived
    Sen. Ron Wyden: NSA ‘repeatedly deceived the American people’
    About the Snowden disclosures, the Oregon Democrat told the NSA chief: ‘the truth always manages to come out’

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  12. World science owing to close international ties and state`s money and influence sometimes elaborate it`s predictions by the majority principle throwing the dissidents` opinions away.History shows that the international conflicts and wars always appeared unexpectedly and changes everything from the economy to the scientific dewelopment.Experts usually doesn`t like the prediction of conflicts.

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