Taking part in the national debate
Dame Frances Cairncross, economist and journalist
To many economists, the very idea that their subject should be classed as a science is an odd one. True, the Nobel Prize for Economics is specifically for “economic science” – and true, the subject comes under the umbrella of the British Science Association. In addition, economists are increasingly developing ways to test their more modest theories by comparing human behaviour under different conditions. But when, in November 2008, the Queen visited the London School of Economics to open a new building and asked why nobody had seen the financial crisis coming, she spoke for the bewilderment of many people that the profession had failed to forecast the worst economic meltdown for over 70 years. “Queen speaks for the nation,” announced the Daily Mail.
If the Queen could challenge economists, so surely could everyone else. Certainly, economists are famous for disagreeing with each other. If all the economists were laid end to end, joked George Bernard Shaw, they would never reach a conclusion. Broadly speaking, most economists agree on a number of things. This has been demonstrated (to the satisfaction, at least, of many other economists) at the IGM Economic Experts Panel, an initiative by the University of Chicago. This is a panel of top American economists who are offered statements about economic policy and asked to indicate whether they agree, disagree, or are uncertain. In addition they rate the certainty of their answer on a scale of 1 to 10, which allows the answers to be weighted. This ideologically diverse group has often shown surprising unanimity. They tend to agree, for instance, that allowing airline groups to merge would be beneficial for passengers, and that increasing the minimum wage would make it harder for low-skilled workers to find jobs.
However, when economists appear to agree on something, it does not necessarily mean that they are right. And there are some areas where they publicly disagree. Many economists have picked holes in Jeremy Corbyn’s economic policies, and I certainly wouldn’t endorse them myself, yet 41 academic economists said in a letter published in the Observer in August this year: “The accusation is widely made that Jeremy Corbyn and his supporters have moved to the extreme left on economic policy. But this is not supported by the candidate’s statements or policies. His opposition to austerity is actually mainstream economics, even backed by the conservative IMF. He aims to boost growth and prosperity.”
The views of economists shape economic policy. For this reason alone, they need to be questioned. For instance, would so-called ‘people’s quantitative easing’ – the Corbyn plan to make the Bank of England print money to give to housing authorities, local councils, and other good causes – be beneficial or harmful? Ought the Bank of England to raise interest rates? Will the ‘living wage’ cause more unemployment?
If people are to understand the debate on these important issues, and to take part in it, they need the tools to do so. What are those tools? Perhaps the most important is numeracy. To be numerate is not quite the same as being good at maths. It involves a sense of scale and proportion. One of the best examples of a lack of numeracy was the famous soundbite attributed to Everett Dirksen, an American Senator: “A billion here, a billion there, pretty soon, you’re talking real money.”
Numeracy is not an easy skill to teach. It helps if schools teach maths well, and if students continue to study the subject up to A-level. The narrowness of the A-level course means that too many youngsters, especially girls, drop maths at 16. It helps, too, if people understand something about statistics, and are confident enough to use them properly. For instance, few people ever ask what proportion of income tax is paid by the wealthiest one per cent of taxpayers and even fewer, asked to guess, get the answer right. Yet much of the debate on economic policy in the 2015 election was based on an assumption that raising taxes on the wealthy would generate a lot more revenue.
At present, many people find economic debate scary. Yet some of the key propositions of economists make very good common sense in daily life. One of the best is the concept of opportunity cost – if you go to a football match on Saturday afternoon, the opportunity cost is that you can’t go roller-blading at the same time. Another is the idea of ‘revealed preference’ – people’s values are revealed more clearly by what they do, rather than what they say.
To take part in the national debate on the need for restraining public expenditure or the advisability of setting a national living wage, people can get a long way with a mixture of common sense and an understanding of which statistics to trust and why. These are skills that would help people enter many more debates on scientific issues, from climate change to genetically modified crops. We need our educators to teach that early, to the citizens of the future.