Friday, January 6, 2012

A preliminary guide on experts (by Francesc Trillas)

The financial crisis and the appointment of technocratic governments in Greece and Italy are good reasons to think about academic research on the role of experts in economic policy and in decision making in general. The recent book by Daniel Kahneman, “Thinking, Fast and Slow,” mentions the issue and keeps a balanced view between the pro-experts attitude of legal scholar (and Obama’s regulatory czar) Cass Sunstein (also, author with Richard Thaler of “Nudge,” one of the Bibles of behavioral economics) and the anti-experts  attitude of social psychologist Paul Slovic. In an interview in the Time magazine, Kahneman argues that experts are useful for some tasks and useless for others, where the aggregation of independent information or independent views by lay persons is more useful. 
Dani Rodrik views technocratic governments or agencies as a wrong solution to what he calls the globalization “trilema,” by which currently it is incompatible to try to keep three things simultaneously: national democracies, welfare states and global integrated markets. He argues that it is better to stop global integration if we do not manage to build a global democracy. Legal scholar Avishalom Tor, from the University of Haifa, has a couple of papers on behavioral antitrust (on entry and resale price maintenance) where the most interesting thing is the survey he makes of the literature on behavioral biases of experts, managers and teams in microeconomic decisions. The (former?) chairman of the Federal Trade Commission in the US, William Kovacic, has a theoretical paper with a co-author on the behavioral biases of regulators, arguing that these biases push regulatory decisions closer to those of a politicized decision maker.
The economists Landier and Thesmar have a wonderful book in French on the difficulties of government policies, and they have there a chapter ridiculing the role of experts, showing funny quotations from General De Gaulle and others on the issue. The solution they give is similar to the one advocated  by  the Danish social scientist Flyjbjerg in his book on the systematic planning errors in infrastructure projects: massive and systematic transparency, and allowing for public participation and education in democratic decision making. Finally, one of the references suggested by Landier and Thesmar is the classic book by Phillip Tetlock on the forecasting mistakes made by experts in politics and economics. 

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