The influence of economists on public attitudes toward government.

Beaulier, Scott A. ; Boyes, William J. ; Mounts, William S. 等

I. INTRODUCTION

Do economists in government encourage or discourage the growth of government? Since economists tend to be more skeptical of government intervention in markets (Blendon et al. 1997), one would expect government spending to slow when more economists are employed by the government. In practice, however, economists have struggled to slow government growth Economists in government are not heroic defenders of market capitalism. In fact, when it comes to constraining government, they are no better, and sometimes worse, than other policymakers.

The reason that a government sometimes grows when more economists are in government is straightforward: while economists might, in general, be more sympathetic to markets and competition, they are also more knowledgeable about bureaucracy, rent-seeking, and interest group formation. Thus, the effect of economists in government is ambiguous. On the one hand, economists might be promoters of market solutions; on the other hand, however, economists are also aware of their place in the public bureaucracy. In this paper we call into question the way economists in government should be viewed. Maybe John Maynard Keynes had it right all along when he wrote (1935, 383),

 ... the ideas of economists and political
 philosophers, both when they are right and
 when they are wrong, are more powerful
 than is commonly understood. Indeed the
 world is ruled by little else. Practical men,
 who believe themselves to be quite exempt
 from any intellectual influences, are usually
 the slaves of some defunct economist.
 Madmen in authority, who hear voices in the
 air, are distilling their frenzy from some academic
 scribbler of a few years back.

Although the passage above is one of Keynes's most frequently cited statements, it is usually treated as nothing more than a great turn of phrase. We think there is more to this statement. If economists have as much sway as Keynes thought, then public attitudes and public policy should be affected by the growth or decline in the number of economists relative to the total population. Are the number of economists in government and the public's attitude towards government related? Or, are they simply concomitant events not foreseen by Keynes?

The most sympathetic view of economists in government models economists as experts interested in promoting economic efficiency (Nelson 2002). But, as was first pointed out by Buchanan and Tullock (1962), politicians and political actors--regardless of whether they enter government with a political science, sociology, or economics background--are no different from ordinary people. When presented with the opportunity to increase their own utility, even the best economic advisors in government will put their own interests ahead of the social good.

There is plenty of historical evidence of economists in government failing to roll back the state's power. Rather than blocking big government, economists have often opted for middle-of-the-road or decidedly statist policies. It is still hard to believe that economists recommended and defended price controls to President Nixon and then continued to support their use in petroleum markets through the Carter administration; however, their motivation for doing so was that they stood to benefit by gaining the loyalty and support of the president. At other times, well-intentioned economists stand by as policies get watered down to such an extent that reforms end up being worse than the status quo.

In this paper, we argue that our understandings about economists in government are often mistaken. In particular, economists in government are ineffective at constraining government's growth. If anything, they are cogs in the machinery of government. Their best efforts at promoting efficiency are thwarted by bureaucracy. Over time, government economists become more apt at passing regulations and new spending programs, and they become less effective at promoting efficiency. If economists are not saviors, there is little reason to think that smaller government can result from employing more economists in Washington, D.C.

II. PUBLIC ATTITUDES

According to a Roper Poll (Ladd 1982), 80 percent of Americans were described as hating deficits in 1982. By 1989, similar polls showed a decline in America's dislike for deficits and an increase in the number of Americans who believe the federal government has the primary responsibility for regulating social issues. The General Social Survey (GSS), which has been carried out by the University of Chicago since 1975, also tracks public attitudes towards government intervention in our lives; the survey asks people whether (1) government should do more to solve our country's problems; (2) more to solve poverty problems; and (3) whether medical expenses are the responsibility of the federal government. Public support for spending in 2006 was near its highest levels ever. In 1975, 49 percent of all respondents thought medical bills were the responsibility of the federal government; 40 percent believed the federal government should help all poor Americans; and 38 percent felt the federal government should do more to solve the country's problems. In the 2006 survey, 78.1 percent said the government is doing "too little" to improve and protect the nation's health; 74.1 percent of respondents said the government is spending "too little" on education. In summarizing the 2006 GSS report, Smith (2007, 5) concludes, "Despite a dislike of taxes (e.g., in 2006 58% said their own federal income tax was too high), more people have always favored an increase in taxes than cuts."

Support for the U.S. government's involvement in the economy declined during the early 1980s but has since risen. According to The Center for the Study of Policy Attitudes, in 1994, 80 percent of Americans believed the government has the responsibility "to do away with poverty in this country" (The Atlanta Journal-Constitution 1994). In a Washington Post/ABC News Poll in 1995, 70 percent of Americans supported government involvement in all aspects of the economy (Pittsburgh Post-Gazette 1995).

Since each poll asks somewhat different questions, comparing polls is problematic. However, the results of these polls do suggest that, over the past few decades, the public's attitude towards an increased role for government has become more positive. After September 11, 2001, public confidence in government reached an all-time high. According to a Washington Post/ABC News poll, George W. Bush's approval ratings exceeded 90 percent, which was the highest approval rating ever recorded for a U.S. president. The public became more confident in government after September 11th and believed government should take on a more proactive role in dismantling terrorism overseas (Langer 2002).

Overall, then, the general public supports an active and large state. On the international front, much of the general public supports military involvement abroad and neoconservative efforts to spread democracy. On the domestic front, America's median voter supports high levels of spending and active government involvement in dealing with social problems. Why?

The origins of the public's favorable attitude towards government are a source of great debate among political scientists and public choice economists. Most public choice economists explain government growth by telling a median voter story: the general public has come to desire bigger government over time, and the policymakers in Washington, D.C., have done an effective job in giving the median voter the government that he or she wants (Caplan 2007).

While the median voter explanation is persuasive, we think the arrows of causation might run the other way. In particular, a larger and more professional bureaucracy has adversely affected attitudes towards government. With an expansion in the government's scale and scope has come an expansion in the number of economists in government. More economists in government have caused public attitudes towards government to become more favorable, which has allowed government to grow. Consistent with Keynes's edict, we think economists have played a role in making the general public more sympathetic to big government.

III. ECONOMISTS IN GOVERNMENT AND IN SOCIETY: A LACK OF SUPPLY?

If, as Keynes suggested, few things matter more in affecting public opinion than the writings of economists, then one of two things must be happening: (1) either there are not enough economists in Washington to constrain new government initiatives and educate the public; or (2) the economists playing the part of policy advisors are supporting the expansion of government. As we will explain in the next section, the supply of economists in government has been steadily increasing for the past 100 years. Moreover, the rate of growth in the number of government economists has been increasing at an above-average rate. Since more economists are involved in policy today, it is difficult to say there are too few economists.

To be more specific, the number of economists in the federal government and the number of economists in society have both risen in absolute and per capita terms. Relative to total employment in the federal government since the mid-1960s, per capita production of economists (measured by the ratio of bachelor's, master's, and doctoral economics degrees conferred to the total population) has risen from .0017 in 1940 to .0065 in 1970 to .01 in 1990. Data on the number of economists in the federal government were pieced together from the U.S. Department of Education, the AEA membership directory, Stein (1969), Nelson (1987), Barber (1989), and Malabre (1995). As a fraction of all government employees, the number of economists in the federal government has risen from .021 in 1968 to .054 in 1990. Moreover, according to a 2002 summary (AEA Papers and Proceedings 2002, 530) of postdoctoral plans of earned doctorates in economics, employment in government increased from 9.0 percent in the 1960-64 period to 12.8 percent in 2000.

Since there are more economists in the population and more economists in policymaking positions than there were in earlier generations, the number of economists does not appear to be too small or on the decline. If there are no problems of supply, we are forced to consider the second possibility: economists in government have been non-neutral in their attitudes about government spending.

To date, economists have viewed economic advisors in government neutrally to somewhat favorably. According to Malabre (1995, 204-210):

 ... as pseudo-scientists, they [economists]
 don't follow the traditions of stating the truth
 or being analytical but instead just want to
 influence the outcome, particularly government
 ones.

In a survey of economists who had worked in Washington, D.C. (Allen 1977), economists seldom relied on economic arguments, but, rather, relied more on instinctive reasoning filled with emotion. As Robert Tollison (Allen 1977, 81) put it in responding to Allen, "the role of the economist [at the CEA] is a stop gap--keep them [other policy-making agencies] from doing something completely dumb, just completely dumb." When entering the realm of politics, economists in government are forced to become lawyers. In so doing, they trade off careful economic analysis and advice for quick and clever arguments. As a result, sound economic reasoning seldom comes out of bureaucracy.

Others are less pessimistic and assume economists play a neutral or positive role. According to Battaglini (2004), policy advisors have little effect on politicians' decisions because advisors are doing nothing more than searching for the right answer to important public issues. Nelson (1987) maintains that economists in government have a positive overall impact since they are "advocates of efficiency."

Contrary to Nelson (1987), we believe that an increased reliance on economists in government has actually led to an expansion in the size of government. (1) The reason that more economists in government can lead to an expansion in government size is fairly straightforward. Economists typically take one of two positions regarding government: either the government intervenes to correct market failures and inefficiency problems, or the government intervenes as a result of rent-seeking. If economists increasingly adopt a market-failure viewpoint, in which government intervention is necessary to correct for market failures, and if economists influence public opinion, then the public's attitude towards government intervention would become more positive over time. Similarly, if economists argue in favor of redistribution by claiming it has the potential to increase wealth more than productive activity, then the public could also develop a more favorable attitude towards government intervention. With more economists around, expressing the ideas mentioned above, more of the public would be swayed to view the government's interventions more favorably.

IV. EMPIRICAL CONSIDERATIONS AND CAUSALITY

Has the increased number of economists caused the public's attitude towards governmental intervention to change? This question is examined using causality tests. An examination of causality was undertaken using the growth rate of economists per capita, the number of rules and regulations promulgated by the federal government, and the number of people who agreed with the following statement from the University of Chicago General Social Survey: "The government should take responsibility for solving problems in society." (2) The survey was conducted every year from 1972-1994 and every other year since then. We examine the responses from 1975-2000.

We use the growth rate of economists per capita as a measure of the number of economists affecting policy. We focus on graduate trained economists. We chose to focus on economists in government rather than lawyers because (1) we are interested in exploring the Keynes claim discussed above; and (2) lawyers are more focused on their relative share of government, rather than the absolute size of government (which, in theory, is the domain of economists). In other words, economists are employed in policy analysis, while lawyers are employed in politicking)

The number of rules and regulations at the federal level is a proxy for the size of government--it gives us an idea of how much government has grown in both size and complexity over time. The University of Chicago's GSS survey results are a measure of public attitudes towards government. The null hypothesis follows Keynes by assuming economists are influential: the number of economists per capita causes the public to become more comfortable with government intervention; this, in turn, causes a growth in government.

In order to test whether any of the time-series in our data were non-stationary, an augmented Dickey-Fuller test of whether a time-series has a unit root was performed. Stationary time-series have a constant mean and variance, and the covariance depends only on the length of time between two periods and not on the time when it was examined. Our augmented Dickey-Fuller tests indicated the series to be stationary without differencing.

The data were centered and a three variable vector autoregression (VAR) with two lags was estimated. The VAR approach allows us to assume all variables are potentially endogenous, and it assumes nothing about causality a priori. Also, a VAR approach produces reduced-form estimates common to many structural models.

The measure of Granger-causality is found in the results of the F-tests of the exclusion of the lags of each of the variables (taken separately) in the three equations, with the null hypothesis being that the effect of the lags of a given variable is zero. Rejection of the null supports the presence of information coming from the lagged variables to the contemporaneous dependent variable.

Results are reported in Table 1. The F-tests shown in Block C indicate that the growth in economists and the growth in government contain Granger information in the changes in public attitudes toward the government allocation mechanism. In addition, past favorable attitudes contribute to current favorable attitudes. The sign on lagged government growth is negative. Nevertheless, the hypothesis that this offsets the positive effects of lagged favorable attitudes and the lagged growth in economists can be rejected. The tests also indicate (Block A) that the growth in government is Granger-caused by the change in public attitudes, as well as previous government growth. Block B indicates that the growth in the number of economists is self-determining.

Thus, the apparent role of economists in the growth of government is through the creation of favorable public attitudes toward government allocation. There is also a marginal contribution of economists in the growth of government regression (Block A).

According to our findings, there was some truth to Keynes's conjecture: economists in government matter a lot when it comes to explaining the growth of government. But, the effect is not a direct one. Instead, economists make pro-government policy pronouncements. The public picks up on economists' pronouncements, and, shortly thereafter, the public's attitude becomes more favorable towards pro-government policies.

V. CONCLUSIONS

Over the past 30 years, the U.S. public has altered its view of government interventions in the economy. Although there are periods in which government deficits are decried by the public and elected representatives, the trend has been for the public to be much more favorably disposed toward government intervention than in the past. This paper has attempted to explain the link between economists and public support for government. While more economists in government do not appear to stop the growth of government, not all expansions in government power should be viewed as signs of inefficiency. Sometimes, public support for government can be efficiency enhancing. Many rules and regulations help internalize externalities and correct for market failures. Clearly, economists in government have helped the public focus attention on these inefficiencies.

Widespread ignorance of economics in the general public, a biased media unwilling to articulate basic economic principles, and the growth of government itself have all been cited as reasons for the public's support for big government. Based on our analysis, if the public and government officials do not understand economics, it is not for lack of economists or economic advisers; the more economists in society and the more economists there are employed in government, the more favorably the public views government interventions.

Three different possibilities follow from our results. First, in the courses economists teach and in their consulting activities, economists tend to focus on market failure and the government's role in market failures. The emphasis on market failure is sufficient to educate the public and government officials to look favorably on an increased role for government. Second, economists point out rentseeking opportunities to the public and government officials all the time. In so doing, economists help policymakers learn that special interest politics can work to one's personal benefit. In other words, economic education can be a mixed blessing: students of economics might be more sympathetic to markets, but, in training them, we also give them the tools to pursue their own self-interest in ways that increase the size of government. A third explanation, which could be concomitant with the first two, is that economists want more government spending because increases in the size of government guarantee the employment of more economists. To date, employment of economists in government rises faster as government spending rises. If other bureaucracies focus mainly on maximizing their budgets (Niskanen 1971), the industry of economists in Washington, D.C., and in other state governments probably behaves in a similar way. Unfortunately, we are not able to distinguish between these explanations. Nor are we able to test which might be valid. Nevertheless, Keynes was right: economists have a potentially large impact on policymaking and public opinion.

REFERENCES

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Blendon, Robert, John Benson, Mollyann Brodie, Richard Morin, Drew Altman, Daniel Gitterman, Mario Brossard, and Matt James. (1997).

"Bridging the Gap Between the Public's and Economists' Views of the Economy," Journal of Economic Perspectives 11: 105-188.

Buchanan, James, and Gordon Tullock. (1962). The Calculus of Consent. Ann Arbor, MI: University of Michigan Press.

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General Social Survey. http://www.norc.org/projects/ General + Social + Survey.htm

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Langer, Gary. (2002). "Trust in Government ... to do what?" Public Perspective July/August: 7-10.

Malabre, Alfred, Jr. (1995). Lost Prophets. Cambridge: Harvard Business School Press.

Nelson, Robert. (1987). "The Economics Profession and the Making of Public Policy," Journal of Economic Literature XXV: 49-91.

--.(2002). Economics as Religion. University Park, PA: Pennsylvania State University Press.

Niskanen, William. (1971). Bureaucracy and Representative Government. Chicago: Aldine-Atherton.

Pittsburgh Post-Gazette. (1995). "Poll: More Support Federal Government," Pittsburgh Post-Gazette (May 18), p. A-8.

Samuelson, Robert. (1995). The Good Life and its Discontents. New York: Random House.

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([dagger]) We appreciate the comments by participants at the Management Seminar at King's College, University of London, and at Seattle University. We thank Joshua Hall and an anonymous referee for useful comments and suggestions. The standard disclaimer applies.

NOTES

(1.) Samuelson (1995) also argues that the growth of government is because of a lack of understanding of economics by policymakers.

(2.) The General Social Survey (GSS) can be found at the following web site: http://www. norc.org/projects/General+Social+Survey.htm

(3.) We are unsure whether or not disaggregaffng educational levels or focusing on undergraduate trained economists would change our results. It should be noted that more economists are employed in government than the official staffstics suggest. Some who never finish their degree or change directions with their degree might not be officially recorded as economists. While this is a clear data limitation that we face, there is reason to think that there are not that many additional economists roaming Washington undercover: economists have a comparative advantage in policy analysis; building political relationships is not in the skill set of most economists. We thank an anonymous referee for drawing our attention to this issue.

Scott A. Beaulier, Stetson School of Business and Economics Mercer University Macon, GA 31207 (478)-301-5596 Email: beaulier_sa@mercer.edu

William J. Boyes, Department of Economics Arizona State University Tempe, AZ 85287 (602)-965-5504 Email: William.Boyes@ASU.edu

William S. Mounts, Stetson School of Business and Economics Mercer University Macon, GA 31207 (478)-301-2837 Email: Mounts_ws@mercer.edu

TABLE 1.
Causality: Economists, Attitudes Toward the Government,
and Government Growth

A: F-TESTS, Dependent Variable = Growth of Government

Variable F-Statistic Significance

Government Growth 53.1210 .0000
Economists 1.8564 .1883
Attitudes 3.3279 .0619

B: F-TESTS, Dependent Variable = Economists

Variable F-Statistic Significance

Government Growth 1.2233 .3200
Economists 93.3659 .0000
Attitudes 0.0003 .9997

C: F-TESTS, Dependent Variable = Attitudes

Variable F-Statistic Significance

Government Growth 11.7012 .0007
Economists 8.1153 .0037
Attitudes 3.0606 .0749