What this covers
David Henderson and Russ Roberts examine the gap between public perception and economic reality on the question of professional disagreement. Henderson, editor of the Concise Encyclopedia of Economics, argues that economists actually agree far more than citizens believe—especially on core microeconomic questions—while Roberts probes whether that consensus is beginning to erode. The conversation moves through concrete examples: the strong polled consensus against rent control, tariffs, and the job-destroying effects of minimum wages, balanced against areas where genuine disagreement persists, most noticeably in macroeconomics and long-term growth theory.
The discussion identifies three sources of apparent disagreement: media dynamics that privilege conflict, the tendency to conflate microeconomic and macroeconomic claims, and the growing market incentives for economists to adopt provocative positions rather than report what the evidence shows. Henderson walks through how survey questions can obscure consensus—the minimum wage surveys, for instance, conflate unemployment with employment effects, potentially masking agreement on underlying mechanisms. The pair also examine where economists truly diverge: on empirical questions like economic growth determinants, on the proper response to behavioral economics findings, and, contentiously, on whether incentive structures in climate science undermine its reliability. A recurring theme is that Friedman's observation still holds—on questions of effect rather than desirability, economists reliably align against non-economists, suggesting real scientific knowledge exists beneath the noise.
Henderson and Roberts argue that economists agree far more than the public believes—especially on microeconomic analysis—and that perceived disagreement stems from media dynamics, ideology, and the growing market incentives for economists to be provocative rather than honest.
- Apparent disagreement is largely an artifact of media balancing, micro/macro conflation, and economists not discussing what they agree on
- There is strong polled consensus on rent control, minimum wage, and trade among economists
- Expanded market opportunities create incentives for economists to be biased or provocative, eroding scientific honesty
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The evolution of Paul Samuelson's textbook tracks the profession's shift on monetary policy: in the early 1950s it described monetary policy as completely ineffective, but as Friedman's influence grew, by the 1980s it described fiscal policy as relatively ineffective and monetary policy as much more potent.
“what he said about monetary policy in the early 50s completely ineffective and as Milton Friedman gained influence in the economics profession Samuelson's textbook changed on that to were by the 1980s he was saying fiscal policy is relatively ineffective monetary policy is much more potent”
The public misreads the positive correlation between rising gas prices and continued driving as a refutation of the law of demand, when in fact rising demand is itself pushing prices up; an exogenously imposed gasoline tax would reduce driving, and a long-term tax produces a larger response as people eventually replace vehicles with more efficient ones.
“part of the reason the price is going up that demand is increasing so you're going to see a positive association between prices and driving ... that doesn't refute the law of demand”
The minimum wage survey question conflates 'increases unemployment' with 'decreases employment'—an important distinction, because a teenager who loses his job to the minimum wage may stop looking for work (going back to school, the illegal sector, or living with parents) and thus not be counted as unemployed, potentially explaining why some economists answered 'no effect on unemployment.'
“increases unemployment is different from decreases employment ... to be unemployed you have to be out of work and looking for work so let's say some poor unskilled teenager loses his job because of minimum wage ... he might pull out go back to school get into the illegal sector live with his parents do any number of things and he won't be counted as unemployed”
Trade barriers and outsourcing do not destroy or create net jobs; they change which jobs exist, shifting workers toward goods where there is no comparative advantage and away from goods where there is—so Blinder's projection of 40 million service jobs at risk over ~10-15 years amounts to ~3% of jobs per year in an economy where ~20% of jobs already churn and are replaced annually.
“protection or trade barriers don't create jobs they change jobs you get different jobs you get people specializing in the goods in which we don't have a comparative advantage rather than the goods that we do”
All economics is behavioral because all economics is about human behavior; the field labeled 'behavioral economics' specifically studies systematic ways people deviate from standard rational-actor models—for example employees sticking with default 401(k) options even when costless to change, due to anchoring and behavioral biases.
“all economics is behavioral all economics is about human behavior ... what the behavioral economists ... has come to mean is people who basically think that in certain systematic ways people will not act the way the economists model says”
Activists on both sides of the political spectrum cheat with data and fudge numbers when pushing public policy; on NAFTA, proponents claimed it would create jobs and opponents claimed it would destroy jobs, while economists like Blinder correctly held it would neither create nor destroy net jobs but change the kinds of jobs—Mexico being too small a part of US economic life for large impacts.
“we had people when NAFTA was on the table saying that NAFTA would create jobs we have people saying the proponents yes we had the opponents the people against NAFTA saying it was going to destroy jobs when in fact most economists would say ... it would neither destroy nor create jobs net”
Over 90% of surveyed economists across three surveys (97% in the 1970s, 92% in 1992, ~93% in 2000) agree that tariffs and import quotas reduce general economic welfare—a consensus that has remained remarkably constant.
“97% of economists survey this was 211 economists agreed that tariffs and import quotas reduced general economic welfare by 1992 that was down a 92% ... in the 2000 survey it bleeped up to about 93%”
Economists frequently share the same views on analysis even when they differ on values; for example, the vast majority agree rent control causes apartment shortages, makes apartments hard to find, lets housing quality deteriorate, and discourages new construction (unless new construction is exempted) because builders anticipate future controls.
“on rent control the vast majority of economists agree that if you keep rents down by law you'll have a shortage of apartments it'll be hard for people to find apartments apartments will slowly deteriorate over time and lower in quality”
There is substantially more disagreement among economists in macroeconomics than in microeconomics; micro issues like rent control and free trade are more settled, partly because micro analysis builds up from simple foundations (two people on an island).
“in macro you're going to find much more disagreement typically than in micro issues are much less settled we're less sure”
Nearly all economists, regardless of whether they favor a carbon tax, agree it will reduce carbon usage—contradicting the non-economist conservative claim that people will drive and use fuel the same amount regardless of price.
“every economist I know no matter whether he thinks the carbon tax is a good or bad idea agrees that it will reduce the amount used”
Physicists also fight personally and disagree about seemingly basic things; the hard sciences are romanticized as conflict-free domains where truth marches forward inexorably, but Friedman confirmed with a physicist that they argue just as economists do.
“do you guys fight that way about all these things ... and the guy said of course we do ... we romanticize the hard sciences as if there's yeah there's no debate it just progress and truth just march forward inexorably ... but that's not true”
It is very hard to find an economist who doesn't live in a rent-controlled apartment who will favor rent control; even left-leaning economists like Assar Lindbeck called rent control the most effective way to destroy a city other than bombing.
“it's very hard to find an economist who doesn't live in a rent controlled apartment who will favor rent control”
Paul Samuelson, politically a liberal, is nonetheless a free-market economist because he laid out the strongest intellectual case for free trade; mathematical economists who identified market failures also frequently built the framework explaining why markets work well, showing 'free-market economist' is an analytical not ideological label.
“the guy who really nailed intellectually ... the case for free trade I think in the 20th century was Paul Samuelson who's you know this liberal and an economist”
When economists actually hold policy power—'where the rubber meets the road'—they tend to push the deregulation button rather than the regulate-more button; agency economists across administrations have unanimously opposed regulatory proposals, with their answer often being 'there are no good economic arguments for your proposal.'
“when economists get into positions where they really need to focus ... which button do I push they tend to push the button that says let's deregulate let's not regulate more”
Behavioral economics' empirical findings on irrationality are strong, but jumping from them to libertarian-paternalist government policy is unwarranted, because the same irrational people run government—and there they handle other people's money with less care, compounding irrationality with indifference.
“those same people who are so irrational or running the government yeah now they're dealing with other people's money not their own so you got irrational irrationality plus I don't care very much and somehow you're gonna get a better result”
Milton Friedman observed that in a room full of economists of various ideological stripes plus non-economists, on a question about the effects (not the desirability) of a policy, the economists will reliably line up on one side and the non-economists on the other.
“you will find very quickly is on a particular issue about the effects of something not about whether you should do something but about the effects of something you will typically find all the economists lined up on one side and all the non economists on the other”
As economists who understand incentives, we should be skeptical of climate science for the same reason—the enormous pool of grant money and prestige distributed according to political alignment cannot plausibly have zero effect on the quality of the science; economists would be no different under such incentives.
“the political environment which hands out grants and money and prestige based on where you fit in the political spectrum could affect the scientific work done on climate ... I wouldn't expect that that money that enormous pool of money that's now at stake we have no effect on the quality of the science”
Pioneers of information economics like Joseph Stiglitz tend to neglect the Hayekian role of prices in conveying information and directing behavior in socially beneficial ways—a 'silo problem' where information theorists either consider that role already established or are not persuaded by it.
“what I had wanted from him and just could never get him to was to talk about how prices convey information and the whole idea from Friedrich Hayek that just the power of prices in directing behavior in a socially beneficial way”
The empirics of economic growth are less settled than commonly assumed; beyond knowing communism prevents growth, the literature on religion, education, IQ, investment, institutions, rule of law, property rights, and tax rates is messy and 'all over the map.'
“as I just as I explored the literature I found people all over the map and I had an economist named Kevin Greer whom Tyler Cowen recommended to me do it and his was it was just his best honest attempt to say what do we know and what do we not know and it's it was less settled than I thought”
The profession has reached a consensus that inflation is fundamentally a monetary phenomenon—too much money chasing too few goods—replacing earlier competing theories (cost-push, demand-pull, labor unions); this consensus emerged because data tested the theories and one survived scientifically.
“Milton Friedman said no inflation is everywhere and always a monetary phenomenon that is too much money chasing too few goods is what causes steady and regular increases in the price level that debates up pretty much over”
Economists understand much better today than 30-50 years ago why rich nations get richer—the role of technology and innovation—even though development economics (why poor nations escape poverty) remains poorly understood.
“why rich nations get richer we have a pretty good understanding of I think about the role of Technology and innovation whereas in the past that wasn't as well understood”
When over 500 economists (including Nobel laureates like Bob Solow) signed a petition supporting a minimum wage increase that implied a free lunch, ideology trumped economic analysis—reflecting a desire to advance a broader political agenda rather than honest economics.
“I think ideology trumped economic thinking I think there was just this desire to go along with something that that made them feel good”
Economics has had a major public success: the demand for economy-wide price controls as an anti-inflation tool has collapsed politically over the last 25 years, even for individual price spikes like gasoline, reflecting public learning—though Friedman attributed this learning more to bad experience than to economists' arguments.
“it's it's fascinating to me how small the demand is politically for you hear it for price controls you hear it but it doesn't have the traction it had 25 years ago”
Economist consensus that the minimum wage increases unemployment among young and unskilled workers is weakening but still strong: surveys found 90% agreement in the 1970s, 79% in 1992, and 74% in 2000.
“a minimum wage increases ... unemployment ... and 90% of economists agreed when the poll was done in 92 seventy-nine percent agreed and when it was done in 2000 seventy-four percent agreed”
Media incentives systematically push experts toward inflammatory framing: when Henderson wrote a Wall Street Journal piece criticizing the Schwarzenegger health plan, Bill O'Reilly's booker called the same day wanting to focus solely on the throwaway line about illegal aliens qualifying for benefits, because riling up an anti-immigrant audience drives bookings.
“I got a call that day from the Booker for a Riley and that was what he wanted to focus on he wanted you to rile people up”
The expansion of market opportunities for economists (think tanks, media, blogs, columns, TV) over the last 25 years, with higher pay and greater reach, has created unhealthy incentives for economists to segregate by ideology, be provocative rather than thoughtful, and use data less honestly—because nuanced 'on the one hand' analysis doesn't get into the New York Times or build a successful blog.
“economists today have more opportunities to run their mouth ... and they pay better and I would argue that that has changed our willingness to use data honestly”
The perception that economists disagree arises from two mechanisms: economists don't bother discussing what they agree on (so public discourse focuses on disagreements), and journalists seeking 'balance' on settled issues like free trade end up pitting an economist against a lobbyist, then headline it as 'economists disagree.'
“economists when they get together aren't gonna bother spending a lot of time talking about what they agree about”
Being in an ideological minority creates incentives for greater intellectual care; Henderson argues he keeps analysis and ideology more separate than many other libertarians and than liberal-left economists precisely because so many people will jump on him if he says something he can't justify.
“part of it is the incentives because I'm in a minority I have to be very careful about this because there are so many people who will jump on me if I say something I can't justify”
There is no single trustworthy media source or 'truth-teller' economist; consumers of economic news must triangulate across Fox, MSNBC, the New York Times, and even academic literature, using their own judgment—while avoiding the opposite error of so much skepticism that nothing is believed.
“you've got a triangulate you've got to see what Fox is saying you got to see what MSNBC is saying you've got to see what the New York Times is saying and you've got to see some even a little of the academic literature”
Sports illustrates that when enormous money is at stake, participants will respond to incentives by taking steroids, human growth hormone, and other measures economists would predict; people romantically resist accepting that sports is a lucrative business whose participants respond to incentives, and college football can never return to its earlier form because of the money washing through it.
“when there's an enormous amount of money at stake people are going to take steroids they're gonna take human growth hormone they're gonna do all kinds of things that we predict as economists they would do”
Paul Krugman, who wrote one of the best trade books ever (Pop Internationalism) and was excellent at explaining economics, exemplifies the corruption of incentives: in his New York Times Magazine he claimed taking from the rich to give to the poor is 'simple arithmetic,' implying a zero-sum world—itself perhaps the biggest fallacy preventing economic understanding—and his health-care writing ignores that a zero price increases quantity demanded.
“Paul Krugman in the sunday New York Times magazine wrote an article saying that if we took money away from the rich and gave it to the poor the poor would have more in the rich would have less it's simple arithmetic implying that the world is a zero-sum game”
Think-tank economists, who hold economics degrees but are advancing a political agenda, are more likely than academic economists to question the virtues of free trade or favor protectionism, blurring the line between scientist and advocate.
“you're more likely to find those folks in think tanks where they're called economists they have economics degrees but they are grinding an axe of one sort of another on either side of the political spectrum”
Ideology may play a much more active role in economics than economists like to admit; the real underlying debate is not the elasticity of labor demand but whether government should be more or less involved, and many economists act simultaneously as scientists and political activists, which may corrupt policy assessment.
“my worry is that is that ideology plays a much more active role in economics then we normally accept as economists”
When economists of differing ideologies (e.g., Summers, Krugman, Henderson, Anderson) actually discussed concrete issues at the Council of Economic Advisers, what was striking was how much they did NOT disagree—on free trade, price controls, natural gas decontrol—suggesting economics is more of a science than commonly thought.
“when we would actually talk about the issues what was really striking was what we didn't disagree on you know things like free trade things like price controls”
The joke that if you laid all economists end to end they still wouldn't reach a conclusion, and Truman's wish for a one-handed economist, reflect a folk belief that economists agree on nothing.
“if you took all the economists in the world and you laid them into and they still wouldn't reach a conclusion”
Macroeconomics is about how the overall economy performs—interest rates, business cycles, unemployment, inflation—while microeconomics concerns individual markets and decisions.
“macro economics which is about how the overall economy performs issues such as interest rates the business cycle unemployment inflation those issues fall under macro economics”