Saturday, February 25, 2012

2 + 2 = ?

Here is a joke about economists:
A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."

Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."

Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

Economists (and very few others) find this joke funny because it is very revealing about how economists are used in the real world. Working for the Congressional Budget Office (CBO) is one of the rare jobs in which politicians ask economists to provide a complete analysis of an issue. In most cases, politicians hire economists to provide evidence to support pre-existing narratives. For example, a colleague worked as an economist for the State of Wisconsin when Tommy Thompson was its governor. There was some discussion among legislators about increasing the minimum wage. Rather than going to the staff economists and asking for a complete analysis of the proposal (seeking the pros and cons of the issue), Governor Thompson's staff asked simply for economic arguments against raising the minimum wage. The governor had decided his position on the issue without having full information. Indeed, he did not want a complete analysis. He just sought support for the belief he had formed without all the facts.

This is typical of how politicians across the political spectrum use economists. They treat them as hired guns, rather than the objective analysts they are capable of being. This is one of reasons why economists in the media may seem to contradict each other. They may be presenting different sides of the issue. But neither is providing the whole truth. One of my primary goals as a teacher is to help people to see "the truth, the whole truth, and nothing but the truth" about macroeconomic issues.


  1. Minimum wage is supported by more tha eight out of ten adults.

  2. However it is rather surprising that there are few economists who are really rich. Others just have light heads and do their best for enterprises the work at. It is very important to know how to operate cash flows and to be able to forecast the situation on the market. Find out more details considering cash options.

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