A furor erupted in the economics community this week when four prominent economists who advise the Romney campaign published a white paper titled "The Romney Program for Economic Recovery, Growth, and Jobs." The authors, Glenn Hubbard, Greg Mankiw, John Taylor and Kevin Hassett used the paper as platform to critique the Obama administration's efforts to promote economic recovery before pivoting to an outline of Governor Romney's economic plans. The furor was not over the critique or the plans themselves, but the justification for the proposed policies.
Nobel Prize winning Economist Paul Krugman accused the authors of misrepresenting the research they cite to provide evidence in support of their plans where no such support exists. The most senior author on the paper, John Taylor, replied by saying that the paper uses the research correctly to draw conclusions based on accurate interpretations. Thanks to some legwork by Ezra Klein, who interviewed several of the cited authors, it is clear that some of the research cited in the white paper is interpreted differently than the authors of that research had intended. But that doesn't necessarily mean the white paper authors are wrong.
It is common in academia for scholars to use existing research as a springboard to make their own point. In some cases this research is used simply as a "straw man" to be torn down, while in others a select portion of the findings are used as a justification to examine a tangential issue. After all, as an old advisor of mine often said, "great scholars rarely stand on the shoulders of giants; they stand on the shoulders of many midgets." The point is simply that most scholarly research builds on a plethora of existing research, but where does policy advocacy fit into this academic framework?
While it is perfectly acceptable for an academic to only examine one small pathway of a problem or question, the trouble with policy advocacy based on only a subset of the research is that it leads to policy proposals that do not take into account all of the facts. This targeted approach is incredibly dangerous and it is increasingly common. It is common because we now have so much information and research available to us, that policy advisers and decision-makers must choose a subset of it to examine based simply on time constraints. In politics, this means that Republicans watch Fox News and read the Wall Street Journal while Democrats watch MSNBC and read the New York Times. In economics or climate science or any scientific endeavor aimed at informing policy decisions, this can lead to inaccurate interpretations of the whole body of research in order to draw politically expedient conclusions.
Since both sides engage in this kind of cherry-picking of research, I am loath to scold the Romney camp for doing it and much more inclined to scold our entire system. We should demand more from our elected officials; it is their job to make sure they are getting the whole picture from their advisers, not some sophisticated form of groupthink. It should also be incumbent on academics turned policy advisers to understand the partisan pressures and steadfastly provide a more complete and balanced analysis of the existing research.
In the long run, a more balanced approach to research will increase common ground between parties and result in better policy outcomes. Unfortunately, since this change seems unlikely to happen anytime soon, partisan bickering will likely continue to be supported by cherry-picked research. This means that policy uncertainty will continue on a wide variety of issues ranging from corporate taxation to healthcare coverage and emissions reduction. From an economic perspective, it is obvious that this uncertainty will prevent businesses and households from long-term planning and continue to be a drain on the economy until we can find some common ground to make long term plans. So, as long as we continue to see this type of partisan sniping over research, expect to see volatile markets and restrained economic growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.