Comment

Abstract

This is an extremely nice paper: rich, original, inventive, carefully done, and fascinating. In short, it is just what you would expect from Gilles. There is far too much to discuss and too little to criticize. What can a discussant do in such a situation? I will try to do three things: explain some basic issues, ask some conceptual questions, and suggest some directions of research. The very general, and important, issue on which this paper is based is the use of incorrect models of the economy. There are three basic questions here. First, how can belief in “incorrect” ideas and models persist? For example, many people believe in UFOs or ESP in spite of what would seem to many signifi cant evidence to the contrary. Second, how do people arrive at incorrect beliefs? This is the more novel question the paper looks at, and the answer given is that they listen to economists (or more generally, experts)! This leads to a third question, also addressed in this paper: namely, why do and how much can economists mislead? The perhaps obvious answer to the fi rst part of the question is that experts have their own ideological agendas and can use the belief by policymakers and the public in their expertise to manipulate policy choices. However, policymakers and the public can observe economic outcomes—that is, in a sense they have sources of information independent of experts, which puts a partial check on what experts can say and still maintain their credibility. Thus, they are constrained in how much they can mislead. These are separate, though related, questions. In order to evaluate