Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

Voting history

Are academic economists ‘in touch’ with voters and politicians?

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Question 2: What do you think is the most likely reason that a majority of UK voters went against the near unanimous advice of the economics profession?

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Answer:
A. Non-economic reasons more important
Confidence level:
Not confident
Comment:
I have argued in my response to Question 1 that the main issue in the referendum campaign was immigration. So economists' answers may have been alpha plus but they were not answering the question on the exam paper. Interestingly none of the alternatives offered here quite fits my view, though A might come close. It was a vote against immigration but the reasons may have been economic as well as non-economic.

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Question 1: Do you agree that the economics profession needs an institutional change that promotes the ability to communicate more effectively with policy-makers and the public at large and to make clear when economists have a united view; and do you agree that we need to introduce leadership to help achieve this improvement through coordinated efforts?

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Answer:
Strongly disagree
Confidence level:
Very confident
Comment:
The question pre-supposes that economists all agreed both on the right questions to ask and on the correct answers so that the problem is one of communication. I disagree. It is now clear that the main issue in the referendum campaign and the reason why "Leave" won was not trade but immigration. On this issue the economics profession's message was that immigration is good for you and more immigration would be even better. Many studies purporting to show that immigration does not reduce wages or job opportunities for the native-born were cited, usually adding the weaselly qualification that there may have been some adverse effects on the low paid. There was virtually no discussion of the effects of immigration on house prices or social housing. The wider issue of the ever-rising proportion of the UK population which is foreign-born (currently over 20%) and whether this is sustainable without loss of social cohesion and as a consequence political instability was never discussed, despite its obvious economic implications. The economics profession is quite happy to discuss the effects of ethnic conflict on growth in Africa. But any such discussion about Britain is either taboo or dismissed as non-economic. The near-unanimity of the profession on Brexit was surprising and suspicious to anyone brought up on the distinction between positive and normative economics or the philosophical principle that you can't derive an "ought" from an "is". Unwillingness to address the immigration issue in a meaningful way suggests a severe dose of political correctness and fears of being accused of racism. A second reason may have been an unacknowledged bias in favour of the EU due to financial self-interest. Most of the economics profession is employed in academia which benefits financially from immigration and EU funding. Fair enough, but this should have been openly acknowledged. This is asking no more than is now expected of natural scientists. The economics profession does not need self-appointed leaders to lay down the law to the rest of us. Rather a franker examination of the issues is required.

Brexit: the potential of a financial catastrophe and long-term consequences for the UK financial sector

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Question 3: What do you think will be the overall economic consequences of Brexit for the UK?

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Answer:
Mildly negative
Confidence level:
Not confident
Comment:
The crucial issue is what sort of policies will be followed in the event of Brexit? If these are sensible, the result will be mildly negative since we would presumably be excluded from the Single Market but get some sort of free trade deal with the EU. Even if broadly sensible it is very unlikely that we would move to unilateral free trade with the whole world. And there is some risk of really stupid policies being adopted by a successor government.

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Question 2: What is the probability that the UK experiences such a significant disruption to financial markets and asset prices following a vote for Brexit on 23 June?

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Answer:
nontrivial but ≤ 10%
Confidence level:
Confident
Comment:
The question was about disruption which is not the same as falls in a few asset prices. The latter occur all the time for a variety of reasons (and non-reasons).

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Question 1: Do you agree that there would be substantial negative long-term consequences for the UK financial sector if the UK were to leave the EU?

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Answer:
Agree
Confidence level:
Confident
Comment:
The eurozone would almost certainly use Brexit as an opportunity to impose new regulations which discriminate against London in euro-related transactions.

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