Ideology, Economics and Policy Making

New York University's Mario Rizzo in his "In Defense of Reasonable Ideology" delivers a sterling dissertation of why economic ideology matters in conducting economic policy analysis.

Some noteworthy excerpts from Professor Rizzo,

``In the realm of scientific hypotheses, even the “falsificationist” Karl Popper accepted a principle of tenacity which had it that hypotheses are not to be dropped in face of any conflicting evidence. No hypothesis will have a 100% of the evidence in its favor. Is this rational? It depends on the nature of the prior probabilities or the prior hypothesis. Suppose someone says: “By and large the free market is best, among all of the feasible alternatives, at promoting human welfare.” Is this ideology? I think most people would say it is. What is it based on? Well, for some people it may be a religion or faith or sorts. But then its negation can be as well. However, it need not be a faith.

``Ideologies stress the interconnections among policies and problems. They may point us in the direction of the general principle implied by a policy and hence the implicit rationalization of further policies. They may make us alert to unintended changes in incentives in related problem areas especially when this worsening of other problems has happened time and again. They show us that when the State intervenes there is more than just some pinpointed technology involved.

``Most people are not scientists, economists or intellectuals. They are not testing hypotheses. They have other things to do. They are often rationally ignorant. How can they make up their minds about public policy? Many, though not all, are ideological. They choose a set or complex of beliefs that comports best with their observations and experience. For them too it is not rational to give up the world view because some (few) observations seem to conflict. Forgive some of them who are not willing to throw away long-held beliefs on the say-so of a president who is someone most never heard of eighteen months ago.

``Public policy questions are not simply technical questions. They involve ethical issues...The science is the technical aspect: causes and effects. The ethics involves the standards that are applied to determine whether a state of affairs is good or just. And the art involves the sometimes intuitive judgments of how to apply the science to get (or allow) the outcomes policymakers want."

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