Economic Advice

VOLKSWIRTSCHAFTLICHE ABTEILUNG

Ideologies, Beliefs, and Economic Advice % A Cognit iv e - E v olut iona ry V ie w on E c onomic Policy-Making

Tilman Slembeck

June 2000 Discussion paper no. 2000-12

DEPARTMENT OF ECONOMICS

UNIVERSITY OF ST. GALLEN

June 2000 Discussion Paper No. 2000-12

IDEOLOGIES, BELIEFS, AND ECONOMIC ADVICE
A COGNITIVE-EVOLUTIONARY VIEW ON ECONOMICPOLICY-MAKING

Tilman Slembeck

Author‘s address:

Tilman Slembeck University of St.Gallen Varnbuelstrasse 19 9000 St.Gallen / Switzerland Tel: ++41 71 224 25 49 Fax: ++41 71 224 35 38 E-Mail: tilman.slembeck@unisg.ch Forschungsgemeinschaft für Nationalökonomie an der Universität St.Gallen Dufourstrasse 48 CH-9000 St.Gallen Tel: ++41 71 224 23 00 Fax: ++41 71 224 26 46

Publisher:

IDEOLOGIES,BELIEFS, AND ECONOMIC ADVICE –
A COGNITIVE-EVOLUTIONARY VIEW ON ECONOMIC POLICY-MAKING

TILMAN SLEMBECK1
Abstract. Economists often perceive the “ideological beliefs“ held by political actors as obstacles to rational policy-making. In contrast, it is argued that ideologies have characteristics that appear desirable in policymaking in that they allow political actors to credibly committhemselves to certain policies, thereby fostering rule-based behavior and predictability. Understanding the roles of ideologies and economic beliefs in the political process also enables economists to be more effective in giving economic policy advice. The roles of beliefs, ideologies, and economists as policy advisers are discussed in a cognitive-evolutionary framework of the political process, and a newresearch agenda is proposed. Finally, several problems and shortcomings of policy proposals are discussed with regard to the two different worlds that policy-makers and economists live in. Key words: policy-making, political process, cognition, evolution, beliefs, ideology, economic advice. JEL classification: D7, H0

„People act in part upon the basis of myths, dogmas, ideologies and‘half-baked‘ theories.“
(A.T. DENZAU & D.C. NORTH, 1994, 3)

1. Introduction
This paper discusses several aspects of the politico-administrative process from an evolutionary and cognitive perspective with focus on the roles of beliefs and ideologies. While “ideological beliefs“ are often blamed by economists for causing irrational policy decisions, I argue that beliefs and ideologies are in the center ofeconomic policy-making, and can, therefore, not be overcome by simply proposing „efficient solutions“ to policy problems, nor by fostering „solid analytical knowledge“ alone. Such a view would naïvely overlook the very essence of politics. That is, the aim of „decreasing the influence of ideologies“ cannot be achieved solely by putting forward „rational policies“ without taking into account thenature of the game called politics.
1

I would like to thank the participants of the Conference on Evolutionary Analysis of Economic Policies, 4-6 May, 2000 in Bochum/Germany, especially Douglass North, Pavel Pelikan, Gerhard Wegner and Michael Wohlgemuth for helpful comments, and Alfred Meier and Jan Schnellenbach for discussing earlier drafts of this paper.

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Therefore, it seemscrucial for economists to understand the roles of beliefs and ideologies in policy-making, and to take them seriously – especially when giving economic policy advice. In this view, economic advisers are themselves part of the game. They are only actors among other actors – many of whom are much more influential in, and knowledgeable about the political process. Within the rules of the political game,economists are not equipped with superior knowledge or wisdom. Their views on the economy and the way it functions are not unrivaled. This has, for instance, lead to the following complaint by William H. Hutt in 1936: „ Although an expert, no authority attaches to the economist‘s opinion [...]...whilst there are few intelligent members of the public who would dare to argue with a professor of...