Trust the experts? Not the ones who failed to foresee the crash
Experts aren't infallible. Prone to overconfidence and groupthink, some of them make catastrophic er
Capitalism is in crisis: the US economy has stalled, the eurozone is imploding, elected European leaders are falling on their swords. Meanwhile, the Middle East is in turmoil: dictatorships are collapsing, Islamists are on the rise, Israel is considering military action against Iran. Oh, and did you know that the world may be on the brink of "runaway" climate change?
We are - to borrow from the ancient Chinese curse - living in interesting times. So how do we make sense of it all? The answer, it seems, is to ask the experts. Scientists, doctors, lawyers, economists, accountants, diplomats, generals - these well-qualified, well-spoken experts are invited on to our television screens, and offered columns in our leading newspapers. We crave their guidance, their wisdom and their insight.
But how much can we trust their judgement? Journalists are often blinded by a grand title or a long string of letters after a name. Most reporters - even specialists such as business or environment editors - need help understanding particular issues. Journalists tend to have degrees in English or history, rather than, say, econometrics or particle physics. The 24-hour news cycle has added an extra dimension: in the words of a former boss at Sky News, they need to"feed the beast".
"Illusion of skill"
Experts aren't infallible. Prone to overconfidence and groupthink, some of them make catastrophic errors. In addition, any "argument from authority" or argumentum ad verecundiam - where a proposition is believed to be true because an authoritative person says it is - is not one we should accept uncritically. Empirical evidence is what matters.
Then there is the "illusion of skill", to quote the Israeli psychologist and Nobel laureate Daniel Kahneman (himself an expert!). In his new book, Thinking, Fast and Slow, Kahneman cites a Duke University survey of stock-market forecasts by a group of chief financial officers of large US corporations. "The conclusion was straightforward," he writes. "[F]inancial officers . . . had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero." In other words, when these CFOs predicted that the market would go down, "it was slightly more likely than not that it would go up". The effect of this was that their forecasts "were worthless".
Logical fallacies and cognitive illusions aside, however, the fact is that some complex arguments cannot be decided without input from a qualified or expert source. But expertise and qualifications cannot trump track record and past performance. If an expert - be it a climate scientist, a stock trader or an intelligence analyst - makes a judgement call or offers an opinion, a forecast or a prediction, shouldn't it be held against him or her if it turns out to be flawed or incorrect? Shouldn't the power and influence of the expert also come with some responsibility? And shouldn't journalists exercise their own judgement when seeking out and selecting so-called experts for comment?
Take David Albright, the former UN weapons inspector and founder of the Institute for Science and International Security (Isis). In recent weeks, he has been quoted by various US newspapers as claiming that Iran is building nuclear weapons. His biography on the Isis website touts him as the "go-to guy for media people seeking independent analysis". But what if we want accurate and reliable analysis? Albright's assessment of the Iraqi WMD threat was spectacularly wrong. In November 2002, he suggested that Saddam Hussein could be involved in a "clandestine nuclear weapons effort"; in February 2003, he flatly declared that: "In terms of the chemical and biological weapons, Iraq has those now." Eight years on, should US journalists really be giving such weight to his views on Iran's nuclear programme? Why not instead turn to the handful of experts who were right about Iraq?
The same point applies to the financial crisis. Those economists - who clung to neoclassical theories of "rational expectations" and "efficient markets" while failing to spot the gathering financial storm - should have been discredited in recent years. Most of them haven't been, while those who got it right are ignored.
Take Nouriel Roubini, professor of economics at New York University's Stern School of Business. In 2006, at a speech in Davos, the Turkish-born Roubini warned that Italy would struggle inside the eurozone and might "end up like Argentina" - prompting an irate Italian finance minister on the panel to cry, "Go back to Turkey." In the same year, in a speech to the IMF, he predicted that the US "was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession" - earning him the soubriquet of "Dr Doom". He has, of course, been vindicated on both issues.
So isn't it odd to see finance ministers across Europe - including George Osborne - studiously ignoring Roubini's advice? The professor's preferred solution is "for those countries that have not lost market access . . . to introduce new short-term fiscal stimulus while committing to medium-term fiscal austerity", a position dismissed by Osborne, who has no background in economics, as "ludicrous" and "on the outer fringes of the international debate".
Experts, including economists and weapons inspectors, have a role to play - but within limits. They are not above or beyond accountability; their opinions and judgements should be open to scrutiny, criticism and even ridicule.
The litmus test of expertise is not how many letters or titles a given expert has after his name, but whether or not he has a proven track record of sound analysis and vindicated judgement.