ASSESSING THE VALUE OF ECONOMICS RESEARCH: THE CASE OF THE BIAS IN THE CONSUMER PRICE INDEX |
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| Authors: | DAVID E SCHIMMELPFENNIG GEORGE W NORTON |
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| Institution: | Schimmelpfennig:;Economist, Economic Research Service, U.S. Department of Agriculture, 1800 M Street NW, Room 4179, Washington, DC 20036. Phone 1-202-694-5507, Fax 1-202-694-5775, E-mail Norton:;Professor, Department of Agricultural and Applied Economics, Virginia Tech University, 205 B Hutcheson Hall, Blacksburg, VA 24061-0401. Phone 1-540-231-7731, Fax 1-540-231-3318, E-mail |
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| Abstract: | Economists provide sometimes contradictory information about economic systems that contribute to policy design. How does one value this type of knowledge? A political‐economic game is presented that allows for reinforcing and contradictory research messages. Policy makers are assumed to follow a Bayesian decision theory process and the model is tested with quantitative estimates of the value of research on the degree of bias in the Consumer Price Index. Most economists agree that a bias exists, but published estimates vary widely. A blue‐ribbon panel of economists recommended revisions to how the index is calculated, and the Bureau of Labor Statistics subsequently made revisions that differed from their original plans, but how much influence did the panel really have on the revisions? (JEL Z00) |
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