Politicians ignore economic expertise, Basu argues in new essay

When politicians ignore economic expertise, the risk of costly errors rises in technically demanding areas, argues Kaushik Basu in a Project Syndicate essay published on July 29. The former Indian government chief economic adviser and former World Bank chief economist presents this as a warning about policymaking, rather than evidence of a particular new policy decision or market event.

Basu says political skill cannot substitute for a detailed grasp of incentives, markets and institutions when governments make economic choices. He cites Narendra Modi and Donald Trump as examples of failure, but the published excerpt does not set out the underlying cases or evidence, limiting what can be concluded about those references.

His argument also contains an important qualification. Parts of economics, Basu writes, are close to organised common sense, and political leaders without formal training can at times reach decisions as sound as those made by specialists.

Why do politicians discount economic expertise?

Cross-national interview research described by The Conversation points to a more complicated relationship than a simple rejection of expert advice. A University College London team conducted nearly 100 in-depth interviews with economic ministers, opposition spokespeople and economic committee members in France, Germany, Denmark, the UK and the US, across political parties.

According to the researchers, many interviewees said their regard for economists had declined after the 2008 financial crisis. They cited economists’ failure to foresee the crisis, disagreement among experts and a view that economic analysis can be too abstract or too dependent on models. The politicians also worried that greater reliance on experts could further distance voters from economic decision-making.

Those accounts do not establish that elected officials make better judgments than economists. Rather, they show why political leaders may place weight on their knowledge of constituents’ daily circumstances and on whether advice is practical, specific to a policy choice and capable of being explained clearly.

Economic policy also involves choices that technical analysis cannot settle on its own. Economists can assess likely mechanisms, incentives and trade-offs, while elected representatives determine objectives that reflect political and moral priorities. The research reported by The Conversation says politicians often see those objectives, including social justice or market-oriented goals, as part of their responsibility to voters.

Stuart Hudson, a former UK government adviser writing in 2024, similarly argued that the financial crisis exposed limits on both sides. His account says many non-specialist politicians lacked familiarity with the forces operating in financial markets, while the failure of much mainstream economic thinking to anticipate the crisis weakened confidence in specialist advice. Hudson notes that some economists, including Raghuram Rajan, had raised concerns before the crash.

The practical challenge is therefore to make economic advice accountable rather than automatic: distinguish technical assessments from value judgments, state uncertainty and disagreements plainly, and explain the costs and benefits of competing choices to the public. Basu’s essay makes the case for respecting specialised knowledge; the interview evidence shows why trust in that knowledge must also be earned.

This story draws on original reporting from Project Syndicate.