Economics seems complicated. There’s lots of jargon, tons of different statistics and metrics, and plenty of haughty analysts who belittle anyone who disagrees with them. All of this makes it difficult for the average news consumer to really understand economic news. But it gets even harder when journalists, knowingly or not, deploy misleading storytelling devices or invoke logical fallacies in their reporting.
Many of these tropes are intended to make economics stories more interesting or easier to understand. Sometimes reporters use them without realizing, or because they’re afraid they don’t understand their own story well enough, so they defer to an expert with an agenda. But no matter why they’re deployed, they lead to misunderstandings, strawman arguments, and flimsy rationalizations for the status quo.
If you’re a news consumer, don’t let yourself be fooled by these tropes. If you’re a news reporter or editor, don’t let these into your story.
The All-Knowing Economist:
Many outlets treat economists, especially current or former government leaders, like they know everything about every topic relevant to the economy — or even in topics besides the economy. The truth is that economists, no matter how many fancy degrees or titles they have, are just people.
No economist is an expert in every aspect of the field, and economics is just one lens among many for analyzing the economy and the world. Economics also doesn’t explain everything about the economy. Law dictates the structure of markets, social psychology has enormous impacts on market behavior, history informs why markets appear in the way that they do, and so on.
Moreover, economists disagree constantly, about topics large and small. No singular economist is representative of the field’s entire wealth of knowledge. If you see an economist confidently opine on everything from interest rates, to air pollution, to the minimum wage, to transatlantic trade, odds are they don’t really know that much about any one of those topics.
The All-Knowing CEO:
The media treats wealthy corporate leaders like their opinions on any and every topic are inherently newsworthy. The CEO of a Fortune 500 company can get a column in just about any major newspaper, or an extended interview on just about any broadcast news program, just by asking. The content of these CEO’s commentary often has little or nothing to do with the management of their companies, which is usually the only topic on which a CEO has actual expertise.
To take a particularly relevant example, running a software company doesn’t make one an expert on public health or education. Running a multinational corporation doesn’t make one an expert on the international balance of military power. Certainly employing minimum wage workers doesn’t mean that a CEO knows anything about what it’s like to live as a minimum wage worker.
Whenever you see a CEO or corporate executive given free air time, always ask: how does this person’s experience qualify them to talk about this topic? If the answer is “it doesn’t,” that should tell you two things: first, that the reporter isn’t thinking very hard about why they’re platforming this person. Second, that the CEO may have an ulterior motive for wanting to be seen as a public leader on a particular issue.
The Appeal To Innovation:
We’re often told that new technologies or industries must (initially) go without rules or oversight, in order to avoid squashing something novel in its infancy. Innovation, we are told, is a social good in itself, which must be protected from overzealous oversight. However, neither innovation nor technology itself are inherently positive or negative.
For example, nuclear technology enabled both nuclear power plants and nuclear bombs. The technology itself is value-neutral: the way in which it’s applied is what determines its impact on society. Moreover, because laws always structure markets and economic activity, no innovation which has been brought to market exists in a context-free vacuum, for it to evolve and develop “naturally.” If a technology is being sold to people, it will be updated and upgraded in whatever way makes the seller the most money, regardless of whether that serves a broader social good or not.
Finally, many “innovations” in a market are just “innovative” ways of getting around existing laws and regulations, not innovations which actually deliver something new and valuable to consumers. SPACs and cryptocurrencies were innovative ways of avoiding securities regulations, at least for a time. Most of the pharmaceutical patents filed every year are for new ways of deriving old drugs, to prevent generics manufacturers from disrupting a monopoly on a medicine. Innovation, as a concept, is value-neutral: what matters is how the innovation is applied in society.
The Appeal To Tradition:
This is a classic logical fallacy in which a thesis is deemed correct or valid just because it conforms with the way things have always been done. In economics coverage, this comes up a lot when experts or journalists try to argue against a proposed policy reform. Particularly in the United States, one might hear general appeals to “cowboy capitalism” or the American entrepreneurial tradition as ways of arguing that redistributionist or regulatory policies would simply never work or be accepted here.
This is nonsense based on nostalgia. Nothing is a part of a tradition, American or otherwise, until it is done for the first time — and the United States has a strong tradition of redistribution and regulation, this is the country which invented progressive taxation in the first place. Whether a policy is favorable or not is a question of the policy’s merits, not whether it fits into a tradition that onlookers assign to it.
The Appeal To Moderation:
This is a fallacy closely related to bothsidesism. Journalists observing two sides of a debate may be tempted to think that the truth of the matter must, as a rule, be somewhere in the middle: that both sides of the debate have some things right and some things wrong, and the best way to solve the problem would be to synthesize the two perspectives.
Sometimes moderation offers the best solution to a problem, and sometimes it does not. It is not a law of the universe that both sides of an argument must be equals — sometimes, one person is just right and another person is just wrong. Plus, the best solution to a problem might not even be one which is being debated, or at least which is being argued for in the mainstream.
Because economics can seem technical and jargon-heavy, common journalistic biases like bothsidesism and the argument to moderation can crop up more frequently than on other beats. But sometimes people — even people with fancy degrees or intimidating job titles — are just wrong. (and sometimes “both sides” will only reflect different wings of the elite – for instance, how many articles about housing quote people who are unhoused or have experienced housing insecurity? Who or what constitutes a “side” that should be present is not always an objective fact.)
Big Scary Numbers:
Macroeconomics involves a lot of numbers too large for the human mind to visualize. That can make people anxious. A lot of bad actors abuse that fact to make certain data points seem scarier than they actually are. Journalists or sources sometimes invoke some number in the billions or trillions, and keep on emphasizing it, without comparing it to other data points that contextualize it. This makes the number seem like a serious issue. But a number being very large does not necessarily mean that the number is a problem — all of the raw numbers in macroeconomic data are very large.
The most commonly used Big Scary Number is the federal debt, which on its own, is an almost completely useless number. Almost no economics papers spend much time thinking about the raw total of federal debt itself. Things like the debt-to-GDP ratio, especially when compared to peer nations, can provide us with more useful information — in part because they contextualize the debt against the government’s ability to repay it, and in part because that ratio scales the debt to a more manageable set of numbers that are easier to comprehend. (For more information on the National Debt, read our Debt FAQ)
Mainstream American media conventions argue that journalists should avoid taking a side on political issues in order to present the issues fairly and accurately. But what if one side of a debate is simply wrong — if there are facts that contradict their core thesis, if they have nothing but speculation while their opponents have verified information — yet they continue to believe their false idea, and accuse reporters of bias for calling it false? Journalists can become fearful of these accusations, and begin incorrectly presenting the truthful side and the false side as equals in a debate.
Bothsidesism occurs on practically every beat, not just economics. But because economics can be technical and jargon-heavy, and because economists tend to argue in a belittling style toward anyone they disagree with, theories which demonstrably do not accurately represent reality are often lifted up and validated as just “one side” in a technical argument.
To be clear, it’s not necessarily bothsidesism to lift up a theory which hasn’t been proven empirically — few economic theories are. But if there is clear, decisive evidence against an idea, and if the majority of accredited experts think it’s hogwash, it should be treated as hogwash no matter who is espousing it.
The Government-Household Analogy:
This is a common way of scaremongering about federal government debt, by falsely comparing the government to a household: if you were borrowing money just to pay the electric bills, that would be a problem, right?
Except, the federal government isn’t a household. It’s the federal government. The United States’ federal government in particular prints the currency it borrows in, is a key node for practically all international trade and commerce, commands the world’s reserve currency, and oversees the largest economy and largest military on earth. All of these factors, no matter what you think of them, make the government extremely qualitatively different from a household. This comparison does not hold up.
Anyone invoking this comparison is being deliberately ignorant of Macroeconomics 101, for the purposes of instilling needless fear and anger in the news consumer. If someone relies on this analogy to argue against government spending, it generally means that they’re trying to avoid talking about what government spending in particular they think is irresponsible, and why. (For more on this, see our “Wait, Do We Need To Worry About The Debt?” FAQ.)
The Sin of Progressive Hubris:
As The New York Times’ Paul Krugman once put it, there’s a strong urge among journalists and pundits “to see economics as a morality play, in which attempts by policymakers to make things better are severely punished (while doing too little isn’t).” This shows up when pundits frame government’s efforts to alleviate economic woe as inevitably making things worse. According to the trope, market logic is absolute and government is always harmfully distortionary. Many pundits who invoke this trope don’t even bother to look at whether their predictions are actually playing out in the real world.
As Krugman points out, this style of argument plays on our human impulse to see vast and incomprehensible systems, like macroeconomics, as forces of nature that punish human hubris, like the gods in a Greek tragedy. This frame is also inherently reactionary: it usually doesn’t propose any actual solution to the problem being identified, but merely claims that a proposed reform will pervert, fail to impact, or jeopardize the existing order, as theorist Albert Hirschmann describes.
The truth is that the government is always a part of the economy, because economies require legal structures. Markets only exist within the context of the laws that are set up to govern them, and they’re always designed in the particular ways policymakers have chosen. This isn’t to say that government intervention is always and necessarily a good thing; it’s just not always and necessarily a bad thing either. You have to actually look at how a policy is playing out.
“Lies, Damned Lies, And Statistics”:
This phrase refers to using tortured or irrelevant statistical data to make a weak argument seem more plausible than it really is.
Say someone is trying to argue that Americans’ diets are worse than they’ve ever been, and as evidence, they cite that national production of jelly beans is at an all-time high. That may well be true, but does it actually prove their point? How many jelly beans does the average American eat in a week? Is jelly bean consumption concentrated in a few specific regions, or a few specific times of the year? Are there other, healthier foods with higher consumption rates? What about less healthy foods? This one data point alone can’t sustain the sweeping argument being attributed to it.
That’s a bit of a silly hypothetical, but you see similar things all the time with actual macroeconomic data or studies. Numbers are one thing. Interpretation of them is something else. Likewise, however, don’t assume that just because someone has a statistic it is automatically irrelevant or tortured; statistical data is often powerful evidence to support an argument, as long as the data actually relates to the argument being made.
This pejorative term is used to dismiss the theory of Seller’s Inflation, which describes how, in an inflationary environment, large corporations are able to use existing price increases as a smokescreen to raise their prices even higher as a profit-maximizing strategy. This is, in part, because it becomes much more difficult to distinguish between implicit collusion and genuine adjustments for rising costs. Many mainstream economists and other opponents of the theory use the term “greedflation” to dismiss the theory as liberals whining about companies getting greedier, which is in no way what the theory actually argues.
Fiscally Conservative, Socially Liberal:
Many centrists and libertarians use this descriptor to try and split the difference between liberal and conservative positions and broaden their appeal. This mode of thinking does not make sense, because social and economic issues are intrinsically intertwined. Housing insecurity is more pressing for people of color because of racist redlining policies. It is impossible to fix social problems without spending money. This framing is also sometimes used to describe people who support things like abortion access or marriage equality but are otherwise conservative. However, those people might be in favor of loosening discriminatory anti-LGBT policies, but they won’t go so far as actually pushing to expand necessary healthcare. Or they might favor allowing abortions while demurring on providing increased funding for sex education programs or parental leave.
The long and short of it is that when people describe themselves (or someone else) as fiscally conservative but socially liberal(or in effect, a libertarian), what they really mean is that they care about marginalized communities and advancing equity, just not enough to really do anything about it.
“Real” Economic Policy:
Among the punditry and media, there is a tendency to distinguish between economic and social policy, despite the fact that a lot of social policy is fundamentally about addressing people’s economic lives. For instance, Matt Yglesias wrote that “the country would benefit from a Democratic Party that moderated considerably on social, cultural, and environmental issues and focused on representing working-class material interests.” The problem there is that environmental, social, and cultural issues have material consequences for working-class people. Running out of drinking water in the Southwest will cause economic havoc, just as more frequent floods, wildfires, and hurricanes create huge uncertainties and raise the costs everyone pays just to exist in a certain area. Housing insecurity is social policy, but it’s also a bedrock of people’s economic lives. It’s hard to work without a place to safely spend the nights.
Workplace protections like the CROWN Act, which prohibits discriminating against workers and students for their style of hair, shield them from termination and directly impact how many people experience their jobs. Protections around retail discrimination are economic policy too. Remember, a major plank of the Civil Rights Movement centered around equitable credit and work (including workplace conditions). The economy is social and trying to distinguish the two based on whether you can apply macro 101 buzzwords is disingenuous and serves only to further cut off the practice of studying economics and policy making from the way that real people live in our economy.