Sunday, December 21, 2014

Economics, Entertainment And The Dr. Oz Effect

Dr. Oz is the star of popular TV program in which he provides advice on medical problems and treatments.  It turns out that he provides bad advice.  More than half of the claims that he makes are wrong.  TV is full of experts like Dr. Oz.  They give investment advice, marital advice and even legal advice.  Of course their advice is worth about what free advice costs.  Paul Krugman compares these experts to some of the economists that he encounters on TV news shows who display a similar lack of competence.  He attempts to explain their popularity and their behavior.

One explanation is that they are all in the entertainment business.  Personality and a simple explanation for complex problems is what builds a large enough audience to attract sponsors.  It also helps if they provide the audience with messages that they want to hear.  Furthermore, most of the Wall Street economists focus on short term problems that interest momentum investors who don't hang on to their investments for very long.  Its not surprising that their opinions about economic policy conform closely with that of their clients.  The good news is that most economists, like most doctors, are more concerned with protecting their reputations than they are with client relationships or with their ability to entertain a popular audience on TV.

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