The Millennium Survey: How Economists View the U.S. Economy in the 21st Century

FREDERIC L. PRYOR [*] ABSTRACT. This essay presents the results of a survey of AEA members on how they expect the U.S. economy to evolve in the next 50 years. More specifically, respondents were asked about changes in a variety of macroeconomic variables and whether such changes would lead to major changes in the economic system or important economic institutions. For the next quarter century, for instance, the respondents foresee the greatest deviation from current trends occurring with regard to growth of per capita GDP, volatility of the financial system, and globalization. They also predict that changes in the economic system will most likely come about from the impact of increasing globalization, increasing inequality of income, and increasing financial instability. I The Millennium Survey: How Economists View the U.S. Economy in the 21st Century THIS ESSAY REPORTS THE RESULTS of a survey of members of the American Economic Association living in the U.S. about their views of the future of the U.S. economy in the first half of the 21st century. The questions cover both indicators of economic performance and major changes in the economic system or important institutions, The questionnaires went to a random sample of AEA members and the usable replies for this analysis amount to 1.1 percent of the total membership of the Association eligible for sampling. Such an exercise is motivated by three concerns. First, the results may stimulate serious economic analysis on where we are heading and how our economic system might adjust to changing circumstances. This is a topic that few professional economists have focused much attention on and the replies to the survey may be useful in highlighting policy problems looming in the coming years. Second, after some years have elapsed and we know what is actually happening in these future years, the analysis may provide useful information about the biases of the profession. And finally, the results may provide a useful reference point for those wishing to know how their fellow social scientists view the future economy. The questionnaire covers ten major economic indicators that have received considerable attention in recent years. These include: per capita GDP, economic volatility (both production and financial variables), globalization, the changing degree of market competition, inequality of household income before taxes and transfers, the environmental and natural resource situation (raw material prices, air and water pollution, and global warming), and population. In all cases the questions deal with deviations from current trends or levels so as to determine in what ways the future will be different from the present. Of course, many difficulties face anyone trying to predict what will happen to the U.S. economy in the first half of the 21st century. Many unknown exogenous variables will influence events: wars, famines and other natural catastrophes, as well as changes in political leadership, ideologies, and technology. Certainly our ability to forecast war is limited and, with regard to changes in technology, Steven Schnaars (1989) has shown that technological forecasting, even by "experts,' is little better than reading tea leaves. To complicate matters, poor performance for any particular indicator of economic success might lead to a change in economic institutions which, in turn, could further influence performance. This difficulty can be partially overcome by a two-step procedure. All respondents were first asked what they believe will happen to the U.S. economy in a business-as-usual scenario, that is, without major changes to economic institutions and regulations. Then they were asked whether the developments they predict would lead to a major change in the economic system or to important economic institutions. A. The Survey: Mechanics, Sample, and Biases The mechanics of the survey are straightforward. …