Twenty years ago, economics was cool. Thanks in part to the publication of Freakonomics, economists were regarded as dispensers of brilliant and unexpected solutions to everyday problems. Whether you were trying to catch terrorists or figure out which wine to serve with dinner, all you needed to do was ask an economist.
It is striking how popular the contrary position has now become: whatever policy position you might be contemplating, if economists are against it, it can’t be that bad. Brexit? The economists hate it; sign me up. Tariffs? Economists have been against them for centuries; bring on the Tariff Man. (As always, there is an exception to prove the rule. After the recent election in Canada, Prime Minister Mark Carney joked that unlike most politicians who campaigned in poetry and governed in prose, he campaigned in prose and would govern in econometrics.)
Against this backdrop, it was intriguing to see Stefanie Stantcheva recently receive the prestigious John Bates Clark Medal, the same award that Steve Levitt, co-author of Freakonomics, won back in 2003. But while Levitt won the award for the clever data-detective work that was later made famous by Freakonomics, Stantcheva won in part for asking the public what they think about areas such as inflation, energy and trade. These are issues on which economists regard themselves as experts.
Take inflation, which had seemed to be a solved problem in rich countries until the past few years. Why did it return? Economists broadly agree on the reasons, although not on their relative importance: governments borrowed and spent freely during the pandemic; supply chains were strained; energy prices spiked after Russia’s invasion of Ukraine in 2022; central banks hesitated to respond.
But what do the American citizens surveyed by Stantcheva and her colleagues think? Maybe the public and the economists aren’t so far apart after all: they blame action by the Federal Reserve, increases in production costs, and most of all, government spending. If that looks very much like the economic consensus to you, you may be right.
It is only on closer scrutiny that public attitudes to the causes of inflation start to look odd. For example, many people think that increases in interest rates cause inflation, whereas economists think the opposite. Perhaps people have confused cause and effect: fire engines are often spotted close to fires, paracetamol goes hand in hand with a headache and whenever interest rates are high, there’s an inflation problem. Or perhaps it is simply that people think of inflation as a reduction in their purchasing power and few things reduce purchasing power more reliably than an increase in your debt payments.
Another Stantcheva project investigated “zero-sum thinking”, a topic that seems more abstract, even philosophical, but which perfectly captures the new zeitgeist. There are many ways to describe Donald Trump’s approach to government, or the philosophy of the new Reform party in the UK, but “zero sum” is a useful one.
The zero-sum thinker frames the world in terms of winning and losing, us and them. If one person is to get richer, someone else must get poorer. If China is doing well, then the US must logically be doing badly. Jobs go either to the native born, or to foreigners. In contrast, the centrist dads among us see win-win solutions.
Stantcheva and her colleagues at Harvard’s Social Economics Lab have been asking: what sort of person tends to see the world as zero sum? There are some surprising findings. For example, there are few clearer refutations of a zero-sum mindset than a thriving city, in which people flock to be with others, and the social, cultural, educational and financial opportunities that result. Yet Stantcheva’s research found that urban areas are more prone to zero-sum thinking than rural ones, perhaps reflecting our failure to build new homes.
One puzzle in modern politics has been the rise of populists who grab ideas from both the political left and right. Stantcheva’s work (with Nathan Nunn, Sahil Chinoy and Sandra Sequeira) helps to clarify why this might happen. For example, a zero-sum thinker tends to be in favour of more redistribution and in favour of affirmative action — traditionally leftwing policies — but also in favour of strict immigration rules. Rightwing populists also think affirmative action is important, they just think it’s important and wrong.
The old-fashioned win-win thinker tends to like immigration (more opportunities for everybody) and think that affirmative action and redistribution are a sideshow, because a rising tide lifts all boats.
My own biases are firmly against zero-sum thinking. I’m always on the lookout for smart ideas that can make life better for everyone. But Stantcheva’s work strongly suggests that zero-sum thinking isn’t some sort of senseless blind spot. When people see the world in dog-eat-dog terms, they usually have a reason.
Young people in the US tend to see the world as zero sum, reflecting the fact that they have grown up in a slower-growth economy than those born in the 1940s and 1950s. A similar pattern emerges across countries: the higher the level of economic growth a person grew up with, the less likely they are to see the world in zero-sum terms. People whose ancestors were enslaved, forced on to reservations or sent to concentration camps are more likely to see the world in zero-sum terms. And, intriguingly, while people with little education are often zero-sum thinkers, people with PhDs may be more zero-sum than anyone, which speaks volumes about the scramble for scarce scholarships and research positions in elite education.
The world is full of opportunities for mutual benefit, so zero-sum thinking is a tragedy and a trap. But it is not a mystery. If we want to understand why so many people see the world in zero-sum terms, we only have to look at the fact that our dysfunctional politics and our sluggish economies have needlessly produced far too many zero-sum situations. Fix that problem and maybe economics will one day be cool again.
Written for and first published in the Financial Times on 9 May 2025.
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