Question A:
Adam Smith’s metaphor of the invisible hand has been foundational to the development of modern economic theory.
Responses
Responses weighted by each expert's confidence
Question B:
Adam Smith’s metaphor of the invisible hand has been commonly misinterpreted as advocacy for pure laissez-faire capitalism.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Daron Acemoglu |
MIT | Bio/Vote History | ||
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 Joseph Altonji |
Yale | Bio/Vote History | ||
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 Alan Auerbach |
Berkeley | Bio/Vote History | ||
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 David Autor |
MIT | Bio/Vote History | ||
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It's a pretty compelling simile! (It's not a metaphor, as your high school English teacher dutifully taught you. I'm going to regret writing this parenthetical note.)
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 Abhijit Banerjee |
MIT | Bio/Vote History | ||
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 Marianne Bertrand |
Chicago | Bio/Vote History | ||
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 Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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Along with the division of labor
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 Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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 Judith Chevalier |
Yale | Bio/Vote History | ||
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 David Cutler |
Harvard | Bio/Vote History | ||
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 Angus Deaton |
Princeton | Bio/Vote History | ||
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 Darrell Duffie |
Stanford | Bio/Vote History | ||
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 Aaron Edlin |
Berkeley | Bio/Vote History | ||
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 Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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 Liran Einav |
Stanford | Bio/Vote History | ||
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 Ray Fair |
Yale | Bio/Vote History | ||
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 Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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 Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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 Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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 Robert Hall |
Stanford | Bio/Vote History | ||
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 Oliver Hart |
Harvard | Bio/Vote History | ||
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 Bengt Holmström |
MIT | Bio/Vote History | ||
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A catalyst for theorizing about markets and price formation - absolutely
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 Caroline Hoxby |
Stanford | Bio/Vote History | ||
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The invisible hand is foundational to all notions of partial and general equilibrium in economics. It certainly drew me into economics and (I have no doubt) has drawn in many others as well. Any who truly understands economics implicitly relies on this concept.
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 Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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 Kenneth Judd |
Stanford | Bio/Vote History | ||
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 Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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 Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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 Pete Klenow |
Stanford | Bio/Vote History | ||
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 Jonathan Levin |
Stanford | Bio/Vote History | ||
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 Eric Maskin |
Harvard | Bio/Vote History | ||
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The first welfare theorem---a fundamental finding in economic theory---is essentially a formalization of the invisible hand.
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 William Nordhaus |
Yale | Bio/Vote History | ||
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A wonderful metaphor and inspirational for economist-poets. Only proven almost two centuries later with appropriate reservations.
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 Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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 Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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 Larry Samuelson |
Yale | Bio/Vote History | ||
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Variations on the concept of the invisible hand, culminating in the two fundamental welfare theorems, play a central role in our understanding of the possibilities and limitations of decentralized resource allocation.
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 José Scheinkman |
Columbia University | Bio/Vote History | ||
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 Richard Schmalensee |
MIT | Bio/Vote History | ||
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 Carl Shapiro |
Berkeley | Bio/Vote History | ||
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 Robert Shimer |
University of Chicago | Bio/Vote History | ||
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 James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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 Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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 Christopher Udry |
Northwestern | Bio/Vote History | ||
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The metaphor is important as it is used now, but it's not how Smith actually used the phrase.
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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Daron Acemoglu |
MIT | Bio/Vote History | ||
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The invisible hand and its formalization, first welfare theorem, are beautiful and thought-provoking. But their insights should not be applied when their conditions are not met. In real world, monopoly, power, politics and other market failures are pervasive and cannot be ignored
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Joseph Altonji |
Yale | Bio/Vote History | ||
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Alan Auerbach |
Berkeley | Bio/Vote History | ||
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David Autor |
MIT | Bio/Vote History | ||
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Reading Smith is a Rorschach test. And although Rorschach tests have no wrong answers, many have failed when it comes to Smith
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Abhijit Banerjee |
MIT | Bio/Vote History | ||
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Marianne Bertrand |
Chicago | Bio/Vote History | ||
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Markus Brunnermeier |
Princeton | Bio/Vote History | ||
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See Viner’s JPE (1926) article. Adam Smith also captured many “behavioral” aspects.
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Raj Chetty |
Harvard | Did Not Answer | Bio/Vote History | |
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Judith Chevalier |
Yale | Bio/Vote History | ||
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David Cutler |
Harvard | Bio/Vote History | ||
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Angus Deaton |
Princeton | Bio/Vote History | ||
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Darrell Duffie |
Stanford | Bio/Vote History | ||
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Aaron Edlin |
Berkeley | Bio/Vote History | ||
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Barry Eichengreen |
Berkeley | Bio/Vote History | ||
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I would prefer the wording "Adam Smith's writings have been wrongly interpreted as advocacy for pure laissez-faire capitalism."
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Liran Einav |
Stanford | Bio/Vote History | ||
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Ray Fair |
Yale | Bio/Vote History | ||
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Amy Finkelstein |
MIT | Did Not Answer | Bio/Vote History | |
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Pinelopi Goldberg |
Yale | Bio/Vote History | ||
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Michael Greenstone |
University of Chicago | Bio/Vote History | ||
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Robert Hall |
Stanford | Bio/Vote History | ||
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Oliver Hart |
Harvard | Bio/Vote History | ||
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Bengt Holmström |
MIT | Bio/Vote History | ||
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Caroline Hoxby |
Stanford | Bio/Vote History | ||
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Only ignorant, unread, & intellectually shallow people believe that the invisible hand is equal to Laissez Faire. The concepts are entirely different/orthogonal. Conflating one concept with the other displays an unforgiveable unwillingness or gross incapacity to learn economics.
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Hilary Hoynes |
Berkeley | Bio/Vote History | ||
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Kenneth Judd |
Stanford | Bio/Vote History | ||
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Steven Kaplan |
Chicago Booth | Bio/Vote History | ||
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Anil Kashyap |
Chicago Booth | Bio/Vote History | ||
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sometimes misinterpreted for sure, lots of what he wrote has been forgotten and the caricature has taken hold.
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Pete Klenow |
Stanford | Bio/Vote History | ||
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Jonathan Levin |
Stanford | Bio/Vote History | ||
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Eric Maskin |
Harvard | Bio/Vote History | ||
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Once we understand what assumptions need to hold for the first welfare theorem to go through, we see that there are many circumstances (e.g., monopoly power or externalities) where a laissez-faire approach is not warranted.
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William Nordhaus |
Yale | Bio/Vote History | ||
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Didn't need this metaphor to defend social Darwinism, monopolies, cartels, and ruinous degradations of the economy and polity.
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Maurice Obstfeld |
Berkeley | Bio/Vote History | ||
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Emmanuel Saez |
Berkeley | Bio/Vote History | ||
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Larry Samuelson |
Yale | Bio/Vote History | ||
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Too often, the conclusions of the welfare theorems are emphasized and the required conditions ignored.
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José Scheinkman |
Columbia University | Bio/Vote History | ||
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Richard Schmalensee |
MIT | Bio/Vote History | ||
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Sometimes, yes, but commonly seems too strong.
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Carl Shapiro |
Berkeley | Bio/Vote History | ||
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Robert Shimer |
University of Chicago | Bio/Vote History | ||
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Adam Smith recognized some limits to laissez-faire capitalism, notably in his discussion of collusion; however, he argued that the government cannot prevent collusion. It can only facilitate it through bad policies.
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James Stock |
Harvard | Did Not Answer | Bio/Vote History | |
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Richard Thaler |
Chicago Booth | Bio/Vote History | ||
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Not sure how to answer this. No data.
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Christopher Udry |
Northwestern | Bio/Vote History | ||
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Smith had much to say about the dangers of traders conspiring to manipulate markets.
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