The Financial Crisis Inquiry Commission was created to examine the Causes of the Financial and Economic Crisis in the United States. The Final Report issued on January 27, 2011 was loaded with details and background information about contributing factors to the crisis. The FCIC website also includes testimony and other information. However, the commissioners were divided along political lines and the report included two dissenting views to the majority report's conclusions.
MIT Professor Andrew Lo has summarized the study of the Global Financial Crisis in his paper Reading About the Financial Crisis: A 21-Book Review (final version published in the Journal of Economic Literature in March 2012). Lo wrote "there is still significant disagreement as to what the underlying causes of the crisis were, and even less agreement as to what to do about it. But what may be more disconcerting for most economists is the fact that we can’t even agree on all the facts. . . this is a terribly frustrating state of affairs. Why is there such a difference? The answer is simple: complexity and human behavior." Lo suggests that perhaps "Like World War II, no single account of this vast and complicated calamity is sufficient to describe it."
Given the split FCIC conclusions and the likelihood that the causes of the crisis will be debated long into the future, I decided to conduct a survey of crisis "experts" (that have researched and publicly commented on the crisis) to determine whether we can further clarify opinions of the primary causes of the financial crisis. Additionally, I wanted to ask the experts for their prescriptions for fixing remaining problems related to the crisis.
The five survey items are detailed below. I intentionally cast a wide net, expecting that subsamples may yield interesting results. The criteria I used for "expert" in the initial survey were
- Authors or Editors of Books (available at Amazon.com) discussing the Global Financial Crisis, Housing Bubble/Crash and/or critical aspects of them.
- Individuals that have been credited with having predicted (or warned of the critical aspects of) the crisis in advance.
- Authors of academic or research papers that have been a) published in recognized journals or b) cited in crisis books or government reports relating to the crisis.
I posted the initial survey results on 11/11/2011 and it included a diverse sample of 22 participants. I posted the 44th response on 8/27/2013 (compiled between 11/17/2011-8/27/2013), which closed out a second sample of 22 participants. The second sample represented opinions obtained after additional time had passed since the beginning of the crisis, and the second sample participants had the option of viewing the prior responses before submitting their responses (the initial participants were not aware of the other responses until I released all 22). The results for the second sample of 22 only are posted here.
The latest update takes the total participants to 56. While most are in the US, the sample is global and includes participants living (or born and raised) in Europe, Asia, and Australia. I haven't calculated the number of invitations sent, but I'd estimate it is roughly 280. Many in the sample have publicly listed email addresses and I contacted them directly. Others have some email contact information or web based contact forms and I made attempts to reach many through those avenues as well. Some contacted me to let me know of their forthcoming books. But many others in the sample do not appear to have public contact information. It's likely some invitations ended up in spam folders and never reached the intended recipients, but I suspect most potential respondents were too busy or not interested in participating. As expected, many invitations were politely declined and numerous individuals cited the need to be objective and/or independent due to their positions or relationships.
I expect to maintain the initial survey results here, the second sample results here, as well the ongoing results page going forward (hopefully more participants will continue to weigh-in). The initial survey was conducted entirely via email. Some surveys after the first sample were conducted via phone, but those and all the participants were initially contacted via email and their responses were also verified via email. I have added a growing collection of assumed responses from individuals that have made their crisis opinions clear (and are linkable or the source is cited) below the results tables.
The sample includes 13 individuals that warned of the crisis in advance (and 2 of 3 Revere Award winners for most cogently warning of the crisis in advance), several authors of crisis best sellers, real estate and investments professionals, as well as prominent academics from both the US and abroad. I was initially concerned about potential biases in the sample, but I believe the statistical significance of the results has increased as the sample has grown. The consistency of the first and second samples also implies that any biases are minor.
Regarding the latest results here are some of my comments. Regarding simple narratives to describe the crisis, “Everyone” was at fault (Wall Street, the government, and our wider society) has 27 votes representing just under half of the complete sample. "It was the fault of the government" has 11 votes, while "It was Wall Street’s fault" has 10 votes, and 7 participants prefer none of those. There are some notable differences between the first and second samples though. The % of participants choosing "Everyone" rose from 41% in the 1st sample to 59% in the 2nd sample. In the 1st sample 29% blamed Wall Street versus 25% that blamed the Government. In the 2nd sample only 5% blamed Wall Street versus 18% Government. If the 2nd sample represents the public sentiment, that would imply that in more recent years blame has shifted more toward Government and less toward Wall Street, blame has shifted substantially more toward blaming "Everyone" and more experts recently prefer none of the three simple narratives (up from 5% of the 1st sample to 18% in the 2nd sample). However, responses since the 2nd sample have been leaning toward blaming Wall Street.
Regarding the FCIC final report, the Majority conclusions has 21 votes. When the FCIC report was released there was a flurry of criticism and the latest results have "None of the Views" in second place with 12 votes, while Wallison's Dissent has 8 votes (plus favorable mentions from two of the "None" voters). There was not much change between the first and second sample on this item. The Majority conclusions had 2 fewer votes in the 2nd sample while the other three (3 member dissent, Wallison dissent, and None) had the same number of votes in the 1st and 2nd samples. On a percentage basis the majority % dropped from 47% to 41%, while the other three had respective percentage gains. Note that 11 participants abstained on this item (3 in the 1st sample and 5 in the 2nd) with 4 of those being foreign based crisis experts.
The third item asks whether the Global Financial Crisis ended already or will end within the next few years. There is an issue of defining the GFC and clarifying whether it is a single event, or two, or more phases. But what is clear from the results is that the vast majority of the experts believed that the Global Financial Crisis was ongoing at the time of their response. Only 9 of the participants believe that the global financial crisis ended before 2012.
Items four and five asked for simple one paragraph summaries of the causes of the crisis and what still needs to happen. I was initially planning on asking for voting of causes based on Mark Jickling's list of Causes of the Financial Crisis, but felt it be too confusing and instead opted for simple paragraph summaries (which some participants felt was too limiting). I haven't attempted to summarize or mine the responses (yet), but perhaps there is a way to distill some conclusions from the responses. The main reason for this format however, was to allow the individuals to summarize in their own words their opinions of the causes of the crisis, as well as their suggested prescriptions.
Responses to Items 4 and 5 are aggregated (shortest to longest responses) at these links.
- 4. What were the primary causes of Global Financial Crisis?
- 5. What still needs to change as a result of the crisis?
Survey participants list (Crisis Expert Qualification) - original participants were posted 11/10/2011
- Viral Acharya (Book Author)
- Larry Allen (Book Author) - added 2/27/2014
- Phillip Anderson (Book Author) - added 2/10/2012
- Dean Baker (Crisis Predictor & Book Author)
- Clive Boddy (Book Author & Published Paper) - added 2/13/2012
- Roddy Boyd (Book Author) - added 11/17/2011
- Aaron Brown (Book Author) - added 11/21/2011
- Ludwig Chincarini (Book Author) - added 1/3/2013
- Aaron Clarey (Book Author)
- Jesse Colombo (Crisis Predictor) - added 10/14/2013
- Jerry Davis (Book Author)
- Vox Day (Crisis Predictor & Book Author)
- Kevin Dowd (Book Author) - added 3/9/2012
- Larry Doyle (Book Author) - added 9/11/2013
- Fred Foldvary (Crisis Predictor)
- James Galbraith (Book Author) - added 11/26/2014
- Isaac Gradman (Book Editor)
- Jeremy Hammond (Book Author) - added 9/24/2013
- Robert Hardaway (Book Author)
- Fred Harrison (Crisis Predictor & Book Author) - added 1/18/2012
- Michael Hirsh (Book Author)
- Steve Keen (Crisis Predictor & Book Author)
- James Kwak (Book Author)
- Nye Lavalle (Crisis Predictor) - added 9/7/2012
- Les Leopold (Book Author) - added 12/1/2011
- Ross Levine (Book Author & Published Paper)
- Michael Lim Mah-Hui (Book Author) - added 1/18/2012
- Robert Litan (Published Paper & Book Editor) - added 12/23/2011
- Francis Longstaff (Published Paper) - added 12/23/2011
- Johan Lybeck (Book Author) - added 10/29/2012
- Matthew Lynn (Book Author) - added 12/8/2011
- Jacob Madsen (Crisis Predictor)
- Nolan McCarty (Book Author) - added 9/24/2013
- Yalman Onaran (Book Author) - added 12/13/2011
- Ann Pettifor (Crisis Predictor & Book Author) - added 11/23/2011
- Edward Pinto (Research cited in FCIC report)
- Nomi Prins (Book Author) - added 2/27/2014
- Donald Rapp (Book Author)
- Assaf Razin (Book Author) - added 1/1/2015
- Christine Richard (Book Author)
- Jay W. Richards (Book Author) - added 8/27/2013
- Robert Rodriguez (Crisis Predictor) - added 4/12/2012
- Richard Roll (Published Paper) - added 12/21/2011
- John Rubino (Crisis Predictor & Book Author)
- Nicholas Ryder (Book Author) - added 12/10/2014
- Hersh Shefrin (Published Paper) - added 12/30/2011
- Laurence Siegel (Published Paper & Book Editor)
- Paul Sperry (Book Author)
- John Talbott (Crisis Predictor & Book Author)
- Peter Tanous (Book Author) - added 3/18/2012
- Christopher Thornberg (Crisis Predictor) - added 10/14/2013
- John Train (Published Paper & Book Editor) - added 12/16/2011
- Jennifer Taub (Book Author)
- Richard Vague (Book Author) - added 11/13/2014
- John Wasik (Book Author)
- Matthew Watson (Book Author) - added 2/27/2014
Link to the Lastest Survey Results
Link to the First Sample Results (11/11/2011)
Link to the Second Sample Results (8/27/2013)
The original survey was emailed in the following format. If you are an expert that would like to participate in the survey, or would like to nominate someone, please email me.
The 5 survey items are
1. Which FCIC View best represents the causes of the Financial Crisis?A. Majority View
B. 3 Member Dissent
C. Wallison Dissent
D. None of the Three Views
2. Which *narrative best represents the causes of the Financial Crisis?A. It was the fault of the government
B. It was Wall Street’s fault
C. “Everyone” was at fault: Wall Street, the government, and our wider society
D. None of these Narratives.
* See Telling the Narrative of the Financial Crisis: Not Just a Housing Bubble by Douglas Elliott and Martin Baily.
3. The Global Financial Crisis effectively ended in the year2009
or, I believe the crisis is ongoing and I project the Global Financial Crisis will end in the year
2013 or beyond.
4. In one succinct paragraph, please respond to the following question. What were the primary causes of Global Financial Crisis?
5. In one paragraph, please respond to the following question. What still needs to change as a result of the crisis?
Gary Karz, CFA
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