There are certain examples I use in my classes where the origins are shrouded in mystery. They likely come from some obscure note I wrote to myself after reading something online. One of those examples is that there are some states in the US that require fortune tellers to be licensed. [*] I use this as an example of the ridiculousness of occupational licensing, which in many circumstances serves no real purpose other than creating a barrier to entry into the market. After all, what harm could befall consumers from receiving the services of an unlicensed fortune teller, that licensing would help to prevent?
It turns out that the fortune teller example is true. Here's the relevant website with links to the law, as well as this hilarious article which asks the most relevant questions:
How cool would that be to have a fortune tellers license? But then I started to wonder how the licensing process would work. Is there a written examination? Do they hand you a blank piece of paper and expect you to divine the questions and then answer them? Is the test multiple choice or essay? Who grades the essays? Other fortune tellers – kind of like bar exam? Is there a road test? Is reading tea leaves or your palm akin to parallel parking?
I was in New Orleans last month. Walking along Bourbon Street, you see a lot of fortune tellers. I could tell the phony ones. They were the ones that beckoned me over. If they could tell the future, then surely they would have known that I wasn't going to walk over to them, no matter how enthusiastic they waved at me?
Anyway, if fortune tellers are licensed in Massachusetts, does that mean economists should need a licence? After all, economists are regularly asked to tell the future - what is going to happen to GDP, unemployment, interest rates, exchange rates, etc.? Whether economists should be licensed or not isn't a crazy question - there have been calls for that in the past (see here and here). And the consequences of bad fortune telling are likely to be as bad, or worse, when an economist gets it wrong as when a palm reader does. Real risk of harm is the reason that governments license doctors, dentists, and nurses. If there is a real risk of harm from people making poor financial decisions on the advice of economists (or other fortune tellers), maybe they do have to be licensed after all?
[HT: Marginal Revolution]
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[*] Although, as it turns out, I have referred to licensing of fortune tellers before, with a relevant link (see here).
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