Henry Farrell is pioneering a new index:
But how to cut through the hype to figure out whether or not there is a real likelihood of change in the current regime or not? The usual approach is to look for an indicator variable of some variety that will allow you to track underlying processes that you can’t directly measure. I think I’ve found one – and it’s at least as good as the Economist’s famous Big Mac index for figuring out shifts in PPP. My claim is that the degree of rhetorical overkill in Jagdish Bhagwati’s op-ed fulminations on trade is a very good indicator of what the free trade establishment actually thinks about the underlying risks or threats to the existing regime, and (to the extent that this establishment is politically plugged in) a plausible leading indicator of what’s likely to happen in the future. I’ll endeavour to test this hypothesis by keeping track of the Bhagwati Blood Pressure Index (or BBPI) over a period of time, and testing whether it maps well onto the expected outcomes.
This is an excellent place to start. I suggest, however, that we need some mechanism to establish an exchange rate between trade pundits, the better to obtain the always-desireable "market basket" of economic beliefs.
| 
The problem lies with the coefficient in front of "Lou Dobbs". Since he rarely goes below "Red-Faced, Adam's-Apple-Bulging, Jugular-Vein-Throbbing, Brain-Constricting, Spittle Emitting Anti-Trade Rage", you'll have to multiply his intensity by a very small, almost infinitesimal number so that he won't overwhelm the index, and it's notoriously difficult to accurately model such small correction factors. The errors involved could dramatically decrease the utility of the basket.
Posted by Minos | March 4, 2008 8:41 PM