In this essay, I argue that the importance attached to the President or the Fed Chairman in determining economic outcomes may be an instance of what psychologists call the fundamental attribution error.

During the Clinton administration, the projected Budget surplus improved by over one trillion dollars. However, most of this change came as a surprise to the administration. A reasonably non-partisan analysis by Douglas W. Elmendorf, Jeffrey B. Liebman, and David W. Wilcox shows that less than 20 percent of the revision to the Budget outlook came from economic policy. (See figure 4 in the paper).

For Discussion. In the essay, I also suggest that CEO’s may be overpaid because people attribute too much of corporation’s performance to its CEO and not enough to the overall context. Do you agree with this argument?