Tuesday, June 15, 2010

Liberals Are Less Informed About Economics

From the Wall Street Journal, a story about a public opinion poll testing knowledge of economics. The author is Daniel B. Klein.
Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents’ (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian.

Rather than focusing on whether respondents answered a question correctly, we instead looked at whether they answered incorrectly. A response was counted as incorrect only if it was flatly unenlightened.

Consider one of the economic propositions in the December 2008 poll: “Restrictions on housing development make housing less affordable.” People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.

Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.
The researchers, rather generously, refused to count “not sure” against respondents. Maybe they misunderstood, or maybe they thought it is an open question (which in most cases it’s not).

What were the other questions?
The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).
So here we have a test of basic economic knowledge.

How did different groups respond?
How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.

To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians. Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.

Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%).

The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect.
Liberals and leftists like to think that their views are merely “enlightened.” Indeed, they chortled three years ago when a poll came out showing that a majority of Republicans don’t believe in evolution.

(Of course, in the same poll 40% of Democrats said they didn’t believe in evolution.)

But if Christian conservatives don’t much like evolution, liberals and leftists don’t much like economics.

But the implications of the two things are radically different. While not believing in evolution is pretty much an innocent foible (unless you want to be a biologist), not believing in economic science has nasty implications for public policy.

Further, the liberal ignorance of economics is not innocent. It’s rooted in a class-based ideology. Markets run counter to the class interests of liberals. Markets give power to people who produce wealth, and not to those who redistribute it.

Markets give power to ordinary people, who are allowed to live their lives the way they want. This is a source of frustration for people who believe they should be able to dictate the lifestyles of others.

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