Sunday, January 13, 2013

Americans don't believe economists.

The graph is from an article in the current issue of The Economist. I quote:
In their take on the survey Roger Gordon and Gordon Dahl of the University of California, San Diego, find that on topics with a large academic literature economists mostly arrived at the same answer. A full 100% of those questioned agreed that returning America to the gold standard would be a bad idea, for instance. Bigger disagreements emerged when research was scant......... 
The American public certainly seems disinclined to go along with the economists’ consensus. Paola Sapienza of Northwestern University and Luigi Zingales of the University of Chicago compare the economists’ survey results with a similar poll of members of the public. They find a stunning gap of 37 percentage points, on average, between the proportion of economists and of ordinary Americans agreeing with a particular statement (see chart)......... 
The distribution of views within the public was most similar to the distribution within the profession when there was little consensus among economists. Evidence is mixed on the benefits of school vouchers, for instance, and similar shares of economists and non-economists agreed with the policy. It is when economists felt quite certain they knew the right answer that big gaps emerged. Economists were unified in thinking it is hard for an individual investor to beat stockmarket indices; only 55% of the public agreed. Whereas 93% of economists reckoned a carbon tax is a less costly way to cut emissions than car fuel-mileage standards, only 23% of the public agreed. Such divergence may help explain the lack of traction for the policy in Washington, DC.
Perhaps public opinion is more influenced by advertising than by expert opinion.

  • Stock brokerage firms would not like to see their customers go to low cost mutual funds based on stock indexes. 
  • The Republicans ran in a couple of elections claiming that the stimulus didn't work, funded by corporations and  wealthy people interested in Republican controlled government. 
  • Oil, coal and gas companies would presumably see their sales reduced by an effective carbon tax.
  • American manufacturing companies want Americans to "buy American" whether or not doing so increases employment.
I don't know why Americans don't think that gasoline prices mainly reflect market factors, unless they feel that the manipulation of oil supplies by OPEC is not a "market force". I do assume that prices can be manipulated in a market with inelastic demand by an oligopoly that reduces supply to drive up prices and profits.

The major theme of this blog is "knowledge for development". Erroneous beliefs (false knowledge) held by the public is obviously bad for policy making in a democratic society. Freedom of speech is supposed to be the mechanism by which good information replaces bad information in the public forum. On the other hand, in modern society where mass media give disproportionately loud voice to big money, we seem not to be able to depend on truth driving out the false in the public forum. This is especially true when we have laws pretending that corporations and lobbying organizations with their advertising budgets are people with guaranteed free speech, and when our educational systems do not enable students with strong skills in information literacy -- evaluating the truthfulness of sources of information.

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