Thursday 10 June 2010

Self-identified liberals and Democrats do badly on questions of basic economics (Updated)

This is the conclusion of a study by Daniel B. Klein and Zeljka Buturovic published in the May issue of Econ Journal Watch. In a recent piece in the Wall Street Journal Klein writes,
Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.
Respondents were asked about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian and were asked eight economics based questions. Klein goes on to explain how Buturovic and himself conducted their study,
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.

Therefore, we counted as incorrect responses of "somewhat disagree" and "strongly disagree." This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer "not sure," which we do not count as incorrect.

In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.
The other questions that respondents were asked, along with the unenlightened answers,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).

As to the results, Klein writes,
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.
I wonder how different the results of such a survey would be in New Zealand. I would guess there would be little difference.

Update: In the comments Eric points out that he has answered my question about New Zealand here.
Long story short: left wing ideology correlates with a reduction in economic thinking (0.2 sd) but also with a reduction in political ignorance (0.3 sd). Political ignorance correlates with reduced economic thinking (0.23 sd), so the absolute effect of left wing ideology on economic thinking is a bit smaller than the partial effect. But there's still an overall negative effect.

3 comments:

Samuel Konkin said...

Hi Paul,

What do you make of the following criticisms of the study?

http://www.fivethirtyeight.com/2010/06/are-you-smarter-than-george-mason.html

I am genuinely interested.

Eric Crampton said...

Paul, recall that I have answered this question before for NZ.

Long story short: left wing ideology correlates with a reduction in economic thinking (0.2 sd) but also with a reduction in political ignorance (0.3 sd). Political ignorance correlates with reduced economic thinking (0.23 sd), so the absolute effect of left wing ideology on economic thinking is a bit smaller than the partial effect. But there's still an overall negative effect.

Paul Walker said...

Sam. He is missing the point completely. Take this bit as an example:

"Others were poorly phrased, for instance: "A company that has the largest market share is a monopoly?". This is confusing; having the largest market share is a necessary, though hardly sufficient, condition for being a monopoly, and no alternative definitions were presented. Is this question really an objective basis for determining whether someone is more or less "enlightened" (that's actually the term that Klein uses!) about economics?"

Say someone answered that they agreed with the statement: "A company that has the largest market share is a monopoly?". What does this tell us, it says that the person doesn't know that the condition is necessary but not sufficient for monopoly, which is, I think, Klein's point. Agreeing with the statement shows that you don't understand some basic economics. In this case about monopoly.