In yesterday’s Daily Kos, Dean Nut criticizes my book as filtered through the Economist‘s review. It turns out that alleged economic illiteracy is just selfish voting:
The Americans who most believe that “the economy is seriously damaged by sending jobs overseas” come in several varieties, including: former manufacturing workers who lost their high-paying union jobs to overseas companies and are now working in lower-paying, non-union jobs; and Americans who studied computer science and programming on the promise of “the information economy,” only to see programming jobs sent to India. The former category include huge swathes of automobile, steel, and textile workers. The textile workers have only to go to Wal-Mart to see where their jobs went– pick up a shirt and read the label, “made in China”.
This is an interesting objection to my results. It’s also empirically testable. If the reason why economists and the public disagree is that their interests diverge, then we should be able to make the disagreement vanish by statistically controlling for differences in interests.
Chapter 3 of my book reports the results: Controlling for income, job security, income growth, race, and gender diminish the belief gap between economists and the public by less than 20%. And even this exaggerates the role of self-interest, because the signs of the coefficients are often wrong. E.g. Contrary to the self-interest story, economists who share the economic circumstances of the average citizen worry more about the economic harm of welfare – not less.
Bottom line: The theory that economists hold their distinctive views because they are out of touch with the economic realities faced by the average American has been weighed, measured, and found wanting.
If only all my critics’ objections were this specific.
READER COMMENTS
Karl Smith
Jul 10 2007 at 11:36am
The counter-argument is that your empirical tests may be too crude.
Perhaps, displaced textile workers have lower incomes than economists but displaced programmers had higher incomes.
Or perhaps more radically, it is that economists of either political stripe or any socio-economic class all have a vested interest in exaggerating the role of economic principles.
Perhaps, economic principles are 80% bunk. However, what economist of any class or political affiliation would find it in his or her interest to say that?
Liberal economists use economics to promote liberal policies and conservative economists to promote conservative policies but they are all careful to do so in a way that makes the economics profession look good.
Moreover, perhaps economists are always willing to “debate” others because they are masters of sophistry who know that by intellectually embarrassing their opponents they can increase their demand and ultimately their incomes.
Also, Byran you find that education is associated with thinking more like economists. Does that mean that education is a way of signaling that one does think like an economist or that education changes the way people think?
Plan B
Jul 10 2007 at 11:56am
stupid question: would anyone aware of the findings of behavioral finance be surprised at the conclusions of your book?
first time commenter, thanks for the great blog!
Matthew c
Jul 10 2007 at 3:10pm
I agree with you that voters are irrational.
My problem is with your proposed solution. It seems likely to me that disenfranchising people will lead to more antisocial behavior on the part of the disenfranchised, and a disconnect between the “true citizens” and the masses of those deemed unworthy to vote.
Additionally, I am not as sanguine about the votes cast by many intelligent individuals who nonetheless support socialism and other economically disastrous policies.
A real fix to government is simply limiting and reducing its sphere of influence as far as possible. The current approval ratings for Congress and the White House are a very positive sign for that.
Tushar Saxena
Jul 10 2007 at 10:28pm
Everytime the line “programmers jobs gone to India” is mentioned, i hit the roof. I’m currently working at Merrill Lynch in its technology organisation. I am a member of ACM – Association for Computing Machinery the biggest and most respected computing professional organisation. Consistently in its newsletters, studies have found that IT jobs are abundant and recruiters have been practically houding computer science/engineering majors with job offers.
Infact, all the data shows that its only a PERCEPTION that there were huge job losses. Severe shortage of computer science new hires has been forecasted due to ever decreasing enrollment in the program by freshmen. This is what the outsourcing brouhaha and dot com bust have done. However, its just that – a perception. The cranky communists at Daily Kos can put their welfare checks where their mouths are.
Tushar Saxena
Jul 10 2007 at 10:29pm
sorry about the double post my first time here.
[I removed the duplicate for you.–Econlib Ed.]
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