Bryan Caplan  

Democracy in Middle Earth

Is Greed in the Genes?... Recommended Reading...
Eric Crampton was there with me on opening night for The Fellowship of the Ring.  Now this former EconLog guest blogger is a professor in Middle Earth, a.k.a. New Zealand.  And he's finally started his own blog, Offsetting Behavior, to publicize his research.  Eric's latest paper tests the Miracle of Aggregation for NZ voters - and finds it wanting:
Using a dataset allowing for testing of ignorance's effects, I here have shown that ignorance correlates reasonably strongly with policy and party preferences and with failure to understand economics. Moreover, the effects are not trivial, often well outpacing the effects of education. Even worse, membership in the types of organizations most likely able to provide adequate cue-givers fails to substantially attenuate ignorance's effects. We can perhaps take some comfort in that the politically ignorant also are somewhat less likely to vote.
But wait, there's more!  Eric also checks whether my results from "What Makes People Think Like Economists?" hold up in NZ.  Education and male gender still matter a lot, but in NZ, unlike the US, income has a big effect:
The biggest absolute effect comes from having a very high income: being in the top income bracket increases your "economic thinking" score by 0.39 standard deviations. Second, Maori ethnicity reduces the score by 0.31 standard deviations. Next, having a university degree increases the score by 0.29 standard deviations. Being male increases the score by 0.25 standard deviations. Identifying with a left-wing ideology reduces the score by 0.2 standard deviations.
Another interesting result:
Caplan finds that expected income growth correlates with economic thinking. I similarly find that those with a better household financial situation as compared to the prior year also think more like economists (0.1 standard deviations), but those who expect the economy to do worse in the next year also think more like economists. As Caplan's study relied on data from 1996 and mine from 2005, perhaps those who think more like economists are better able to forecast economic trends.

P.S. Eric takes econometric requests.  I asked him to check whether dropping his measure of ignorance restored the dominance of education over income.  Not quite; dropping ignorance made education more important and income less important, but the changes were modest.  In the end:
The effects of income and education are roughly comparable. The lowest levels of both have little effect. Middling levels of both have some effect. And the highest levels of each have a strong effect. Having an undergraduate university degree has a stronger effect than having the second-highest level of income, but being in the highest income bracket looks to have a stronger effect than being in the highest education category.

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COMMENTS (2 to date)
Gary Rogers writes:

Interesting results, though I am beginning to think there is a negative correlation between college education and practical economic understanding. The only two ways I can rationalize the economic thinking in government are mal-education and dishonesty.

I also understand that New Zealand is one of the few countries that has not bought into economic stimulus as something that "has to be done." I would be very interested in some future blogs on how the economy is doing down there. I will have to check out Eric's blog.

Joshua Lyle writes:

I just wanted to say thank-you for posting this; I really enjoyed reading your book and continue to look forward to seeing your ideas and research be further developed.

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