Arnold approvingly cites the new Buturovich-Klein study finding that people who went to college know less about economics than those who didn't. But if you read the original piece, the authors graciously distance themselves from this very conclusion!
In commenting on this paper in draft, Bryan Caplan suggested that there is a strong reason to suspect that, among less schooled people, those more economically enlightened would be more likely to complete the survey. The survey was initiated by email, and taking the survey would require a certain level of curiosity, reading compression, and cognitive focus. The survey procedure tends to screen out those of low IQ. The conjecture is supported by the fact that among our respondents, only 7 percent had no college--a percentage far below that of the population. In our view, Caplan has a good point. Although we see no reason to suspect that, among more schooled people, those less economically enlightened would be more likely to complete the survey, we do think that the sort of effect suggested by Caplan is certainly operating to some extent. Meanwhile, as shown by Caplan and Miller (2006), IQ correlates with economic understanding. Thus, we can imagine how Figure 1 would look if somehow the sample were truly representative: The ends at the left would be lower, and so the lines would slope upward, indicating a positive correlation between economic enlightenment and education level.
Buturovich and Klein's reaction to my critique is so transparent and modest that I'm happy to endorse it verbatim: "But we have no simple way to determine, gauge, or confidently correct for any such response bias, so we just proceed to report the data such as they are."
Arnold then tells us how his recent speaking experiences illustrate the negative effect of education on economic literacy:
At the University of Vermont, an outpost of the established Church
of Unlimited Government, I received nothing but pushback from the
audience. The typical question from the audience asserted that people
have a right to health care, and that settles the issue.
In northern Indiana, inside a Methodist Church where I spoke to many
people of Tea Party sympathies, people got what I was saying right
away. They asked more constructive questions (I got pushback, but it
was of a different nature and on different issues).
If I'd been with Arnold, I'd probable evaluate his audiences the same way. But what is the right way to interpret the two experiences? The Vermont audience was probably a little better-educated than the Indiana audience, but not by much - 37% of Tea Party supporters are college grads, versus 25% for the general public.
But education is hardly the only difference between the two groups. Above all, the Vermont audience was vastly more left-wing. In the general population, education and left-right ideology are roughly uncorrelated. But universities are where highly-educated leftists hang out. I say Arnold was detecting the effect of ideology, not education. The Vermont audience was anti-market not because of its education, but despite it.
I think that libertarians
ought to be very agnostic about the relationship between educational
attainment and grasp of economics. That relationship may not be as
strongly negative as Klein claims to have found (I will disclose here
that I tend to believe that Klein is right.) However, it is certainly
not strongly positive, as it would have to be in order to justify
confidence in giving power to the educated elite.
Although I'm not certain that the effect of education on economic understanding is strongly positive, it's highly probable. Almost all of the evidence confirms that education makes people think much more like economists (see here and here for starters). Buturovich and Klein themselves admit that they don't have a strong counter-example. Personally, I'll bet at 3:1 odds that if their survey were given to the general population, education will have its standard positive, large effect on economic understanding.
P.S. None of this means that I want to "give power to the educated elite," especially if "the educated elite" means "highly educated leftists." Separation of economy and state is my first choice. Still, if someone's going to wield power, libertarians should prefer the well-educated to the not-so-well educated. While neither demographic is libertarian, the former is less un-libertarian than the latter.