Bryan Caplan  

Intelligence Makes People Think Like Economists

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I've been telling EconLog readers about my article with Steve Miller on intelligence and economic beliefs for years.  Now our piece has finally been published in Intelligence.  Quick version of the paper:
Adding a measure of intelligence to the list of independent variables and re-estimating confirms that ability bias is present and substantial. Adding intelligence as an independent variable does not simply shrink our estimates of the effect of education. It is more important than education in both statistical and economic terms. In fact, intelligence turns out to be the single strongest predictor of economic beliefs.
Subtle version of the paper:
First, even though intelligence is the most important overall predictor of economic beliefs, it is not the most important predictor of beliefs in any of the four categories. Party, ideology, and male gender are stronger predictors for the anti-market questions. Education and "other race" are stronger predictors for the anti-foreign questions. Black is a stronger predictor of the make-work questions. Income growth is a stronger predictor for the pessimistic questions. Intelligence is the most important overall predictor of economic beliefs because it has a strong effect in all four categories, not because it has an overwhelming effect in any particular category.

Second, intelligence is more important than education for every category except anti-foreign bias. For anti-market and make-work bias, intelligence is much more important than education; for pessimistic bias, intelligence has a moderate edge. Education is, however, the most important predictor of anti-foreign bias. This is consistent with the literature finding that education "tends to socialize students to have more tolerant, pro-outsider views of the world" (Hainmueller & Hiscox, 2006, p. 473). In contrast, the typical educational experience gives students mixed signals about anti-market, make-work, and pessimistic biases. Classes in economics and high-IQ peers restrain these biases, but classes in other social sciences and humanities, as well as student activism, arguably encourage them.

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COMMENTS (22 to date)
Richard S writes:

"Education is, however, the most important predictor of anti-foreign bias."

Bryan, may I make a friendly suggestion? Anyone not used to the funny way that academics write would interpret that sentence to mean that more education causes people to be more biased against foreigners. There must be a way to write even for academics that doesn't cause sentences to imply the opposite of what you intend them to mean.

Bill writes:

Unfortunately, I'm too intelligent to drop $31.50 for the paper.

jb writes:

echoing Richard S: perhaps: "Lack of Education is, however, the most important predictor anti-foreign bias"

Great job getting this published. All my leftist friends will claim that your study/paper is rife with procedural errors, and thus your results are invalid.


Hyena writes:

Bryan made this paper available when he posted about it earlier: http://www.gmu.edu/departments/economics/bcaplan/iqbeliefej.doc

Anyhow, I doubt there's much to be said about this politically, as the questions don't amount to a recognizable political programme outside of basic populism.

Dan Weber writes:

I really hope that "log of household income" was a natural log, not a base-10 log.

jc writes:
All my leftist friends will claim that your study/paper is rife with procedural errors, and thus your results are invalid.
So...Bryan finds that when certain beliefs are compared to the general consensus of experts, the beliefs of smart people are more likely to track the beliefs of these experts, i.e., smart folks, like these experts, tend to be pro-market, less anti-foreigner, more optimistic, and less in favor of make-work.

And (non-economist) leftist friends may resent suggested correlations b/w intelligence and support of markets or non-support of make-work.

Makes sense...

Correct me if I'm wrong - I haven't read the article - but aren't the economists whose beliefs are being used as benchmarks actually, on average, left of center? In other words, could we induce cognitive dissonance among leftist friends by saying, "Smart people, like liberal experts, believe in markets and decry make-work"? :)

Floccina writes:

So Bryan is schooling then worthwhile just for the reduction of uneconomic thinking (and in particular anti-foreign bias) or is there a much cheaper way to reduce anti-foreign bias or is the effect too small to cover the huge amount of spending. Should we go to school less but in school study econ whatever reduces anti-foreign bias more.

Hyena writes:

JC,

Most smart liberals are well aware of that and will rapidly point out that their favorite countries, Sweden and Denmark, also tend to rank as a better business environment than the US.

HJ writes:

There is something wrong with the mere fact that economists should care about wether people believe them or not. Sadly, the premisse of this study reinforces the conception that economic science is often a lot more political than academic. Dogmatic even, in its worse moments.

The whole concept of economic beliefs is polluting economic science. Why can't economists content themselves with explaining what they see in the world? Why do they need to convince us that their way is the only valid one? Observing and reporting would be so much more useful than preaching and lobbying.

It's either science or activism (or its step-cousin, religion). Economists should decide in which field they want to play. In the meanwhile, their marginal usefulness for the scientific field is decreasing rapidly.

Evan writes:

HJ, imagine translating what you said into other areas of belief:

Would you say toxicologists shouldn't care, and just be content to observe, if they perform a survey and discover that a large amount of people believe feeding children lead is good for them?

Would you say medical researchers shouldn't care, and just be content to observe, if a survey shows that people think eating the body parts of albino people cures HIV? (I didn't even have to make that one up)

When you say "Why do they need to convince us that their way is the only valid one?" you are committing the classic error of mistaking scientific knowledge for lifestyle choices. In science there is only one way because there is only one truth, only one objective world.

It is true that you don't have to do what economists say. If you love poverty, suffering, and squalor, you would be well advised to lobby for an economic policy that resembles what the average person believes instead of what economists believe in. The problem is the average person simultaneously wants prosperity and wealth, but believes in policies that are inimical to those values.

Steve Roth writes:

Good stuff, Bryan. Looking forward to reading it carefully.

Right off, though, it raises the question i've asked you multiple times:

Who thinks more like economists? Republicans or Democrats? Conservatives or liberals?

It's clear from MOTRV that you have that information from SAEE immediately to hand. But you've never shared it.

A cynical mind might think that Dems and libs think more like economists, but you didn't want to share that info. That finding would surprise me (a devoted lib), but still: why haven't you shared that info?

Ben Hughes writes:

@Evan: Home-run response to HJ. You captured my thoughts better than I could ever hope to.

I'm not a working economist but I've interacted with a lot of people on an everyday basis and what Bryan's saying is completely consistent with my experience. The smartest people I know, when pressed to reveal their "beliefs" (read: understandings) of economics, usually are free from most of the biases and sloppy reasoning used by most people - even without a formal education in economics (and indeed in some instances without *any* education in economics).

I think excellence at the "economic way of thinking" is really just a subset of excellence at forming cohesive arguments and thinking "beyond stage one", as Thomas Sowell would put it.

Lori writes:

In fact, intelligence turns out to be the single strongest predictor of economic beliefs.

As opposed to what, non-economic beliefs? Reminiscent of the 'ec' vs. 'non-ec' controversy surrounding the Lousewart administration.

Douglass Holmes writes:

Steve Roth,
I would think that Democrats have lower anti-foreign bias than Republicans, that Republicans have lower anti-market bias than Democrats, and that they are roughly equal in make-work and pessimistic biases.
Conservatives tend to be more pessimistic about cultural issues, and Liberals are more pessimistic about environmental issues, but I don't see either side having a monopoly on pessimism or optimism.

Steve Roth writes:

Douglass Holmes:

I would surmise that your surmises might be correct. But I'd be interested to know if the SAEE had some non-surmisal data.

Steve

Steve Miller writes:

Steve Roth and Douglass Holmes:

Sorry, I was out of town when Bryan posted this, and somehow missed the entire comment thread. I have two papers, using the GSS, that address exactly your question. One in Critical Review (2007) with uncategorized questions about economics, and a second with more questions (the same questions we use in the Intelligence article) and broken down by bias category.

So, the short answer, from the second (Journal of Private Enterprise) article:

"This paper examines the connection between political ideology and four distinct categories of economic bias: anti-market bias, make-work bias, anti-foreign bias, and pessimistic bias (Caplan, 2007). Self-identified Republicans and conservatives in the United States tend to have less biased beliefs about economics than their Democratic and liberal counterparts. That is, they are less prone to the anti-market bias and make-work bias as described by Caplan (2007). This result holds, even when controlling for a variety of demographic factors. A notable exception is in the area of international economics, where conservatives (but not necessarily Republicans) are more likely to exhibit anti-foreign bias. A fourth category of bias, pessimistic bias, does not appear to be strongly connected with either party identification or ideology."

Link

Steve Roth writes:

(Not sure if anyone's still reading here; I sure wish econonlog offered comment feeds.)

Steve Miller: Thanks so much for the link. I read your working paper some years ago.

http://homepage.mac.com/freecat/econbias.htm#_ftn1

I wondered at the time why you used GSS for the general public data, rather than just (or also) analyzing SAEE. Would love to hear why.

On both your and Bryan's work, I think the question still remains: are economists' opinions reasonable benchmarks of accuracy, truth, or rationality about how economies work? Are they possibly wrong not because they're rich, secure, or self-described conservatives, but for some other reason? (Why are creationists wrong about evolution? Je ne sais pas, but I'm pretty sure that income, security, and political ideology are not causative.)

Just one example: a disturbingly large number of economists believe that the economy is not doing better than it is because taxes are too high. (Mean: .77.)

But we know for a fact -- thanks to econometricists who specialize in studying long-term growth -- that in prosperous countries like the U.S. over three to nine decades, tax levels have no correlation with medium- and long-term growth. (As opposed to tax increases and decreases, which do correlate -- some -- with short-term growth.)

In this case the public if far *more* wrong (mean: 1.5), but that's rather beside the point. Economists as a group are significantly wrong about this subject.

I have the same question after reading your paper as I did after reading MOTRV: what would you see if you did a SESEE survey: Survey of Economists and Specialized Economists on the Economy?

Do economists think like economists who have specialized knowledge? Where do their opinions diverge? Does either group display more income, security, or ideological bias?

[Name fixed. Also, though we don't have specific comment feeds, we do list recent comments at http://econlog.econlib.org/archives.html#recentcomments.--Econlib Ed.]

Steve Roth writes:

Previous post says "Steve Miller writes," should be Steve Roth. Op error, form autofill or some such. Sorry.

Thanks,

Steve

[fixed--Econlib Ed.]

Steve Miller writes:

Steve Roth,

That's a good question -- the main reason I used the GSS is because that's what I was working with at the time, on other projects (such as the Intelligence article) and by then the SAEE was more than a decade old, and in my view it has less of a mix of types of economic policy questions. The majority of SAEE questions are focused on "How is the economy doing?" or "how does this policy/factor/problem affect the economy?" The GSS, I would argue, has a greater variety of economic topics covered, and frames them is a variety of ways.

Yes, of course it is possible that economists are biased for some other reason. But we can only deal with the explanations we are aware of. I'd be curious to hear other possible explanations, but I never hear them, with one exception: that economists are biased because their training itself creates biases. Okay, but why then are educated, intelligent, male, etc. non-economists so likely to "think like economists" even without economics training?

I don't see your point with the TAXHIGH variable; the average economist's answer in the SAEE was between "not a reason at all" and "minor reason." It's not hard to imagine *minor* reductions in efficiency caused by high taxes in some areas. Maybe some thought payroll taxes are too high, or capital gains taxes, etc. -- economists disagree on these things both positively and normatively. The reason they don't indicate "major reason" is because of precisely the evidence you present.

Steve Roth writes:

>"why then are educated, intelligent, male, etc. non-economists so likely to "think like economists" even without economics training?"

Possible answer: because that economics training/belief system pervades the general educated belief system, through osmosis etc.

Steve Miller writes:

That's a possibility for education, but not IQ or gender (obviously).

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