Friday, May 07, 2010

Study: Liberals are economically illiterate

In economics, there are some basic laws that are beyond dispute. One of them, for example, would be the law of supply and demand. How well do people understand these laws? Economic Journal Watch, a peer-reviewed journal, has published a study done by George Mason University in collaboration with Zogby that attempts to answer that question. They asked eight basic economic questions of 4,835 people. Their first interesting result was that college-graduates did not know more about basic economics than those with a high school education or less. The second interesting results was that economic knowledge depended strongly on political philosophy with self-identified liberals and progressives being much less knowledgeable than self-identified conservatives or libertarians. Table 2 from their paper shows these results (click on the table to enlarge):
What happens if rents are artificially lowered? The law of supply and demand says that demand goes up and supply goes down. In other words, there will be a shortage. According to the table above, only 14 % of "very conservatives" or 16% of libertarians answered the rent control question incorrectly. However, an amazing 71% of liberals and 79% of progressives answered this question incorrectly. In none of the eight questions did the liberals/progressives do better than conservatives/libertarians.

If Democratic policies, such as Obamacare and cap-and-trade, seem economically irrational, it is likely, according to this study, a result of the proponents of those policies being economic illiterates. The left really does not understand or does not want to understand the law of supply and demand.

In my conversations with liberals, the root of the problem seems to be a refusal to consider more than one side. In the rent control issue, for example, a liberal's sympathy is with the renter and he will refuse to consider that landlords and people who might consider becoming landlords also have rights and options. Many liberals would seem to be intellectually capable of considering how all sides would respond to a policy if they wanted to but they don't because they don't want to.

Hat tip: Todd Zywicki/Volockh.

UPDATE: Ilya Somin suggests, without providing any actual evidence, that there might be other questions that conservatives might answer poorly.

UPDATE: Liberal blogger Mathew Yglesias weighs in:
As best I can tell, his argument is that because many rank-and-file progressives have mistaken ideas about economics, it’s okay for conservatives to have wrong ideas about climate science.
This might provide some consolation for the left except that the conservative position on global warming is in agreement with real scientists while the left's is governed by unsavory politicians (Gore), disreputable bureaucrats (UN), clowns (Hansen), and con men (Jones, Mann).

Mr. Yglesias continues:
The good news about progressives is that actual policymaking in, for example, the Obama administration is not based on elementary errors of economic policy.
which might be true except for porkulus, bail-outs, cap-and-tax, and Obamacare, etc.

WELCOME to readers of Natural Fake.

PREVIOUSLY on the subject of Obamanomics and how it differs from economics:
Obama modeling US economy after Europe's
Irresponsibility pays!
Obamanomics prolonging the recession
US Aaa bond rating threatened by Obama's budget says Moody's
Obamanomics illustrated II
How Dems are prolonging the recession
How Obamanomics destroys jobs
Obamanomics illustrated
Deficits: Obama goes where no man has gone before (illustration)
How to raise the standard of living
Obama's anti-intellectual economic theory
Obamanomics and the test of science
Obamacare may raise insurance costs by 54%
Harvard economist explains why Obamacare will raise premiums
HHS says Obamacare will cause costs to go up and cause employers to drop coverage

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