Are Conservatives Smarter at Economics than Liberals?

An op-ed by Daniel Klein in today's WSJ would lead to that conclusion:

Who is better informed about the policy choices facing the country—liberals, conservatives or libertarians? According to a Zogby International survey that I write about in the May issue of Econ Journal Watch, the answer is unequivocal: The left flunks Econ 101.

Zogby researcher Zeljka Buturovic and I considered the 4,835 respondents' (all American adults) answers to eight survey questions about basic economics. We also asked the respondents about their political leanings: progressive/very liberal; liberal; moderate; conservative; very conservative; and libertarian.

Rather than focusing on whether respondents answered a question correctly, we instead looked at whether they answered incorrectly. A response was counted as incorrect only if it was flatly unenlightened.

Consider one of the economic propositions in the December 2008 poll: "Restrictions on housing development make housing less affordable." People were asked if they: 1) strongly agree; 2) somewhat agree; 3) somewhat disagree; 4) strongly disagree; 5) are not sure.

Basic economics acknowledges that whatever redeeming features a restriction may have, it increases the cost of production and exchange, making goods and services less affordable. There may be exceptions to the general case, but they would be atypical.

Therefore, we counted as incorrect responses of "somewhat disagree" and "strongly disagree." This treatment gives leeway for those who think the question is ambiguous or half right and half wrong. They would likely answer "not sure," which we do not count as incorrect.

In this case, percentage of conservatives answering incorrectly was 22.3%, very conservatives 17.6% and libertarians 15.7%. But the percentage of progressive/very liberals answering incorrectly was 67.6% and liberals 60.1%. The pattern was not an anomaly.

The other questions were: 1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). 2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). 3) Rent control leads to housing shortages (unenlightened answer: disagree). 4) A company with the largest market share is a monopoly (unenlightened answer: agree). 5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). 6) Free trade leads to unemployment (unenlightened answer: agree). 7) Minimum wage laws raise unemployment (unenlightened answer: disagree).

How did the six ideological groups do overall? Here they are, best to worst, with an average number of incorrect responses from 0 to 8: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26.

Americans in the first three categories do reasonably well. But the left has trouble squaring economic thinking with their political psychology, morals and aesthetics.

To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians. Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.

Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%).

The survey also asked about party affiliation. Those responding Democratic averaged 4.59 incorrect answers. Republicans averaged 1.61 incorrect, and Libertarians 1.26 incorrect.

As satisfying as these results may seem for those of us on the right of center, I'm afraid I don't find their analysis very persuasive.

For example, the empirical evidence supporting the supposedly enlightened answers to some of the questions is contested. In theory, for example, minimum wage laws ought to result in higher unemployment. "Recent evidence from the USA and the UK claims to show, however, that employment rises when minimum wage laws are introduced and falls when such laws are repealed." (Link)

Other questions lack nuance. The impact of free trade policies on employment is obviously complex. If free trade results in a country being flooded with cheap goods from a country with a comparative advantage in producing them, the industry in question obviously is going to see negative employment effects. Free trade policies (open borders and low tariffs) could disadvantage an economy in competition with closed markets. More generally, the problem of comparing short-term costs and long-term benefits is fraught with peril.

Finally, an informed lefty might say: So what? The enlightened answer to all of the questions assumes that the sole consideration is allocative efficiency. Many of the questions, however, implicate distributional concerns and the unenlightened answers thus invoke political priors of those on the left. Conversely, the enlightened answer to each question accords with the political priors of conservatives and liberals. In sum, the test suggests two falsifiable hypotheses: (1) Conservatives and libertarians are better informed about economics than liberals. (2) The people who took the test answered the questions based not on economic knowledge but on their political priors. Klein's results can't falsify either hypothesis.

I'm prepared to assume that conservatives are smarter than liberals at least when it comes to Econ 101. (it accords with both my priors and 20+ years experience in academia.) But Klein's research doesn't prove the proposition.

Comments

[Steven L. Taylor]

I had a very similar reaction.

[Chris]

Another example of what's wrong with this alleged test:

Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree).

This of course ignores the price to you when an unlicensed and incompetent lawyer drafts your contract, closes your transaction or defends your court case. Or the price to you when an unlicensed and incompetent doctor operates on your brain or performs your plastic surgery.

Thus the assumption is that removing licensing will introduce more competition and lower prices. But monetary costs are not the only relevant costs if you actually want competent professional services.

[politicalfootball]

I'd challenge other issues as being definitional: What do we mean by labor being "exploited"? All employers, by some definition, exploit their employees to get tasks done. Likewise, employees exploit opportunities for employment and advancement provided by their employers.

But even if we assign a negative connotation to "exploit," that still doesn't get us anywhere. It's a defensible belief to say that Third World workers are exploited compared to the treatment that would be required of employers elsewhere. It all depends on context. One might also reasonably argue that US minimum wage employees are exploiting their employers by accepting an unfair wage.

More important, these questions are designed to expose flaws in liberal economic thinking - they are aimed at liberal policy prescriptions. A similar study might have asked "Did massive government spending end the Great Depression in the US?" (And I wonder: Would even Prof B get the answer right to that one?)

[Cornellian]

The questions are pretty sloppy and seem to me to play towards the ways in which you would expect liberal political beliefs to skew their perception of economic issues. Hence you get a question about housing controls but not one about the effect of immigration where I'd guess conservatives (at least as that term is understood today) to be less inclined to accept that there are economic benefits than liberals.

Similarly some of the questions are just badly worded. For example, "4) A company with the largest market share is a monopoly (unenlightened answer: agree." Of course is it not true that having the largest market share necessarily means one is a monopoly, but it is true that one would expect a monopoly to have the largest market share. So some readers may have been reading the question as asking whether a company with the largest market share could be a monopoly (not necessarily that it must be).

[Shawn W Gillogly]

Well, I did a blog on this a while back myself. Another poll came to a very similar conclusion.

Then there's the poll that leads this piece, that shows that progressive economists are more willing to suborn their economics for their ideology than right-of-center economists (in fact, this is a trait UNIQUE to progressive economists).

http://rangerswg.blogspot.com/2010/05/progressives-cant-do-economics-data.html

[Daune]

Apparently, the study was flawed:
http://www.fivethirtyeight.com/2010/06/are-you-smarter-than-george-mason.html

[MHodak]

I had the same reaction. I think the choice of terms "enlightened" vs. "unenlightened" do a lot to undermine the sense of objectivity around this study. One can ask whether or not a price ceiling on gas will generally lead to gas shortages, and judge the answer as definitively right or wrong. Same with a slew of economic questions, including minimum wage, notwithstanding the relatively few studies to the contrary.