The sorry state of economic literacy

…there is a great deal of confusion about basic facts relevant to policy. Almost half the public, and a quarter of those over age 55, thought Medicare already provided drug benefits for outpatients before legislation providing such coverage was enacted. More than half could not hazard a guess about the size of the budget deficit. The average person thinks 37 percent of Americans lack health insurance, more than twice the actual percentage.

From where do Americans learn about the economy? By far the most common source is television. Those who rely on television the most, however, tend to be among the least informed.

The second most common source is local newspapers, which were cited much more frequently than national or big-city papers.

Friends and relatives came in third, followed by political leaders, radio and economists. The Internet was next, although a sizable contingent listed it as their most important source.

Those who consulted more sources, and consulted them more often, were a bit better informed – but not much. That’s a sobering fact for the media.

People who said they voted in the last presidential election were better informed than nonvoters.

Liberals, moderates and conservatives all did about equally well on the test of economic facts. But those who said they hadn’t thought much about their ideological leanings – one in three people – were appreciably less knowledgeable.

That’s all from Alan Krueger, writing in The New York Times. His bottom line is that ideology, not self-interest, predicts public opinions about economics.

On the same topic, here is one of my favorite essays by Bryan Caplan. Here is one good bit:

In stark contrast to income, education exerts a powerful influence over a wide range of economic beliefs… The typical cab driver with a Ph.D. in philosophy shares the economic outlook of other Ph.D.’s, not other cab drivers. Given the strong correlation between income and education, though, widespread misconceptions about the “beliefs of the rich” are quite understandable.

Further below Craig Newmark offers remarks on related topics.


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