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    Democrats Don't Understand Economics, Says One Study, But Do Understand Compassion, Says Another
    By Hank Campbell | June 9th 2010 08:22 PM | 32 comments | Print | E-mail | Track Comments
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    Daniel Klein,  a professor of economics at George Mason University, says in Econ Journal Watch that progressives do not understand how money works; basically they would flunk Economics 101.

    Their Zogby research surveyed 4,835 American adults and found that the self-identified liberals or Democrats failed to understand even the simplest concepts, such as that restrictions increased costs.   And even really obvious things, like that rent control decreased availability for people not in television sitcoms, or that licensing fees drove up costs of services - nothing.  Despite the evidence.   And even college-educated liberals did no better.

    Basically, if the position did not reconcile with their aesthetic or moral belief, they simply decided not to accept it as valid.   Good thing only Republicans hate science.  If Democrats ever read what scientists actually believe about individual initiative, and that data will not always come down on gender, racial or economic boundaries they like, funding would disappear quickly.

    Offended?   If you can completely accept that Conservatives care less about people than you do, I know how you vote.   But another study, this one from the University of Toronto, says just that.  And it may explain why liberals don't seem to understand economics.  Basically, if compassion is a priority, economic rationality will not be one.  Bad gambling, to be sure, but it may be something of value for science.  

    At some point, psychologists may insist that values are are a part of our biology and genetic heritage.    Politics as biology?   A case could be made.  Both selfishness and altruism have a function in biology and obviously in anthropology both sides have been essential to cultures that survived for any time.   But does that mean you are born a certain political way?  No, that is not how risk factors work, any more than you will get Alzheimer's because someone in your family has it.  I am probably a moderate because I have long said a Republican is just a Democrat who got mugged while on the fringes of each side are some real kooks.   But I am writing this article and studies say extremists are more willing to share their opinions.   It can be rather confusing to people outside science.

    Back to economics, the results, if accurate, would confirm what each side has long said about the other - their beliefs are not grounded in rational consideration of important issues.  It is entirely rational to each side to believe what they believe and they will rationalize ways it is not debunking their beliefs.  So while raising minimum wages increases unemployment liberals may find other factors to attribute unemployment to.  Each side may not be able to help their beliefs if it is part of an underlying psychological need.   America is a tale of two capitalisms if all this is true.

    "We are beginning to understand the deeper motivations that are involved in determining an individual's political leanings," said Hirsh. "While everybody has the same basic motivational architecture, the relative strength of the underlying systems varies from one person to the next. If concerns for order and equality are relatively balanced, the individual is likely to be politically moderate; as either motive grows stronger than the other, political preferences move further to either end of the spectrum."

    Anyway, if you are a liberal and all out of sorts because results showed you think money comes from a magical place and is handed out by leprechauns, don't be annoyed at your lack of economic savvy.   Another study says you are smarter about everything else.

    Comments

    Steve Davis
    "...a professor of economics at George Mason University, says in Econ Journal Watch that progressives do not understand how money works." Possibly true, but then economists (in general) do not understand that economics is not about how money works. Ultimately, economics is about people.
    Hank
    Economies and markets certainly are about people.  Perhaps economics is the gloomy science because they can't understand that people in general are not rational, and picking one political stripe to highlight or another is just mapping data to topology.
    Economics is about people? Since when?

    Gerhard Adam
    How about ever since people traded and bartered for goods and services?  In other words, long before there were professors and schools of economics, humans have used it.  Economists are "Johnny-come-lately's" to a process that has existed for thousands, if not, tens of thousands of years.
    Mundus vult decipi
    Looks like you just proved the above article, and that your a Democrat!

    Hank
    I keep track of claims based about my belief system based on four years writing here and right now 'you are a right wing fascist neo-con Republican' is beating 'you are a godless commie fag junkie Democrat' 51 to 49, so I guess I am right where I (margin of error) need to be.  :)
    This of course presumes that you need to be in the center ....

    Hank
    You make a good point.  I suppose I don't need to be in the center - most journalists are left yet assume a pretense of being in the center and so they let both sides rant and draw a line down the middle and pretend that is objective/balanced coverage.    When it comes to leftwing kooks on vaccines and genetics or rightwing on global warming and stem cells, it is a disservice to give both poles equal time and declare that journalism.

    But I'm not a journalist and I am as far left socially as I am right fiscally.   I am, in actually, one of the very few liberals in a country where conservatives call progressives liberals as an insult and progressives call themselves liberals to try and pretend they care about freedom when they really want to legislate it away.

    So I do get called a shrill lefty and a fascist righty so interchangeably I feel like I must be doing something right.
    general statements about economics like "economics is about people" show that the person saying that phrase doesnt understand the complexity of economics. it can not be put into a paragraph how detailed something like that is. economics is about GATHERING statistics correctly over time, making guesses based off trends found through careful gathering of economic observation, and changing how much interchangeable currency is in the market to keep it steady. the last one is something the BLS and FED fails at. this is why we have inflation

    to outline my point, my last paragraph is not even able to explain economics, because the "how" is not defined.

    Hank
    Anything that is grounded fundamentally in another thing cannot be fundamentally its own thing - amateur philosophers know this, so why don't economists?   Economics cannot be about 'statistics' because it relies on exchanges between people to exist.   That is apodictically evident.
    Steve Davis
    ... they can't understand that people in general are not rational,
    Very true, and that misperception kept economics sidetracked for years.
    Gerhard Adam
    It seems that the study itself doesn't understand economics.  If any political party is supposed to be better at understanding economics, then it suggests the professor doing the study doesn't understand it.

    Economics is about how people manage the exchange of goods and services.  Both political parties think that they can "manage" that phenomenon and consequently demonstrate that neither one has an understanding of what "free" means when referring to markets.  Economists in general, have perpetually tried to tinker with the economy despite having no idea how it works beyond after the fact explanations (or rationalizations) about what has happened.

    Both political parties run deficits like drunken sailors, the primary difference being that liberals think they're being compassionate towards individuals while conservatives prefer to practice their compassion for corporations.  While I don't agree with liberals, I view the latter as being more insidious because it tends to play favorites with organizations that already too big for anyone's good.  I've never heard so many millionaires and billionaires (including multi-billion dollar corporations) do more whining than under conservative administrations.  You'd think they were on the verge of bankruptcy the way they constantly look for favored status from the government.

    Let's let the markets truly be free.  Let's not protect corporations from their liabilities by allowing decision-makers to hide behind the legal fiction of a corporation.  If people (especially those running corporations) were truly being held accountable (just like the small business owner would be) and had to answer for their own choices, the economy would operate just fine.  However as long as corporations can gain favors that are unavailable to the ordinary citizen, the discrepancy between the political parties will always exist, demonstrating that they are all fundamentally clueless regarding economic decisions. 

    As I've said before, even when we consider something like the oil spill, people talk about BP as if it were a discrete entity capable of acting on its own.  None of the people that actually made the decisions and choices which gave rise to this disaster will ever be held responsible for the decisions they made.  Instead they will undoubtedly be rewarded with even greater monetary gains, while the corporations represent the invisible entity with which everyone else will be forced to contend.
    Mundus vult decipi
    logicman
    Gerhard: I'm in broad agreement with you.

    If economics is to be recognized as a science it has to recognize itself as the study of the exchange of goods and services between people - a subset of human behavioral studies and cognitive science.

    ... as long as corporations can gain favors that are unavailable to the ordinary citizen ...
    A corporation is a legal person.

    A person having special economic rights or privileges not enjoyed by the average citizen is most commonly called a king or dictator, or the crony of such.


    Money is a fictitious good which is used as an intermediate good in a two-stage system of barter.  Its function is the same in principle as a signed note promising to supply goods or services.  Were it not a fictitious good, no government could issue base metal coins made to look like gold or silver.

    The universal acceptance of money lies in its ability to divide a debt or obligation into small parts, or to accumulate such, so that disparate amounts and kinds of utility can be traded.  It's a lot harder to do that with promissory notes. 

    Money is not wealth, but most people act as though they think it is.
    I don't think "conservatives prefer to practice their compassion for corporations" is correct. I want to benefi the whole rather than a few.

    Having some liberal leanings I was worried about these results, until I read the article. Wow, what a load of junk! Take, for example, question #6 "6. Third-world workers working for American companies overseas are being
    exploited." for which the unenlightened answer is "Agree".

    First off this question is ambiguous. Does it mean ALL workers, SOME workers, MOST workers, TYPICAL workers? Surely there are at least a few such workers being exploited, after all many workers working for American companies in the US are being exploited. So on at least one of the several reasonable interpretations, the correct answer is the one labeled as unenlightened.

    Worse, unless you are using "exploited" in a technical sense, this isn't even a question about economics. The common notion of exploitation has little to do with economics. People can be exploited even while being paid very well. Of course you can offer a technical definition of exploitation on which overseas workers are typically not being exploited, perhaps in terms of the Pareto efficiency of the employment, but that's not the definition that will be employed by typical survey respondents.

    Wondering if the author perhaps had a conservative bias, I clicked on his bio. Oh. Not only does he have a long list of conservative partisan articles, he's the chief editor of the journal he's publishing in. Now there's some good impartial peer review for you. Oh, and guess what, he publishes a lot in his own journal. Talk about vanity press! So not only is the research poor, but so are the ethics.

    And with just a bit more digging I see that EJW is in turn funded by the Atlas Economic Research Foundation, a foundation for the support of free market think tanks. AERF is in turn funded by private and corporate donations. Now please don't misunderstand me, I in no way want to be seen as saying that all research by AERF, EJW, or Dr. Klein is bogus. But when a professor with a history of partisan research publishes a paper in the journal he himself edits, which is funded by a conservative think tank incubator, which is in turn funded by corporate donations, well, is it at all surprising that he finds liberals as lacking in economic understanding?

    By itself that's not a criticism of the article. After all, however the funding comes down, the research might be good. On that note, see my previous comment. What the money trail shows is how junk science like this manages to get published at all. Apparently you can publish anything if you can find the right funding source. That is the lesson in economics behind all this.

    Hank
    Maybe he's genetically inclined to writing conservative economics articles?   If so, it at least makes sense.  Actually, being in economics and being conservative makes sense.    People like that NY Times Nobel laureate who are economists and claim to be progressive are more maddening because they want to be liked rather than be accurate.

    But yeah, all of the studies in the article are a little goofy - and you did not object to a study showing liberals are smarter than conservatives so ... ta-da ... I would have correctly guessed you lean left!   :)
    In my local area I probably count as a flaming liberal, but that's Idaho. Most of my liberal friends see me as too conservative. So all told I'm probably on the left side of moderate.

    Frankly I was disturbed enough by the one article that I didn't even make it to the others. I'll have a look at the other one you headlined later today. I've read several articles that make claims about liberals this or conservatives that, and indeed they are mostly junk. The one I remain intrigued by is about different typical ethical stances taken by the two sides. The gist of it was that liberals focus almost exclusively on issues of justice and fairness whereas conservatives also include values such as loyalty in their ethical assessments. Unfortunately I didn't have time to go through the study at the time and had forgotten to go back to it til now.

    Hank
    Like some of science and the bulk of politics, people who believe it were already inclined to believe it.
    Well I went back to have a look at the pro-liberal articles. Unfortunately I don't seem to find easy access to the studies themselves and second hand reports make a dubious basis for criticism.

    I do think that studies of the sort you've pointed out here are prima facie suspect. That said I think it's also poor form to pre-judge that all such studies must be wrong. It might have been the case that Democrats were simply blocking certain basic economic facts, or it might have been that Democrats tend to have higher IQs. For all I know, Democrats may be disproportionately blue-eyed with a penchant for kippered herring. These are empirical question that can't be prejudged from purely theoretical concerns. On the other hand, the burden of proof is certainly on anyone who makes such claims and we are entitled to scoff at them until we see the evidence as it initially seems more likely that such claims will be based on poor evidence than that they will be true.

    Wow! You are way overthinking this 'exploited' issue and I think it's a perfect example of the problem. The term exploited is much too subjective and personal for you to apply as you attempt to do. This is very typical of of those with a liberal bias as you claim to have. They always seem to be experts on whether someone else is being exploited and demanding laws and policy to protect them, regardless of what the person feels on the matter. You state "People can be exploited even while being paid very well". Really? What an absolute load of garbage! I'm sure this will be lost on you but if someone agrees to any labor voluntarily, especially for what is considered excellent pay, they are not being exploited. It is simply that any objections that they have to the labor have been overcome by the rate of remuneration.

    Thank you for validating the results of the study so perfectly.

    The term "exploited" is in common usage. Respondents to a survey can be expected to respond to it's common definition. There is a common usage of the term according to which workers can claim to be exploited despite the voluntary nature of their employment. This is sort of the whole point about how unions got started. Now that meaning of the term may or may not be misguided. The point is that the disagreement on the meaning of the term is not a disagreement about Economics, it is a disagreement about semantics. The paper draws a conclusion about Economic understanding based on questions with substantial semantic ambiguity. This is the sort of flaw that is covered in basic undergraduate research methodology courses (it was covered in mine) and is really inexcusable at the post-doctoral level.

    If indeed the term "exploited" is personal and subjective, as you claim, then it has no business being a key term in this sort of study. Certainly nothing could be inferred from a question employing it about the economic understanding of the respondent.

    Gerhard Adam
    I'm sure this will be lost on you but if someone agrees to any labor voluntarily, especially for what is considered excellent pay, they are not being exploited.

    What an interesting use of the word "voluntary".  I'm absolutely fascinated at your ideas of what the alternatives might be?
    Mundus vult decipi
    GMU is full of libertarian economists who are pissed the Bush years debunked their theories. Maybe they should spend more time explaining why the markets aren't rational in the long term and less trying to claim that the people who were proved right by history don't understand economics.

    Yes, I'm a progressive and an economist.

    Hank
    I am confused by your mixing in progressive politics and economics with slamming Bush.   If markets aren't rational, as you say, then libertarian approaches are correct.

    You do get he is no longer president, right?  I know it was a good decade for partisan name-calling but Obama was elected almost two years ago.   Unless GHW Bush gets credit for the Clinton budget surplus you can't really say any issues today are the fault of Bush - sure, there was an artificial run in housing prices but he was one of few people who said that was bad and forcing loan companies to give out mortgages to people regardless of income as a progressive agenda was going to end poorly.    It was the only thing Bush was right on, but that one is documented.
    If liberals don't understand economics how is it that HISTORICALLY every Democratic Administration in the history of the United States had better balanced budgets and lower spending than any Republican Administration. Care to explain that Mr I know it all? Your article is just one more example of partisan rhetoric plain and simple. As far as the mortgage crisis "In Bushes own words-" http://www.youtube.com/watch?v=GkAtUq0OJ68. Chew on that.

    Hank
    every Democratic Administration in the history of the United States had better balanced budgets and lower spending than any Republican Administration
    First, that is a made-up statistic and you don't cite any evidence so let's just ignore your partisan silliness.  Second, progressives are the focus, it just happens to be they are all Democrats today.   In the past, there were plenty of cost-conscious Democrats who cared about defense, etc.   Both parties were a lot more nuanced and less polarized than they are now.  Third, I didn't conduct the study so why you attribute the results to me is unclear - you seem to have commented on the title rather than reading anything in the article.

    I can't find evidence of a single progressive today who is a Republican, thus why Democrats are in the title.   Also, historically, Democrats started more wars than Republicans which is always a boost to the economy.    I also note you did not object to the characterization that Democrats are more compassionate, so I know how you vote.
    I do not want another reply from a smug partisan! Like I said before you see yourself as Mr Know It All. I read all the comments and it quite apparent that your EGO (notice how I made that huge) is as silly as your comments. Also apparent, you have to have the last word. Nice attributes....NOT. Now please do not respond to me, otherwise my last statement will be proven.

    Fine, I'll respond to you so Hank doesn't have to.

    You've made a broad generalization for which you've offered no evidence at all. You've adopted an abusive tone in your largely ad hominem remarks, have assiduously avoided any detailed engagement either with Hank's article or any of the subsequent comments, and you haven't even had the courage to attach so much as a pseudonym to your remarks. Despite this you see yourself as someone whose comments should carry some weight. While Hank undoubtedly has an ego (it takes a bit of one to run a blog), the evidence suggests yours is far larger. Further, Hank's comments are far less partisan than yours. As for Hank having the last word, well, it is his blog. I note that he didn't tell you not to respond, so the only one insisting on having the last word is, once again, you.

    If I were still in middle school as you appear to be, I would say "Hank's rubber, you're glue. Whatever you say bounces off him and sticks on you."

    The bias in this "study" is blatently obvious, in how they laid out their goals and objectives to study" A number of controversial interpretive issues attend our measure, including: (1) our designation of enlightened answers; (2) an asymmetry in sometimes challenging leftist mentalities without ever specifically challenging conservative and libertarian mentalities; (3) our simple 8-question test is merely a baseline and does not gauge the heights of economic enlightenment; and (4) a concern about response bias—namely, that less intelligent people would be less likely to participate in the survey." If you build a survey with the predisposed end result as the goal, you're likely going to achive it, and the results will be worthless, except to pundits who want a tailor made talking point. If liberals know nothing about economic and conservatives are the bastion of that knowledge why have we consistantly seen larger deficits under Republican rule, and smaller deficits and larger surplus under Democrats? Trickle down theory doesn't work, and never has despite decades of support and opportunity. Cutting revenue stream dramatically directly increased deficit in the same amount- basic math that seems to be completely lost on those who claim to be fiscally conservative.

    Gerhard Adam
    As much as I dislike politicians, let's put the blame squarely where it belongs;  modern economic theory.

    Let's face it, despite all the fancy modeling and rhetoric, modern economic theory has uniformly failed to predict anything that has actually happened and provided no useful model in how to actually implement any policy.  In fact, it can be argued that most of our current economic problems are a direct result of failing to understand how economic theory actually translates into real world policies and actions.

    I know that economists like to whine about "free markets" and keep insisting that if that occurred then everything would be fine, but that's a cop-out.  The point of economics being a "science" is to be able to make useful predictions despite the world not being a perfect place.

    If you require ideal conditions to make something work, then perhaps its the theory itself that is flawed. 
    Mundus vult decipi