The value of outreach

I enjoyed the CBC's radio show, The Invisible Hand. Rather than take a Freakonomics-style "wow, isn't this counterintuitive" take, they instead simply presented standard economic theory as it is understood by professional academic economists.

• Episode 1 covered price gouging, with a nice contribution from Mike Munger. (audio)
• Episode 2 takes on value theory. In the event of a zombie apocalypse, chickens rise in value relative to gold (as the Lannisters may yet discover when winter comes). (audio)
• Episode 3 explains why profit isn't a bad word and shows that rather a few capitalists - people who make their living from investments - look rather more like our parents and grandparents than like Mr Scrooge. (audio)
• Episode 4 covers love, marriage and economics. (audio)
• Episode 5 explains moral hazard and insurance. (audio)
• Episode 6, on sweatshops, includes Ben Powell along with a former sweatshop worker. (audio)
• Episode 7 demonstrates that David Suzuki knows absolutely nothing about economics: we have ways of dealing with externalities. (audio)
• Episode 8 explains a bit of macroeconomics: the old Paradox of Thrift. (audio)
• Episode 9 walks through one of my favourite topics: perverse incentives (see the masthead). Frances Woolley helps out. (audio)
• And Episode 10 explores some of the behavioural economics literature. (audio)
• [Update: the audio at the CBC link isn't working, but the (audio) link should take you to the podcast version. Thanks to Wobbly in the comments!]

Worthwhile Canadian Initiative's Stephen Gordon provided academic assistance for the project.

The CBC more typically airs standard economic fallacies as fact, or at least it did back when I was in the country, so this was really rather nice.

What reaction did they get? Here's the show's producer Matthew Lazin-Ryder. Start listening at the 14 minute mark. At 15:55 he talks about his "honest to goodness depression" about the show's being criticized for being "brazen right-wing propaganda". He says [transcription errors mine]:

We wanted to make a show that had a completely different perspective from the things most people hear. And our probably naive anticipation was that people would take it in that way. We didn't honestly expect the angry backlash that we got. ... Our agenda was to present how mainstream economists think about things. 

He also tweeted: 

"Lightning Rod For Hatemail" was the working title for the series. RT @danieloong: A show like that'd be a lightning rod for hate mail.
— The Invisible Hand (@CBCTheHand) April 12, 2013

There is a body of things that economists know about the economy. Sure there's stuff we argue about, but especially in microeconomics, we kinda know what's going on. And the basic set of things about which economists agree diverges wildly from how the public thinks the economy works. The profession attaches perhaps too high of reward for deriving the results of some model when you change a plus to a comma in a utility function when the first order welfare gains are in just getting the voting public to appreciate principles-level economics.

I get irritated when bog-standard economics is cast as having a "right wing" agenda. Mainstream economics helps you figure out what works and what doesn't work for achieving any particular end and the trade-offs that are involved. If you want a fair bit of redistribution, that's entirely consistent with mainstream economics so long as you set up the transfers appropriately; heck, it drops out of most models where you assume diminishing marginal utility of income.* But bog-standard mainstream economics in Canada says a lot of unpalatable things: ditch supply management to reduce milk prices; get rid of barriers to both interprovincial trade and labour mobility; get rid of all the zany exemptions in the GST and adopt New Zealand's version instead.

Imagine a genie gave you a button. If you push the button, every voter in the country thoroughly and intuitively understands principles-level economics. At the same time, the most recent n issues of every academic journal in economics disappear along with all knowledge of their results: we would need to re-invent or rediscover every one of them, with some chance of never finding them at all. Up to what value of n do you leap to push the button? 5 years' worth? More?

Imagine a world where the physicists and engineers spent most of their time figuring out how to get internal combustion engines from 20 to 22 percent efficiency but where, outside of the lab, everyone else is riding horses because they think engines are evil and witchcraft and tools of capitalist oppression. Maybe it's not quite that bad in economics, but it isn't far from it.**

Update: Brennan McDonald suggests, or at least this is what I draw from his comment, that there may be little potential trade-off between high-powered theorem building and public conversion efforts since the public broadly isn't truth-seeking. In that he echoes Patri Friedman's complaint about folk activism. But we are all part of the equilibrium, and I do think that we could use to move a bit at the margin.

* But be careful! Cowen points out that utilitarian theories may be less egalitarian than you'd like. I asked a couple years ago about appropriate egalitarian policy when we start opening up the margins:

Pity the borderline Asperger's investment banker who, despite his financial success, seems at a bit of a disadvantage in dating. Reddit posted the 1600 word email that the would-be suitor sent to the woman who dumped him after the first date; it's since shown up all kinds of places. But folks snickering at it seem an awful lot like a rich one-percenter laughing at a pleading email from a starving man.

If I can play armchair psychiatrist, the same Asperger tendencies that helped this poor guy in investment banking have killed him in dating.

If you're an egalitarian, what is appropriate policy? Is this guy better or worse off than the poor musician who dates easily? With whom would you rather trade places, taking both their positions and their characteristics? If we redistribute income because the investment banker's last dollar is worth less to him than it would be to the poor musician, think too about the marginal utility of the musician's last date relative to the banker's.

 And should we compensate the beauty-challenged?

** See, for example:

• Caplan on systematically biased beliefs
• Me on economic thinking in NZ

Thinking like economists and thoughts about economists

Chris Auld finds that people without a high school education are most likely to think that economists are know-nothings. The proportion of GSS respondents having such views is mostly declining in education. From Auld:

This is consistent with what I'd found on correlates of economic thinking in New Zealand - the more educated are more likely to agree with what I'd taken as consensus economist views. And, with what Bryan found in the States. But I don't recall seeing anything like that uptick among grad school folks, though I'd have to double check. The questions I'd used as indicating economic thinking all touched on microeconomic rather than macro issues: whether wage and price controls are a good idea; whether high income taxes make people less willing to work hard; whether we should have import controls.

Perhaps folks who've gone to grad school encounter too many folks who've done too much macro?

Medical and economic advice

I agree with Karl Smith:

The view I subscribe to currently is that most people don’t care that much about increasing their life expectancy, they care about being cared for and being cared about. They care about reassurance and they care about feeling like they are not alone.

We can see that people don’t care that much about maximizing their life expectancy because they place an enormous premium on their doctor’s bedside manner and a much smaller premium on his error rate. We can see that when objectively bad doctors who are nice rarely get sued for malpractice, while much better doctors who are assholes get sued all the time.

When we were shopping around for an obstetrician in 2007, we first asked for a measure of successful deliveries correcting for difficulty. That didn't exist. Then we asked for just rates of adverse outcomes. That doesn't exist either as the docs refuse to supply the data. Our midwife recommended which ones were nice. I said "I don't give a damn which one's nice, I want the one who can unwrap an umbilical cord from around a kid's neck if there's a problem." Finally, phrasing it as "If you only cared about the safest best possible delivery, who would you pick for your own delivery" provided me her assessment. She probably still thinks I'm a jerk, but two successful caesarean deliveries subsequent to unsuccessful trial of labour later, with the latter having involved an umbilical cord twice wrapped around the baby's neck [all turned out fine], I've no regrets.

We can see that when we offer potential surgical patients stats on the number of fatalities at prospective hospitals and they refuse them. We can see that when message boards about doctors are filled with comments like “He really understood me.” “She took the time to stop and listen. “ “I knew they cared about whether I got better” “I was more than just a number.”

These are not comments about the skill of the medical provider but about the caring of the medical provider.

Well, that explains why the midwife was surprised when I asked for stats. It probably had never come up before.

How different is economic advice?

Minimum wage disappointments

David Farrar rightly takes the National government to task for its failure to support Roger Douglas's minimum wage legislation.

It will be remarkable to see National MPs argue against a bill, which just 18 months ago they were in favour of. As their MPs get up to explain, why they are voting against, I doubt any of them would really believe what they are saying.

The Government gets criticised, often unfairly, for refusing to break pre-election promises that are a handbrake on greater economic growth. I think it is commendable that the Government places a premium on honouring its major commitments.

But when there was no pre-election promise, when in fact their stance was 100% in favour of a lower minimum wage for teenagers, the u-turn by the National Party is legitimate fuel for those who say the Government’s record is not matching its rhetoric.

Now, I could understand it if English had asked Treasury to run a quick extension of the Hyslop and Stillman paper to check for effects post the 2008 minimum wage changes and they'd found my preliminary analysis was missing something. It very plausibly could be missing something, but there's a prima facie case there to answer.

Instead, the scuttlebutt I've heard is that National did some polling and it looked bad.

Of course the polling would look bad. The median voter is, not to put too fine a point on it, utterly incompetent to make on the spot decisions about appropriate economic policy. Last year I noted some results from the 2005 New Zealand Election Survey:

While economists will disagree vehemently about the magnitude of the effects, most economists would agree that minimum wages reduce the creation of new jobs. In [the New Zealand Election Survey of voters], 983 respondents either strongly agreed or agreed that minimum wages reduce the creation of new jobs, 698 were neutral, and 1461 disagreed or strongly disagreed. ... Whaples' 1996 survey of economists found that 87% of labour economists agreed that minimum wages increase unemployment among the young and unskilled.

Voters reckoning that minimum wages have no effect greatly outnumber those thinking that minimum wages hurt job creation.

I could have forgiven Key if he'd let it go to first reading, let the evidence for the effects of minimum wages be debated in committee, encouraged some popular discussion, then decided to back down because he wasn't able to bring the public onside. It would have been courageous to go beyond first reading if opinion were against it, and Key is hardly courageous. But to kill it before committee? When they opposed Labour's move back in '08 and didn't promise anything on the subject?

I'd happily trade the government for a futures market. But not for a polling firm.

Gender and economic thinking

Lots of work finds that men do better in economics courses and in surveys of economic thinking than women. Stephen Hickson has been doing some work in our economics department on correlates of performance in our stage one courses and was curious about this gender gap. I sent him this 2000 piece by Ziegert which finds that personality type explains a good chunk of differential male-female performance in economics courses.

Myers-Briggs personality tests sort individuals along four basic dimensions (allowing for gradations within the dimensions): from Introverted to Extroverted (I/E), from iNtuiting to Sensing (N/S), from Thinking to Feeling (T/F), and from Judging to Perceiving (J/P).

As you might expect, economists lean heavily to the thinking side of the scale. And, if you sort personality type by gender, women are more likely to be F type than T type: there's about a 60/40 split in favour of T for men and 60/40 in favour of F for women. This will matter in the social sciences more than in the hard sciences because most of what economists have to say runs counter to F-type priors about the way the world works.

Ziegert finds that the male-female gap disappears once she's corrected for personality type. She concludes:

These results suggest that personality types do affect student performance in economics whether measured by course grade or by performance on the TUCE exam. Unlike previous research, I found support for the hypotheses that thinking (T) students outperform feeling (F) students on both course grades and TUCE exams. Given that men are more likely to be classified as thinkers (T) than are women, and women are more likely to be classified as feelers (F) than are men, this result has implications for the relative performance of men and women in principles of economics. After adjusting for personality preferences, the "gender gap" in economics, which historically has favored men, disappears: gender is not a statistically significant predictor of performance in economics whether measured by course grade or performance on the TUCE exam.

So we probably need to do more to appeal to our F-type students: explaining that it's because we care about the poor that we don't like minimum wages and that it's because we care about poor people overseas that we support sweatshops. It's harder to make the argument when it's counterintuitive (what do you mean that policies that say they help the poor don't help the poor!), but we've gotta do it.

Reasons to distrust petitions

The girl at 3:00 who winds up signing...sigh.

Some folks turn him down, some because they know hyperinflation is a bad idea, some because they don't want the hassle of dealing with him. But most folks sign the petition, supporting an increase in inflation to 100% this year and 100% for each of five years subsequently. I wonder how many signatures he could get if he spent a few more days at it.

HT: Brad Taylor
Update: original source site here.

Opposition to redistribution: self-interest, or economic thinking?

Andrew Leigh points to recent work showing that preferences for redistribution correlate negatively with education, income, being male, and being white rather than black. The work pointed-to suggests that as folks move up the ladder (education, income, etc), they want to pull the ladder up behind them.

I'll suggest an alternative explanation. Each of the covariates mentioned correlate VERY STRONGLY with "economic thinking". Bryan Caplan's work (US sample) says that the gap in beliefs on positive economic matters between economists and the public is narrowed by education, being male, and income growth; my work (NZ sample) says that economic thinking on a more mixed set of positive and normative questions (though none relating to the desirability of redistribution) correlates positively with being male, having higher income, and having higher education.

What's going on then, in my account, is folks who are more likely to understand economics are more likely to understand the costs of redistribution in terms of economic growth foregone.

Natalism

Matt over at The Visible Hand points us to one of the darker responses to the current economic unpleasantness: resurgent tribalism. Long story short: a New Zealand manufacturing plant with some skilled migrant Filipino workers kept those workers on and laid off some relatively lower skilled New Zealand workers. The laid off workers are, of course, upset about having lost their jobs and some are pushing to have the migrant workers' visas revoked.

It's depressing that the government seems to be jumping on the "let's blame the immigrants" bandwagon. Leaving aside the obvious point that if the company were to have to lose its more skilled workers it might well lose its contract with Nissan and consequently have to lay off a lot more good Kiwi blokes, it's still none of the government's business. The firm is better placed than the government to decide which of its employees are most important to keep on - and all the more so when many firms are running pretty close to the shut-down point.

I'd previously reported on the correlates of "economic thinking" in New Zealand. One of the components of my "economic thinking" variable measured whether the respondent tended to agree that immigrants help the economy. I re-ran things, this time using only the immigration measure. I constructed a variable taking on a value of 1 if the respondent disagreed or strongly disagreed that immigrants help the economy, and 0 if neutral or positive towards immigrants' effects. I then ran probit specifications to find the correlates of being in this group.

The NZES also queries whether respondents agree or disagree that "immigration is a threat to the New Zealand way of life". The variable correlates strongly with thinking that immigrants hurt the economy (0.44). The two columns in the table below report the results (marginal effects) of separate probit specifications looking at the correlates of thinking immigrants are a threat either to the New Zealand economy or to the New Zealand way of life.



The table reports only those interesting variables that are significant both after a general-to-specific reduction and in the initial specification, so some variables only show up in one specification or the other. The coefficients tell you the increase in the probability of answering that immigrants are a threat given a change in the independent variable listed. So, if you're of Asian ethnicity, you're 14% less likely to believe that immigration hurts the economy (but no more or less likely to believe that immigrants threaten the New Zealand way of life).

What I found most interesting was that left-wing ideology, which I expected to be a reasonable insulation against fear of immigrants, only showed up in the second specifications: holding left-wing ideology correlates with a reduced fear that immigrants threaten our way of life, but has no effect on views of the effects of immigrants on the economy. I was also very surprised to find that union membership had zero effect on beliefs about how immigrants effect the economy, but strongly affected beliefs about "way of life". None of the occupational codes came up as important, being unemployed or on unemployment benefit didn't matter. Being of middling income seemed to increase fear of immigrants, as both low and high income groups showed negative effects (though which proved statistically significant varied by specification).

The obvious candidate variables show up as important: education and reading newspapers reduces fear of immigrants; political ignorance, being in a rural area, and being born in New Zealand increases it. If I add in political party support, supporters of the Maori Party and New Zealand First are significantly more likely to view immigrants as a threat to the New Zealand way of life and to the economy; National and Labour supporters are pretty similar to each other on these questions with reduced likelihood of viewing immigrants as a threat as compared to the set of other parties' supporters.

Perhaps sentiments have changed a lot since 2005 when this survey was conducted, what with the ongoing economic unpleasantness. In the 2005 survey, there's little evidence that those out of work or in more tenuous household situations were more fearful of immigrants; of course, it's now much harder to find a job if you become unemployed. But, based on the 2005 numbers, 35% of respondents rated immigrants a threat to the NZ way of life (with 41% disagreeing) and only 22% rated immigrants a burden to the economy (with 51% disagreeing). And, National supporters were more pro-immigrant than average. This is all pretty promising. Even if Immigration Minister Coleman is not helping in keeping immigrants from becoming scapegoats, it doesn't look like there's a big base on which such sentiment could build.

Income, education, and ignorance

In my last post, I looked at the correlates of what I call "economic thinking".

Bryan Caplan asks for more details on the relative effects of income and education on economic thinking. Of course, in most work looking at political ignorance, education matters more than income. That's also what I found when I looked at the correlates of ignorance two posts ago. And, in Caplan's work, education matters a lot while income doesn't matter at all in explaining what makes people think like economists.

I re-ran the economic thinking regressions, dropping the ignorance variable to compare education and income. And, to make the comparisons stark, I'll set the baselines in each case as being the lowest level of education or of income. So, the null for education is "less than secondary", which includes "incomplete primary education/none" and "primary school completed"; for income, it's "household income less than $15,900", which includes "No income" and "less than $15,900". I only here report results on the education, income, and ignorance variable. Results will vary from the previous ones as my null has changed on the education and income indicator variables, and because I've fixed a rather trivial coding glich that has meant that the second decimal place on most of my coefficients has had to be updated.

What does that mean? It means that, in my sample, having the highest level of income does more to increase economic thinking than does having the highest level of education. But it's still not quite a fair comparison: while 16.5% of the sample has the highest level of education, only 9% of the sample has the highest level of income. The "University" variable will include folks with graduate degrees and folks with just a Bachelor's degree. I had previously aggregated different levels of education that seemed to have the same effect; let's move to the finer gradations. 7% of my sample has a postgraduate degree, for example. Here goes. Everything above again but this time, with finer differences in education levels.

I previously had aggregated together the two types of secondary school diplomas; we see here that they have the same effect on economic thinking (namely, none). I had aggregated together technical qualifications with incomplete university degrees: it looks like incomplete university degrees are more important than technical qualifications. And, I had previously aggregated together undergrad and postgrad degrees: the effects here seem pretty close to identical.

The effects of income and education are roughly comparable. The lowest levels of both have little effect. Middling levels of both have some effect. And the highest levels of each have a strong effect. Having an undergraduate university degree has a stronger effect than having the second-highest level of income, but being in the highest income bracket looks to have a stronger effect than being in the highest education category. Running some post-estimation tests, though, we can't reject that the coefficient on the highest income bracket is equal to the coefficient on the postgraduate degree. I do come closer to rejecting equality when the ignorance variable is included: the ignorance variable attenuates the effects of education much more than it does the effects of income.

So, the condensed version: income matters more in my sample than it does in Bryan's. I don't have a simple answer as to why. In Bryan's work, he controls for partisanship and ideology; I leave partisanship out because I want to use "economic thinking" as something that explains party choice rather than the other way round, but I did control for ideology. If I throw the different party vote intentions in as controls in these regressions, they only somewhat attenuate the effects of income on "economic thinking": they'll push the coefficient on the highest income category down to about 0.43, but no farther. Perhaps education matters a bit less here because of the nature of New Zealand university degrees. Undergrads here complete a three year programme with fewer electives. While most of the commerce students will take our introductory micro and macro papers, not many students from other disciplines come over. A quick chat with our stage one lecturer suggests about twenty percent of first year students at Canterbury take our stage one economics courses, and about eighty percent of those are going to do a Commerce discipline as a major. My impression is that a higher fraction of first year students in the US do stage one economics.

What makes Kiwis think like economists?

In previous posts, I described how I constructed a measure of "economic thinking" and a measure of political ignorance. I also discussed some of the general contours of the debate about whether ignorance matters in the real world.

We'll now turn to the determinants of economic thinking.

The seminal work in this area has been done by Bryan Caplan. He finds that, in a survey of Americans and economists on questions of positive economics, the public is severely biased. Compared to economists, the public is very scared of foreigners, favor make-work schemes, pessimistic, and skeptical about business and markets. He finds that people with more education, higher income growth (not just higher income), and men think more like economists than do others, all else equal. There were of course other factors that reduced the extent of disagreement, but those were the big ones.

I checked correlates of my measure of "economic thinking" in the New Zealand Election Study. The results are in Table 3 of the full paper, available at SSRN.



You'll probably need to click the link to see the table properly.

The biggest absolute effect comes from having a very high income: being in the top income bracket increases your "economic thinking" score by 0.39 standard deviations. Second, Maori ethnicity reduces the score by 0.31 standard deviations. Next, having a university degree increases the score by 0.29 standard deviations. Being male increases the score by 0.25 standard deviations. Identifying with a left-wing ideology reduces the score by 0.2 standard deviations. Anything that has an effect close in absolute magnitude to having a university degree I count as being pretty important.

So, what about political ignorance? Well, a standard deviation decrease in political ignorance increases your economic thinking score by 0.23 standard deviations. Is this a big effect? If I re-run the specification so we can compare folks with a university degree to those with less than a high school degree, I find that the difference is 0.33 standard deviations: moving from the lowest possible education to the highest increases your economic thinking by a third of a standard deviation. How about moving from the highest amount of ignorance to the lowest? The difference between the highest and the lowest ignorance score is 4.9 units, so moving from the highest to the lowest level of ignorance increases economic thinking by more than a full standard deviation. That's a bigger effect than anything else in my specification. As a robustness check, I split the ignorance variable into the lowest, middle, and highest levels of ignorance (with anything more than 2 standard deviations above mean counting as highest and anything more than 1 standard deviations below mean counting as lowest). Compared to those with the highest levels of ignorance, those with the lowest are 0.46 standard deviations higher in economic thinking, an effect which still greatly dominates the effect of moving from the lowest level of education to the highest. I think this suggests that political ignorance is of substantial real-world importance.

Other fun facts on economic thinking. Caplan finds that expected income growth correlates with economic thinking. I similarly find that those with a better household financial situation as compared to the prior year also think more like economists (0.1 standard deviations), but those who expect the economy to do worse in the next year also think more like economists. As Caplan's study relied on data from 1996 and mine from 2005, perhaps those who think more like economists are better able to forecast economic trends. This is something I plan on testing in later work look back through prior iterations of the NZES.

Next time: ignorance, economic thinking, and policy preferences. Sneak peak: the politically ignorant really really like the death penalty.

Measuring Economic Thinking

In previous posts, I discussed political ignorance and the measure of ignorance that I constructed using data from the New Zealand Election Survey. Let's now start looking at whether ignorance explains anything important about individuals' party and policy preferences. First, are the ignorant more or less likely to agree with economists on questions of economics? To answer that, we have to construct a measure of "economic thinking".

The New Zealand Election Survey includes eight policy preference questions that seem to me to address issues about which economists are generally on one side. They're not a perfect set of positive questions, like the ones Bryan Caplan is able to use in his work comparing the views of the public and economists on the economy, but they're not bad. While economists will disagree vehemently about the magnitude of the effects, most economists would agree that minimum wages reduce the creation of new jobs. In our survey, 983 respondents either strongly agreed or agreed that minimum wages reduce the creation of new jobs, 698 were neutral, and 1461 disagreed or strongly disagreed. So, I created a new variable with a score of +2 for those strongly agreeing, +1 for those agreeing, 0 for those neutral, -1 for those disagreeing, and -2 for those strongly disagreeing. Whaples' 1996 survey of economists found that 87% of labour economists agreed that minimum wages increase unemployment among the young and unskilled. This isn't identical to "minimum wages reduce the creation of new jobs", but it isn't far off.

Views as to the effects of minimum wages on job creation is my first measure of "economic thinking". What are the others?

"To solve New Zealand's economic problems, the government should control wages (prices) by law."
Most economists would violently disagree with both options. Here, 319 respondents strongly agreed that prices should be controlled, with a further 863 agreeing. 160 strongly agreed with wage controls, with a further 535 agreeing. The number disagreeing outweighed the number agreeing in both cases, but not by a lot.

"High income tax makes people less willing to work hard."
Economists are certainly divided as to the precise tax elasticity of the labour supply, and especially at current marginal tax rates, but few would disagree that high tax rates would induce a negative labour supply response: it would only run in the opposite direction if most workers were on the backward-bending portion of their labour supply curves. 916 respondents disagreed that high income tax reduces labour supply; a further 138 disagreed strongly.

"There should be a law to further reduce pay differences between women and men."
Most analyses of the matter have shown that gender pay differences disappear once you control for education, work experience, type of job and time outside of the workforce. Whaples (1996) found 83% of labour economists disagreed with such legislation. 773 respondents here strongly supported such legislation, with a further 1180 simply supporting. Only 900 either opposed or strongly opposed.

"The government should introduce import controls."
While some economists have made names for themselves by providing blackboard proofs of specific circumstances in which specific forms of protectionism might help particular countries (look up "terms of trade" argument), most economists would not expect these circumstances either to be identifiable ex ante or that actual tariff policy would ever be conducted in accordance with such theories. Fuller and Geide-Stevenson consequently find 92% of economists agreeing that tariffs and import quotas generally reduce welfare. Here, 518 strongly support import controls with a further 1075 simply supporting. Only 232 strongly opposed with a further 562 simply opposing.

"Immigration is good for the New Zealand economy."
Whaples found that 96% of labour economists agree that "the overall gains to American society from immigration exceed the losses." Here, 766 disagreed or strongly disagreed, with 1925 agreeing or strongly agreeing.

"The government should provide a job for everyone who wants one."
Economists tend to prefer transfers to the poor rather than job-creation schemes. Even in the context of current stimulus packages, most economists would agree that money should be spent only on projects that actually pass a cost-benefit analysis, rather than digging holes and filling them in again. This survey was conducted in the lead-up to the 2005 election, when such arguments would have been far from the front of voters' minds regardless. 738 respondents strongly agreed that it definitely is the government's responsibility to provide a job for everyone who wants one, with a further 1437 simply agreeing. 1060 said that government should not take on that responsibility, with a further 228 saying that it was definitely not the government's responsibility.

So, I have eight measures where I think economists' views are relatively one-sided. How to combine them? Again, I used a principal-component analysis to extract an underlying index of what I call "economic thinking". Like the ignorance measure, it provides an ordinal ranking of respondents' economic thinking, with mean zero and standard deviation one by construction.

Next up: What makes people think like economists? Sneak preview: Political ignorance doesn't help.

Footnote: My principal component measure loaded onto two factors. I re-did all of the analysis I'll later discuss using other ways of measuring economic thinking: first by using another principal component measure where I drop the two questions that load onto the second factor (effect of taxation; immigration), then by just using the sum of the measures. Not much changes.