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Assorted links
1. All of sociology in one short blog post.
2. New economics blog on political ignorance.
3. $500 billion for the FDIC, ho-hum. Fortunately it is just "a loan."
4. Lying with your writing, and Robin Hanson's new favorite book.
5. Lying with your reading, and more here, including a discussion of motive.
Posted by Tyler Cowen on March 6, 2009 at 12:26 PM in Web/Tech | Permalink
Comments
Good thing "life ignorance" is negatively correlated to political ignorance. ;)
Posted by: Alex Golubev at Mar 6, 2009 12:41:19 PM
The hilarious thing about the FDIC loan is that it was prompted by the banks' outcry over the raised fees. And how, exactly, is the FDIC supposed to repay the loan?
Clearly, this is termed a loan solely for hiding an addition to the deficit.
Posted by: Yancey Ward at Mar 6, 2009 3:22:49 PM
I would agree that sociology is for the most part a load of baloney.
But it's pretty rich for one set of pseudo scientists to ridicule another set of pseudo scientists for being involved in such a mushy, pseudo scientific discipline.
In light of recent events, one would think that such attitudes would be tempered.
Truth is, both of these pseudo scientific disciplines (economics & sociology) have had disastrous effects on US economic and social/welfare/educational policies.
One wonders if Miss Cleo would be a well respected "adviser" if she replaced her crystal ball with some mathematical models.
Posted by: Dev Smythe at Mar 6, 2009 4:27:08 PM
The four intellectual leaders who Obama imitated during the period of his intellectual development were W. E. B. DuBois, Malcolm X, Martin Luther King, and Nelson Mandela (p. 220 of his memoir) . The linked summary of DuBois, "Most of social life boils down to struggle over the stuff that gives your power, or resisting the power."
Presumable, that kind of thinking is at the core of who Obama is.
Posted by: Greg Ransom at Mar 6, 2009 4:40:22 PM
I love how Dev Smythe and Greg Ransom apparently go from blog to blog posting the same comment over and over, without bothering to check if it fits in with the preceding discussion.
Dev Smythe:"I would agree that sociology is for the most part a load of baloney..." um, that was on the EconLog blog, who are you agreeing with here?
Ransom has apparently discovered that a man who became President of the United States thought that holding political power is actually important, and is blasting this exciting discovery everywhere he can.
Posted by: Barbar at Mar 6, 2009 6:03:10 PM
Nobody seems to know who Obama is -- David Brooks, e.g. keeps changing his mind, and it looks like a lot of other people are changing their minds. With the dramatic reaction of the markets to Obama's current revealed hand, people are taking a closer second look.
Well, we do know something, and part of that something is the heavy influence of a particular branch of sociology -- Critical Race Theory at Harvard, Critical Legal Studies at Harvard, big into DuBois, big into neo-Colonialism, etc. 20 years of the pop-sociology of Rev. Wright, which Obama took back with him to Harvard, and listened to again and again.
It's what we know. We don't know much. But we do know that.
Posted by: greg ransom at Mar 6, 2009 7:32:50 PM
Introductory Comments
Thanks for the link to the economic blog run by Eric Clampton, and his articles on political ignorance, Tyler.
As it happens, I’m a political scientist, and as it also happens, I found myself replying at length to a similar sort of post on “rational irrationality” --- at Econlog --- by Bryan Caplan. Entitled “Extending the Enlightened Preference Approach: Proceed With Caution”, Bryan’s post drew on the analysis set out in his stimulating book The Myth of the Rational Voter: Why Democracies Choose Bad Policies --- a book I highly recommend to all specialists in both economics and political science. This, mind you, even though I disagree with Bryan’s overall argumental thrust . . . both in his book and post.
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You get a flavor of Bryan’s posted argument in the very first paragraph of his Econlog commentary:
”How would people's preferences change if they knew more? Political scientists usually attack this question using the so-called "Enlightened Preference" method. (See Scott Althaus' Collective Preferences in Democratic Politics for a fantastic survey of this large literature).”
What I said then by way of reply might conceivably --- just conceivably --- be relevant here. (Note: I banged out the original reply at bursting speed. The version here is slightly revised for readability.)
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1) The Buggy Professor Replies to Bryan Caplan
That's a thoughtful post, Bryan --- and it sent me back to re-read the criticism you made in 2005 (Economic Journal Watch) of Donald Wittman and, to an extent, of the Univ. of Chicago political economy school: Stigler, Posner, Becker, Pelzman (and probably others) . . . all of whom agreed on the following matters:
i. Voter ignorance was not a major problem for a democracy like the US;
ii. Such ignorance --- in line with all political science public opinion surveys and collective action theories in economics --- was rational, given the insignificance of one person's vote in electoral outcomes, plus the costs in time and effort to be more informed;
iii. And the large number of ignorant or uninformed beliefs held by voters didn’t really matter that much to our democratic system’s overall functioning. Why? Because voters’ biases --- however ignorant or wrong-headed --- essentially cancelled out one another . . . to the point, please note, that a democratic system like the US’s performed over time just as well as our market economic-system.
In the process, of course, such reasoning has infuriated libertarians and still does apparently.
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2) Your Earlier Argument with Wittman
As a libertarian, you disagreed. In particular, you set out a very good summary of Wittman's (classical?) argument for democracy, then show --- in line with your enlightened preference theory (developed by others) --- that the Chicago school’s political economy was wrong and even dangerous. . . even though, needless to add, you adhere to their free-market theories about our economy.
Why did you disagree?
Because, as you argued in that exchange with Wittman, if you look empirically at what people actually believe about the workings of a market economy, then on three scores --- later enlarged by you in your recent book to four --- voters were actually not "irrationally ignorant", but rather "rationally irrational" With this claim established, your argument led explicitly and more by implicit extension to a double conclusion: 1) American democracy was, in its workings, erratic and wrong about the desirable role of government in the economy. And 2) we would probably be better off (as I infer from your arguments) with a "benevolent despot".
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The term in quotation marks meaning what? Well, as used by French philosophes in the 18th century who knew France was unlikely to develop peacefully into a constitutional monarchy with freedoms of the sort Voltaire and others found in Britain, the term meant a tyrant whose knowledge fitted your simulated error-free computer-genius.
It was a very good exchange, but in my view Wittman came across more successfully, and still does in the light of your recent book and extended argument. And leaves the Chicago School of political economy sound in its overall estimation. At bottom, in a noticeably imperfect world, our democratic system performs about as well as could be humanly expected . . . at any rate, if judged by pragmatic criteria: including our enormous wealth, extremely high per capita income, and our history of creative innovation and bold entrepreneurship, while encouraging a marked increase in tolerance for minorities and in opportunities for women in all ways of life.
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Agreed: this latter claim needs to be justified, not just asserted. Which justification now follows.
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3) First Off, Did You Really Succeed in Showing that Democratic Voters Are Systematically Biased and Uninformed and hence Vote Against Their Basic Interests?
If so, then rational irrationality as you put it should lead to a drastic curbing of democratic governmental intrusion into the economic life of our country, the market itself --- as envisaged by Neo-Classical and New Classical economists --- self-regulating and self-corrective if impacted by exogenous shocks. Sooner or later, however great the shocks, the economy will return to a well-functioning General Equilibrium.
Note though.
In your book, you don’t show that voters are systematically irrational except in a strange way: you compare their beliefs in four areas of economic life with the beliefs of experts: to wit, Ph.D. economists . . . presumably, the surrogates who, together, constitute a perfectly enlightened computer-genius or, in real life, presumably, the totally enlightened benevolent despot. Presumably, this benevolent human-genius informed by the collective wisdom of Ph.D. economists would curb and limit democratic politics to the point that something like a laissez-faire economy of the English sort in the mid-19th century. (Our own economy, let us grant, never laissez-faire as England once was).
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4) A question prompts itself here: Is this not a strange criterion, your enlightened preferences incarnate, by which to judge our actual state-market relations and, more specifically, to prove how rationally irrational voters are?
Consider, first off, macroeconomics.
To start here is to note that there is no consensus whatsoever among Ph.D. economists on such things as the Ricardian equivalence in fiscal policy, or whether menu costs create a system-wide rigidity of prices, or whether business firms are irrational to not lower wages in a recession to the existing reservation wage, or whether money is endogenous or exogenous . . . the latter a big lively issue reawakened by the Bernanke-led Fed Reserve. I wager that you and your colleagues as GMU recoiled from each and every one of his measures (note: this was written in the late spring of 2008).
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Agreed: in microeconomics, there is more consensus.
Still, disagreements exist --- even on free-trade (assuming it’s a micro issue, not macro). Yes, there’s near-unanimity in the economics profession about it’s value. I happen to agree myself with it. That said, to then claim as you do, Bryan, that the public is especially uninformed and even stupid to not like free trade is to overlook the fact that there are, in a period especially of rapid technological and globalizing flux, lots of individual losers: witness the rapidly shrinking US mfg. sector’s labor force under pressure of a rapidly shifting comparative advantage . . . this shift, please observe, influenced markedly by the “excessive appreciation” of the dollar since the early 1980s, first against the Japanese, Korean, and Taiwanese currencies, and later the Chinese renminbi. Yes, the economy overall benefits, and you could argue that the laid-off workers benefit too from lower costs at Wal-Mart and elsewhere, but it does not seem either irrational or stupid for the laid-off workers and those who fear their turn is next to not like the policy.
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As for what you call “xenophobia” as being at work here among the public that doesn’t like free trade’s impact,
I could just as well argue that libertarian economists lack patriotism and presumably think that Chinese workers or those in India are going to volunteer to fight against our enemies in the next war. Or wonder whether the very slow growth in average male income since the late 1970s --- measured in real dollar terms, at a time of a vast increase in the income of the rich and very affluent --- hasn’t something to do with these rapid shifts in comparative advantage . . . never envisaged by Ricardo or Ohlin-Heckscher or anyone else in the past, what with the bursting surge of “multi-level” production around the world thanks to multinational enterprise. (Not even Krugman’s economic geography deals effectively with this turbulent change, essentially a product of the last three decades or so.)
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5) Shift Your Attention Now, Bryan. Let’s Considerthe Sagacities or Not of Experts, Whether Economists or Otherwise
Bluntly put, I think you badly go astray in crediting experts with far more accurate, valid, true, and pragmatically or operationally sound knowledge and policies at their disposal . . . at any rate, of a politically charged sort. The evidence? For well over four decades now, Philip Converse’s path-breaking studies in public opinion have been vindicated in dozens of studies, and most recently in Gordon Tetlock’s Expert Political Judgment .
As it happens, what their studies show is that the so-called experts in political matters --- pundits, political campaign leaders, talking-heads, opinion-setters, and so on --- tend, like experts in virtually every field, to overestimate their understanding, their knowledge, their ability to analyze a situation, and their predictions of what will happen . . . and not just in politics, mind you. In fact, they do no better than a simple linear equation does in such matters, run on a data-set of the views of any large group of people chosen at random if the modeler first located the median of the experts’ own views and recommendations.
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More to the point, it’s most educated people --- the graduates of the best universities, graduate school products, and the like --- who turn out to have the most ideological system of beliefs. They tend, accordingly, to be more disposed than the average person to reject any information that doesn’t fit into their preconceived belief-systems and to seek reinforcement of their own views and hobby-horse theories.
So you want to find rational irrationality at work, Bryan?
Then look at these people --- including your Ph.D. economists. Mentally, they tend to exhibit a sort of semi-pathological mind-set: they strive for cognitive consistency, rejecting discordant information, and --- in group setting --- succumb easily to group-think and mutually admiring intellectual reinforcement.” .
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7) I Repeat: Are Economic Ph.D’s Any Different?
Do they not, as Kahneman’s and Tversky’s work as well as others have found,
i. Exaggerate their knowledge,
ii. Think they have more control over events (which they analyze or predict in terms of modeled simplification and taken-for-granted assumption),
iii. And exaggerate their ability to control things. These are widely accepted, experimentally tested findings: hence 80% of drivers think they’re better than average, and probably that’s true of 90% of investors in the stock market.
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8) Democracy in Practice: Comparative Evidence of a Concrete Sort
(i.) No country in the world has a per capita income above, say, $25,000 (PPP) --- leaving aside oil-rich dictatorships (and Singapore) --- that doesn’t have a democratic system of politics, an independent judiciary, limited corruption and elite predatory behavior, and a largely market economy.
(ii.) Among democratic countries, those with the most trust in the population across family, class, ethnic/racial, and regional division have the highest per capita income. They also have the least political corruption --- brought out in annual surveys for 20 years now, using a variety of cross-checking evidence. Only Singapore again --- 4-5 million Chinese, under a dictatorship --- is in the 20 countries least corrupt. The US and Britain are the least corrupt of countries larger than 30 million, Germany usually next to them (the three probably not distinguishable at the 5.0% or less level, statistically speaking)
(iii.) Among these top-performing 20 democratic countries, the US --- leaving aside Norway (5 million, whose oil riches drive up or down its per capita income depending on the price of oil) and Luxembourg (250,000) --- the US has by far the highest per capita income (roughly $47,000), a good 30-35% higher than Germany’s, France’s, Britain’s, or Japan’s; and with only Ireland (4 million) having a per capita income near it. The US also tends to have invented and innovated most of the high-performing cutting-edge industries of the last 35 years of the long-wave Schumpeterian creative-destruction cycle, as it did with the previous two long waves . . . going back, over a century ago, to the cutting edge innovations like the internal combustion engine, electrification, and mass –production mfg. of the assembly line sort in the first two to three decades of the 20th century..
(iv.) On top of that, the two great liberal democracies --- Britain and the US --- have defeated in war all major non-liberal authoritarian or totalitarian countries since the industrial revolution of the late 18th and early 19th centuries: Napoleonic France, militarist Germany and its allies (WWI), Nazi Germany, Fascist Italy, militarist Japan (WWII), and together in NATO with others the Soviet Communist empire . . . with the destruction of communism world-wide save in North Korea and Cuba.
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9) So What Follows?
Bluntly put again, by any pragmatic standard, these are impressive achievements,and they seem a fairer way to gauge what is humanly and historically possible, rather than using some standard of a theoretical model and its alleged computer genius-surrogates --- Ph.D. economists ---who seem to be divided on almost all major macroeconomic issues and some notable microeconomic ones.
Added: March 6, 2009: Si monumentum requiris, circumspice.
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Michael Gordon, AKA, the buggy professor
Posted by: the buggy professor at Mar 6, 2009 7:53:28 PM
close italics?
Posted by: at Mar 7, 2009 12:07:15 AM
Close italics:
Posted by: the buggy professor at Mar 7, 2009 9:12:44 AM
Regarding people saying they have read books that they have not actually read:
- the figures mentioned in the articles may well be underestimates. If in anonymous surveys people underreport income or misreport so many other variables so often -- why not lying when you are asked about having lied about the books you've read?
- I was surprised to see that people lie about not having read the book about Obama. There he is, in the same list as Tolstoi and Joyce!!
- all in all I think it's good people lie about not having read certain books. This means we value reading and we even perceive that readers are more sexually attractive (according to the reasons for lying mentioned in one of the links). I was recently devastated when I found out that some of my students would openly admit that they did not read at all because they thought it was pretty useless and preferred to do other, more useful things. I was so shocked I did not even have an answer ready. Of course I was quite sure some of them did not read at all but I would have expected them not to tell me straight.
Posted by: Olivia at Mar 9, 2009 7:45:29 AM
