econ 101

[Azazello1313]

 

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.

[SEC=UGA]

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.

 

I disagree with his asessment of the first question and will emphatically state that it is poorly phrased. "Restrictions" as he states do not automatically make housing less afforadable. We have seen restrictions used here in Atlanta to keep neighborhoods more affordable. For instance, there were certain parts of Atlanta proper that were seeing extreme gentrification, people were coming in buyin up older small houmes and replacing them with McMansions. This effectively was driving up the price of the homes in the surrounding areas, increasing property values. The natives that lived in the area began to see their housing valuse swell and were subsequently having difficulty paying the taxes on their new values. Thus, the city council implemented zoning restrictions in certain neighborhoods that would not allow homes that were atyipical of those in the neighborhood to be built. They placed height and sf restrictions on all new construction. Thus, the newer more expensive houses were not being built in these neighborhoods and pricing/value was depressed. There are many other examples of how zoning restrictions can in fact supress the value of housing.

 

Mandatory licensing of professional services increasing values of said services is also somewhat errant. For example, we have begun to see commissions paid to real estate agents plummet, even prior to the housing crisis. The standard of 6% no longer exists and there are many groups out there that will charge either flat fees or commissions of </= 3%.

 

Some of the things he states I definitely agree with, but he seems like a pompous ass and I felt like being arbitrary. Learn how to phrase a question while doing a survey, give them multiple questions, phrased differently that ask them the same thing, etc... Then take that survey, compile the answers and I'll take it much more seriously.

[wiegie]

These results don't surprise me.

 

I will say that there are some nuances that the questions don't capture (for instance, the empirical evidence on the connection between minimum wages and unemployment is not as conclusive as the standard blackboard supply and demand graphs from ECON 101 would indicate and free trade does lead to unemployment in some sectors (although overall it should balance out across the overall economy)) but overall the questions are indeed representative of what I might ask in my intro econ classes.

[Azazello1313]

I disagree with his asessment of the first question and will emphatically state that it is poorly phrased. "Restrictions" as he states do not automatically make housing less afforadable.

 

he doesn't say they do "automatically". as he clearly states, "There may be exceptions to the general case, but they would be atypical." and that is absolutely true: restrictions on new development generally restrict supply and thus relatively increase the price of existing development.

 

For instance, there were certain parts of Atlanta proper that were seeing extreme gentrification, people were coming in buyin up older small houmes and replacing them with McMansions. This effectively was driving up the price of the homes in the surrounding areas, increasing property values. The natives that lived in the area began to see their housing valuse swell and were subsequently having difficulty paying the taxes on their new values. Thus, the city council implemented zoning restrictions in certain neighborhoods that would not allow homes that were atyipical of those in the neighborhood to be built. They placed height and sf restrictions on all new construction. Thus, the newer more expensive houses were not being built in these neighborhoods and pricing/value was depressed.

 

wow, if this is true, people in your area are incredibly stupid. "please pass laws to decrease the value of my asset by tens of thousands of dollars in order to save me a couple hundred a year in property taxes!" that is like hoping your stock portfolio tanks so you don't have to pay as much capital gains tax. or hoping you don't get a big bonus at work, because you'll have to pay taxes on it.

 

edit to add: let me guess....these are the parts of town where all the progressives live?

 

Mandatory licensing of professional services increasing values of said services is also somewhat errant. For example, we have begun to see commissions paid to real estate agents plummet, even prior to the housing crisis. The standard of 6% no longer exists and there are many groups out there that will charge either flat fees or commissions of </= 3%.

 

well that's a result of people deciding the licensed professional service might not be worth the fee, and they can basically do it themselves. but that doesn't do anything at all to change the fact that it's still generally more expensive if there are professional licensing requirements to perform a service.

Edited June 8, 2010 by Azazello1313

[Yukon Cornelius]

wow, if this is true, people in your area are incredibly stupid. "please pass laws to decrease the value of my asset by tens of thousands of dollars in order to save me a couple hundred a year in property taxes!" that is like hoping your stock portfolio tanks so you don't have to pay as much capital gains tax. or hoping you don't get a big bonus at work, because you'll have to pay taxes on it.

[SEC=UGA]

he doesn't say they do "automatically". as he clearly states, "There may be exceptions to the general case, but they would be atypical." and that is absolutely true: restrictions on new development generally restrict supply and thus relatively increase the price of existing development.

 

 

 

wow, if this is true, people in your area are incredibly stupid. "please pass laws to decrease the value of my asset by tens of thousands of dollars in order to save me a couple hundred a year in property taxes!" that is like hoping your stock portfolio tanks so you don't have to pay as much capital gains tax. or hoping you don't get a big bonus at work, because you'll have to pay taxes on it.

 

edit to add: let me guess....these are the parts of town where all the progressives live?

 

 

 

well that's a result of people deciding the licensed professional service might not be worth the fee, and they can basically do it themselves. but that doesn't do anything at all to change the fact that it's still generally more expensive if there are professional licensing requirements to perform a service.

 

I'm sooooo F*cking BORED!!!! The economy needs to pick up and fast!!!!

[Ursa Majoris]

5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree).

 

I doubt there's any answer to this that is correct or incorrect.

[westvirginia]

I doubt there's any answer to this that is correct or incorrect.

 

+1. In the most base, technical view ALL labor is "exploited" as are natural resources to provide a good or a service.

[Ursa Majoris]

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).

To address the questions other than the lead question, which is arguable, I'd say only 2 and 4 are not really arguable. The rest are very arguable depending on the scenario.

 

"Enlightened" and "unenlightened" are tendentious at best.

[Azazello1313]

To address the questions other than the lead question, which is arguable, I'd say only 2 and 4 are not really arguable. The rest are very arguable depending on the scenario.

 

"Enlightened" and "unenlightened" are tendentious at best.

 

I dunno, I think they're mostly pretty clear. 5 and 6 are the most debateable -- in a way, you could really define ALL employment as "mutual expoiltation"; and free trade CAN cause pockets of higher unemployment, even if system-wide it has an average effect in the opposite direction.

 

also, the fact that they may be somewhat debateable is factored into the poll, with the "somewhat agree" and "somewhat disagree" answers.

 

but even with the questions you concede are "not really arguable", the left/right pattern holds. that pattern seems to be pretty consistent across all of the questions.

[Ursa Majoris]

I dunno, I think they're mostly pretty clear. 5 and 6 are the most debateable -- in a way, you could really define ALL employment as "mutual expoiltation"; and free trade CAN cause pockets of higher unemployment, even if system-wide it has an average effect in the opposite direction.

 

also, the fact that they may be somewhat debateable is factored into the poll, with the "somewhat agree" and "somewhat disagree" answers.

 

but even with the questions you concede are "not really arguable", the left/right pattern holds. that pattern seems to be pretty consistent across all of the questions.

OK but counting "somewhat disagree" along with "disagree" eliminates the "debatable" factor and assumes both the groups are going the same way which they may not be.

[Azazello1313]

here's a pdf of the whole study

 

some additional findings beyond the political orientation stuff:

 

*Athiests and Protestants scored best of the various religions identified, with 1.91 and 2.4 questions wrong, respectively. "Other/No Affiliation" (i.e. people who are spiritual but non-denominational) scored the worst by far, with 4.09 questions wrong. I don't find this surprising at all... I think it's self-evident that the amorphous "touchy-feelies" aren't very well connected to reality to start with.

 

*Married people score best of the various marital statuses (2.72 questions wrong). This applies only to traditional marriages: people in "civil unions" or "domestic partnerships" scored worst by a large margin (4.05 questions wrong)

 

*People who identified themselves as residents of "America" scored best (2.25 questions wrong), while those who identified themselves as residents of "The Planet Earth" scored worst by a large margin (4.59 questions wrong).

 

*People who frequently shop at Wal-Mart scored much better than those who never do (2.24 to 4.24 questions wrong, respectively). This isn't much of a surprise to me... the snoots who won't shop there aren't likely to know a thing about saving a buck. It's pretty clear that the people who shop there aren't stupid about economics... but their detractors may be.

 

*Households with union members score worse.

 

*In direct proportion, the results are correlated to income. The less you make, the less you're likely to know about economics. Again, not surprising.