Subject: I. Voters' grasp of Economics -- Survey results Date: Tue, 02 Feb 1999 09:02:16 GMT From: oldnasty@mindspring.com (Grinch) Newsgroups: sci.econ How well does the average voter understand economics, and the US economic situation? Let's just say something's not being taught in high school. During the 1996 Clinton/Dole presidential election campaign, when public interest in and awareness of economic issues arguably should have been highest, a nationwide Harvard/Kaiser Foundation/Washington Post survey of eligible voters found what follows. This poll also covered 250 working PhD economists and compared their opinions to those of the general public, the results of which I will put up in an accompanying post. Below are excerpts from the Post stories about the surveys, and samples of the data. I've also included links to the full stories and additional data at the end. ==================================== Reality Check: A Nation That Poor-Mouths Its Good Times Washington Post, Sunday, October 13, 1996; Page A01 Here are the rosy facts about the U.S. economy, as measured by government statistics: Unemployment is at a seven-year low. Inflation is at its lowest level in three decades. The federal budget deficit has declined to about $109 billion this year from $290 billion in 1992. The economy is creating millions more jobs than are being lost to downsizing, mergers, business failures or foreign competition. Yet here are the public's bleak perceptions: The average American thinks the number of jobless is four times higher than it actually is. Nearly 1 in 4 believes the current unemployment rate tops 25 percent -- the proportion of Americans who were estimated to be out of work at the worst of the Great Depression. They believe that prices are rising four times faster than they really are and that the federal budget deficit is higher, not lower, than it was five years ago. And 7 in 10 say there are fewer jobs in the US than there were five years ago.... The Harvard/Kaiser/Post survey found that most American's don't know much about the nation's overall economic performance, and often exaggerate the economy's troubles while they remain ignorant of its successes. Just 2 percent (!) of those interviewed knew, for example, that the deficit has fallen, the number of full-time jobs has increased, and that unemployment and inflation are lower than five years ago. Given their murky view of the present, it's not surprising that many Americans are pessimistic about the future. Just 1 in 4 expects the standard of living for the average American to rise in the next five years.... In fact, over the past five years, the number of Americans with jobs has risen by at least 9 million, to more than 123 million, with a larger proportion of Americans 16 years and older working today than at any time in the nation's history. Meanwhile, the unemployment rate stands at 5.2 percent. But most Americans dramatically overstate the proportion of the country that is looking for a job and can't find one. The average response pegged the jobless rate at 21 percent, or about four times the actual 5.3 percent in July when the poll was conducted. Even widespread news coverage last month that the jobless rate had fallen to a seven-year low failed to convince many people that things were improving on the employment front. More than half of those interviewed two weeks after that figure was announced said unemployment was increasing or unchanged from a year ago. Most Americans do little better estimating the rate of inflation. The average guess: 14 percent -- nearly five times higher than the current rate of slightly less than 3 percent. One in four said prices were rising 10 percent or more a year -- and 1 in 4 acknowledged that they didn't know enough to hazard a guess. And nearly half said inflation was higher now than it was five years ago, even though the rate has fallen sharply.... But while most Americans see tough times for workers and consumers, they think corporations are on easy street. When asked to estimate corporate profits, the average response was a 47 percent profit rate -- or about five times the actual figure.... People don't merely get the details wrong, they also misperceive broad trends. Barely a third knew that the unemployment rate is lower now than it was five years ago. Just 1 in 6 knew that the inflation rate has fallen over the past five years. Seven in 10 incorrectly thought the budget deficit is larger today than it was five years ago. Overall, 54 percent of those interviewed misidentified the trend of the three key measures: unemployment, inflation and the deficit. [When the disparity between official statistics and their views is pointed out] half of all Americans say the official statistics are simply wrong -- they don't believe that the jobless rate is as low as it is reported to be, or that prices are rising as slowly as the government says they are. Many suspect that government numbers are manipulated to hide the truth from the American people. Nearly half -- 48 percent -- of those interviewed said a big reason these statistics are inaccurate is because the "federal government deliberately manipulates the numbers to mislead the public about how the economy is really doing."…. --- Samples from the survey data: Q. The overall economy today is. . . Growing: 60% Stagnating: 20% In a Recession :10% In a Depression: 7% Q. What percentage of all Americans are unemployed and looking for work? Average response: 20.6% Actual: 5.4% [Note: The percentage of survey respondents who were unemployed but looking for work was 5%] Q. Do you think the number of full-time jobs in the US increased, decreased or remained the same over the last five years? Increased: 29% Decreased: 46% Same: 24% Q. Is the inflation rate higher, lower or the same as five years ago: Higher: 46% Lower: 16% Same: 34% Q. What's your best guess for the current inflation rate? Average response: 13.5% Actual: 2.9% Q. Is the federal budget deficit larger, smaller, or the same compared to five years ago? Larger: 70% Smaller 12% Same: 17% (The deficit was $181 billion smaller.) Q. What's your best guess for the average rate of corporate profits? Average response: 46.7% Q. Have international trade agreements created jobs in the US, cost jobs, or made little difference? Created jobs: 17% Cost jobs: 54% Little difference: 27% Q. Is the cost of gasoline too high, too low or about right? Too high: 75% Too low: 4% About right: 21% Q. Which is responsible for gasoline prices -- the law of supply & demand or the oil company's actions to maintain their profits? Supply & demand: 22% Oil company profits: 73% Full Washington Post story: http://wp5.washingtonpost.com/wp-adv/classifieds/careerpost/library/econone.htm Data from the Kaiser Foundation: http://www.kff.onlinemagic.net/archive/health_policy/social/econgen/econgen.html "Of course, on some policies, age, party affiliation and other factors come into play," [economist] Walstad said. "But across the board, economic knowledge has the most consistent influence on people's views of the economy, creating the basis on which good public policy can be made and ill-conceived policy can be countered." Which brings us to part two, Voters vs. Economists...