Subject: II. Voters vs. Economists -- Survey results Date: Tue, 02 Feb 1999 09:11:45 GMT From: oldnasty@mindspring.com (Grinch) Newsgroups: sci.econ Economists and the general public -- somebody's not communicating something to somebody. Again, excerpts from the story, excerpts from data, and links to more of both at the end. ==== Reality Check: The Great Divide Washington Post, Tuesday, October 15, 1996 Good news for President Clinton: There is a core group of voters who agree with him that the economy is stronger than it was when he took office; and that free trade, corporate downsizing and technology will improve the standard of living for the average workers... Bad news for the president: They're economists - and nobody believes them. That's one of the findings of two new Harvard/Kaiser/Post public opinion surveys... These found that however much economists might disagree with each other, their intramural differences look like minor quibbles compared with their differences in opinion and outlook with the general public. For example: Seventy percent of Americans think family incomes have fallen behind inflation over the last two decades -- but only 22 percent of economists agree. More than half the public -- but only 5 percent of economists -- think trade agreements have cost the United States jobs. Sixty-nine percent of the public -- but only 12 percent of economists -- think inflated salaries for corporate executives are a problem for the economy. Just one American in four believes that over the next five years the standard of living for the average citizen will rise. Half of all economists, in contrast, hold this optimistic view. "It's a different world that people think they're living in and what we think they're living in," conceded David Berson, chief economist at Fannie Mae, the home mortgage financier that is headquartered in Washington. "Frankly, I don't have a good explanation for it.".... The survey of 250 economists was among a random sample of members of the American Economic Association who live and work in the United States. All of the economists interviewed for the survey have a Ph.D. in economics, are employed full-time as economists, and consider domestic economic policy to be one of their specialties. The survey of public economic attitudes was described in the earlier installments of this series... In the public poll, eight in 10 said they thought most of the new jobs being created in America were low-paying. Yet economists tend to fall back on official statistics put out by the government that show the majority of new jobs paying above-average wages.... Corporate downsizing is another of those issues dividing experts and citizens -- 59 percent of voters think downsizing is a major drag on the economy, versus 5 percent of all economists. "If in the 15th century we said we wouldn't put up with downsizing, we would still be living at the standard of living of the 15th century," said Lloyd Orr, a professor of economics at Indiana University.... With economists and voters holding such different views of the way things are, it's no surprise that they have different opinions about what government ought to do to make the economy stronger. Economists have been successful -- in fact, maybe too successful -- in bringing the public around to one of their most cherished beliefs: that persistent federal budget deficits are a major drain on the economy. When asked what were the most important economic problems facing the country, more Americans cited the federal deficit -- 20 percent -- than any other item. But with the deficit now less than half what it was just four years ago, it was cited as most important by only 6 percent of economists. Instead, two-thirds of the Ph.Ds said the main drag on the economy today is "inadequate education and job training." While the general public shares that concern, it's on an equal footing with such other factors as "foreign aid spending" and "too many people on welfare," which economists tend to dismiss as economically inconsequential.... Economists bemoan the lack of knowledge and understanding among ordinary Americans about a subject that affects them so directly. "People form their opinions based on a shallow sifting of information, in which what is most fearful or most dramatic gets retained -- and everything else drops out," said Love, the Illinois economist. He noted that this "lack of understanding" extends even to highly educated professors in other academic departments. At the University of Missouri, for example, economics department chairman Podgursky recalls having heated arguments with colleagues in the education department on the issue of school vouchers -- which he favors and they abhor. "They say, `It's wrong to make money off children.' And I say, `Wait a minute. What about you?' " And it's not much better for Podgursky at home. "Even my wife thinks economists are stupid," he reports.... The Post/Kaiser/Harvard surveys shows average Americans are downbeat about the economy, eager for a tax cut, suspicious of free trade and sympathetic to an increase in the minimum wage. Most economists, by contrast, are upbeat about the economy, dead set against tax cuts, worshipful of free trade and dubious about setting a minimum wage at any level. In cases like this, good politics often wins out over good economics. Economists who have been there, in this and previous administrations, say the best they can usually hope for is to turn aside the worst of the ideas served up by their more politically minded colleagues. "Playing defense," is the way Treasury Secretary Robert E. Rubin described his job in this election year. "The trick as a policy economist is not to let the perfect be the enemy of the good," explained Laura D'Andrea Tyson, the top economic aide at the White House. "Economists who work for politicians learn very quickly to figure out a way to tell the presidents some version of what they want to hear," said another former adviser to President Clinton.... Economists from the past four administrations all said they eventually came to realize that there were some arguments they just would never win. The experts, for example, have agreed for years that while savings, investment and education all are good for the economy, giving tax breaks to stimulate them usually isn't a good idea -- since these tax changes invite scams, raise prices and generate windfalls for people who would do those things anyway. But most presidents, including Clinton, can't resist fiddling with the tax code. They are drawn by the simple notion that if you favor something, you can get more of it by offering a tax break. And the tax code today literally speaks volumes about the victory of politics over economics.... == Q. Over the next five years, do you think the average American's standard of living will rise, or fall, or stay about the same? Rise Fall Same General Public 24% 29% 46% Economists 50% 8% 41% Q: During the past 20 years, do you think that, in general, family incomes for average Americans have been going up faster than the cost of living, staying about even, or falling behind? Staying Falling Rising Even Behind General Public 11% 19% 70% Economists 35% 42% 22% Q: Do you think most of the new jobs being created in the US country today pay well, or are they mostly low-paying jobs? Mostly Mostly Pay well Low-paying Neither General Public 16% 79% 4% Economists 39% 32% 22% Q: Do you think trade agreements between the United States and other countries have helped create more jobs in the United States, or have they cost U.S. jobs, or haven't they made much of a difference? Created Cost Little dif. General Public 17% 54% 27% Economists 50% 5% 42% Q. Which of these do you think is the most important reason why the economy is not doing better than it is? General Public Economists The federal deficit is too big 20% 6% Inadequate education and training 14 42 Too many people are on welfare 14 1 Taxes are too high 11 6 Foreign aid spending is too high 10 0 Lack of value placed on hard work 8 4 Too many immigrants 7 0 Too many tax breaks for business 6 0 Too much government regulation 4 7 People don't save enough 2 20 Affirmative action 1 0 No item listed as major reason 1 12 No opinion 3 2 Q. Which among these business-related factors is the most important reason why the economy is not doing better? General Public Economists Companies are sending jobs overseas 31% 1% Companies aren't investing enough in education and job training 21 21 Top executives are paid too much 15 5 Companies are downsizing 12 2 Technology is displacing workers 6 1 Business profits are too high 6 1 Productivity is growing too slowly 4 38 No item listed as major reason 5 30 Q. Recent times have been economically unsettling because of new technology, competition from foreign countries, and downsizing. Looking ahead 20 years, do you think these will eventually be good or bad for the country, or not make much difference? Little Good Bad Difference General Public 43% 31% 23% Economists 93% 2% 3% [This last is a surprisingly unanimous, optimistic consensus. Why is it not reaching the general public? Is it "Blinder's Law" - "Nobody pays any attention to economists except when they fight among themselves?"] Full Washington Post story: http://wp5.washingtonpost.com/wp-adv/classifieds/careerpost/library/econthre.htm Data from the Kaiser Foundation: http://www.kff.onlinemagic.net/archive/health_policy/social/econgen/econgen.html