What You Think You Know

“Unless you start with empirically sound assumptions about voter cognition and motivation, you’re wasting your time – and the time of everyone who reads you.  What makes my stance especially stressful is that behavioral economists strangely neglect political economy.  Most of the scholars with the tools to fix political economy are otherwise occupied.Fortunately, thanks to noble exceptions, the intellectual climate is slowly improving.  Case in point: Gimpelson and Treisman’s new NBER working paper on “Misperceiving Inequality.”  The paper’s great from beginning to end, but here are some highlights.


What if the masses have little notion of how much wealth the elites have accumulated and whether the gap is growing or shrinking? What if even the rich cannot gauge how strong is the motive for the poor to revolt? In such cases, the neat link between actual inequality levels and political outcomes evaporates. The goal of this paper is to show that such uncertainty and misperception are ubiquitous. We present evidence from a number of large-scale, cross-national surveys that in recent years ordinary people have known little about the extent of income inequality in their societies, its rate and direction of change, and where they personally fit into the distribution. What they think they know is often wrong. This finding is robust to data sources, definitions, and measurement instruments. For instance, perceptions are no more accurate if we reinterpret them as being about wealth rather than income.”

Via Systematically Biased Beliefs About Inequality, Bryan Caplan | EconLog @ Library of Economics and Liberty.

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