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Economists versus everyone else

June 04, 2013

When economists strongly agree on an issue, the general public usually disagrees with them, according to research by Chicago Booth Professor Luigi Zingales and Paola Sapienza of Northwestern University.

The researchers compare responses to two surveys. The first survey includes 19 questions posed to the Economic Experts Panel—run by Booth’s Initiative on Global Markets—which comprises 41 senior faculty at US research universities including Chicago Booth, Harvard, MIT, Princeton, Stanford, Yale, and the University of California, Berkeley. The researchers compare these results to responses from the Chicago Booth/Kellogg Financial Trust Index, a survey of a representative sample of US households.

Sapienza and Zingales find a striking 35 percentage­­-point gap, on average, between the economists and the public. For example, about three out of four of the general public respondents say that a “Buy American” policy is good for manufacturing employment, while only 11 percent of economic experts agree. Nearly all the economists queried agree that the North American Free Trade Agreement (NAFTA) has helped Americans prosper, but only half of respondents to the Booth/Kellogg survey think so.

The general public appears unmoved by expert opinions.  Nearly all economists agree, for example, that imposing a carbon tax to cut carbon dioxide emissions is likely to be less costly for consumers than imposing fuel efficiency standards on cars. Only one in four of the general public respondents agrees, however, and only 3 percent of those surveyed revised their views after learning what the experts thought.

The public’s responses seem to be based on informed reasoning. When asked what would happen to car prices if mandatory car standards were to take effect, 70 percent of the survey respondents said they expected car prices would rise. In other words, non-economists understand that carbon dioxide emissions policies come with a cost—but they apparently prefer to pay higher car prices rather than higher gasoline prices.

The authors conclude that the general public makes different underlying assumptions and doesn’t trust those underlying the economists’ views. Economists generally believe that additional revenues raised by taxes will ultimately be returned to consumers. But non-economists surveyed were skeptical the government would spend the revenue raised by a carbon tax as wisely as individuals  would – apparently not believing that the revenue would ever make its way to them.

 – Vanessa Sumo

Paola Sapienza and Luigi Zingales, “Economic Experts vs Average Americans,” American Economic Review Papers & Proceedings, May 2013.