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  • Comment and Discussion
  • William D. Nordhaus

William D. Nordhaus:

In a democracy, one might suppose, the decisions of elected politicians are to some extent influenced by public opinion. This is the motivation for the question, which Alan Blinder and Alan Krueger address in this paper, of how public opinion and, specifically, public opinion about economic affairs is determined.

Blinder and Krueger investigate the state of economic knowledge and preferences among the general public by tracking down a random sample and asking them a battery of fact questions (to determine their knowledge), personal questions (to determine their self-interest), and economic policy questions (to see where they stand on the issues of the day). No one should be surprised to learn that the authors have gone about this task in a thoughtful manner and have produced many interesting findings. The survey has been carefully administered, and the response rate is high. My comments will raise a number of questions about their questions, which leave me thinking that survey research is even harder than I originally imagined.

To begin with, one might ask whether the respondents behave like the textbook homo economicus classicus. Somewhere, someone probably believes that economic policy opinions are formed by continuous-time maximization of a consistent preference function maximizing the present value of the utility of consumption using Bayesian updating in light of the constant inflow of data from the Internet, several televisions tuned to the financial channels, and a live feed from the Brookings Panel. But anyone who still entertains that notion will quickly discard it after reading this paper. [End Page 388]

What do we learn about the public's economic opinions? In reality, public opinions about the economy in a democracy are the outcome of a very complex process in which people try to sort through conflicting accounts and theories, often provided by unreliable narrators. The news contains much factual reporting (including the Dow Jones average to seven significant digits), but very little analytical reporting. Analyses are often shaded by political motives (if by public figures), by profit motives (if by companies), or by desire for publicity (if by private individuals). Even a good news source such as PBS's Jim Lehrer NewsHour feels it has to present a balanced point of view, where "balanced" means someone is there to defend supply-side economics.

Americans report that, of all professions, they trust nurses most and car salesmen and HMO managers least.1 Canadians report that they trust pharmacists most and national politicians least (only 9 percent of Canadians trust the latter).2 Yet people get much of their economic knowledge from national politicians and little from nurses and pharmacists. I suspect that most people view getting economic information somewhat akin to extracting a referral from their HMO. Given the difficulties of knowing whom to trust and the contentiousness of most policy discussions, it would not be surprising if the public is confused at best and ill informed at worst.

How do Blinder and Krueger attack this issue? They administer a battery of nine fact questions to see how their respondents have sorted through the varieties of conflicting opinions. I admit that I found some of the questions vaguely unsatisfying, partly because recall of numerical facts is not identical with sound economic analysis.

In addition, I found myself constantly worrying about the questions. For example, on taxes the question was

"About what percentage of the typical American family's income do you think goes to paying taxes-including all levels of government? "

This is actually a very hard question. Does "typical" mean median or average or what the respondent thinks is a typical nuclear family? Should [End Page 389] I be economically sophisticated and include production taxes and business taxes in the numerator, as a good public finance theorist would recommend and a good Chicago economist would predict? (Blinder and Krueger would not.) Should I include imputed rent on my owner-occupied house in the denominator as the Bureau of Economic Analysis does? (Blinder and Krueger do, but I doubt that most Americans would.) What do we learn from an incorrect answer to this question? Apparently, survey respondents shared some of my confusions, for they grossly...


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pp. 388-393
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