Wednesday, January 4, 2012

Put your books away, its time for a quiz!


It has been a while since I said that. Of course the line students wish for that follows my heading is: "but it doesn't count!"
So relax, this one doesn't count either, but you will learn something.
The questions in this quiz were used some years ago as part of a Zogby International survey to gauge "economic enlightenment" among Americans based on questions of basic economics that were intermixed among other questions.

Other important data was collected data as well, including: each respondent's 2008 presidential vote, party affiliation, voting participation, race or ethnic group, urban vs. rural, religious affiliation, religious participation, union membership, marital status, membership in armed forces, NASCAR fandom!, membership in the “investor class,” patronage at Wal-Mart, household income, and gender. Thorough eh?

For your amusement, I present to you just the eight salient questions involved. Give them a shot and I'll discuss scoring later.

Please indicate whether you agree or disagree with each of the following statements.

1. Minimum wage laws raise unemployment.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


2. Rent-control laws lead to housing shortages.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


3. Restrictions on housing development make housing less affordable.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


4. A company that has the largest market share is a monopoly.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


5 .Third-world workers working overseas for American companies are being exploited.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


6. Mandatory licensing of professional services increases the price of those services.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


7. Overall, the standard of living is better today than it was 30 years ago.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure


8. Free trade leads to unemployment.
  1. Strongly Agree  2. Somewhat Agree     3. Somewhat Disagree 4. Strongly Disagree       5. Not sure 

Remember the Occupy movement, way back last year? One of the criticisms of that group that I supported, was their obvious lack of economic knowledge which was apparent because of their demands. This type of quiz makes that assertion more credible as you will see.

The Zogby researchers Zeljka Buturovic and Daniel B. Klein discovered that of the 4,835 respondents' (all American adults) in their survey, there was a clear association of enlightened answers and self proclaimed political persuasion. The researchers asked the respondents to state their political leanings as either: progressive/very liberal; liberal; moderate; conservative; very conservative; or libertarian. Rather than looking at correct answers, the researchers looked at answers that were clearly "unenlightened."
So, look at the first question above. Minimum wage laws set a floor below which employers are not permitted to pay their employees any less. That means employers either pay that amount to employees, and reduce their own profit, or as often happens, not hire more people and push the extra work onto current employees. So the enlightened answer is to AGREE with question one. When scoring, both "somewhat disagree" and "strongly disagree" were considered unenlightened or incorrect. "Somewhat agree" was accepted as correct in case the respondent thought the question was ambiguous, and "not sure" was not counted.

The researchers discovered that the incorrect responses from 0 to 8 are as follows: Very conservative, 1.30; Libertarian, 1.38; Conservative, 1.67; Moderate, 3.67; Liberal, 4.69; Progressive/very liberal, 5.26. The last two groups were the MOST UNENLIGHTENED.

This is a dramatic difference, and it supports my contention that the economic knowledge of so called "leftists" or better "statists," needs to be upgraded. Libertarians, as I would have guessed, are fairly well grounded in fundamental economics. The Occupy movement, that I believe consists largely of people who think government intervention is the solution to economic disparity, likely belongs to the poorly scoring statists.

One of the researchers, Daniel Klein, wrote about his work in the Wall Street Journal, and did an analysis of the questions which is interesting:

"To be sure, none of the eight questions specifically challenge the political sensibilities of conservatives and libertarians. Still, not all of the eight questions are tied directly to left-wing concerns about inequality and redistribution. In particular, the questions about mandatory licensing, the standard of living, the definition of monopoly, and free trade do not specifically challenge leftist sensibilities.
Yet on every question the left did much worse. On the monopoly question, the portion of progressive/very liberals answering incorrectly (31%) was more than twice that of conservatives (13%) and more than four times that of libertarians (7%). On the question about living standards, the portion of progressive/very liberals answering incorrectly (61%) was more than four times that of conservatives (13%) and almost three times that of libertarians (21%)."


Check your own score - Enlightened answers:
1. AGREE, 2. AGREE, 3. AGREE, 4. DISAGREE, 5. DISAGREE, 6. AGREE, 7. AGREE, 8. DISAGREE

H/T Claude Lesperance

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