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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (321268)	1/16/2007 8:07:56 PM
From: TimF	Respond to of 1574273

Are The Big Four Econ Errors Biases? My colleague Bryan Caplan has devoted many years to uncovering how the beliefs of ordinary people differ from the beliefs of economists, even after correcting for economists' differing incomes and ideologies. In 2004, Caplan summarized his findings as the public having four big biases: an anti-foreign bias, a make-work bias, an anti-market bias, and a pessimistic bias. Arnold Kling quotes Caplan as saying: One of the first things that stands out is anti-foreign bias. When they contemplate economic interaction with foreigners, the general public gets unreasonably negative... A second major pattern in the public's economic illiteracy is make-work bias...In the long-run, blaming technology for unemployment is just silly. As the mechanization of agriculture beautifully illustrates, when machines replace people in one line of work, they switch to another... a blanket anti-market bias...In the minds of public, prices apparently go up when businesses suddenly start to feel greedier. Economists, in contrast, expect businesses to be greedy year-in, year-out; but depending on market conditions, greed may call for prices to go up, go down, or stay the same... A final catch-all category of economic illiteracy may be called pessimistic bias. Conventional wisdom has it that conditions are going from bad to worse. Most Americans think that real income has been falling for decades, most new jobs are low-paying, and doubt whether the next generation will have a higher standard of living. Economists think that this conventional wisdom is dead wrong. Caplan calls these biases, but I would rather call them correlated errors, if they were due mainly to people being ignorant about economics. (To me, an error is an estimate differing from truth, a bias is a cheaply avoidable error.) It is not clear, however, that ignorance is the main cause here... overcomingbias.com Follow up post overcomingbias.com