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Real Economists Study Fake Candidate

In a new paper, two economists write:

In 2012 the National Public Radio program Planet Money created a fake presidential platform based on the issues a small sample of economists, with different political views, agreed upon. In focus groups this platform found no support among the public at large. Is this just a feature of the particular selection made by NPR or is it a generalizable feature? If so, is this because ordinary people have not being trained in economics or because economists lack common sense or miss important political considerations?

In this article we try to address these questions.

We're delighted to see real economists — Luigi Zingales of the University of Chicago and Paola Sapienza of Northwestern — talking about our fake presidential candidate. (Zingales, by the way, was one of the economists who helped create the fake candidate.)

On top of that, their paper asks a couple interesting questions. Do economists really see the world differently from everybody else? And if so, why?

While the authors used our fake candidate as a jumping off point, they (thankfully) found better data for their analysis. They compared surveys of economists with surveys of the general public that asked similar questions, and looked at how the answers differed.

Economists do see the world differently than everybody else, the authors found. What's more, the more economists agree among themselves, the more they disagree with the public at large.

Is the mortgage-interest tax deduction a good idea? Did NAFTA make Americans better off? If you want to reduce carbon emissions, is it cheaper for everyone to raise the tax on gasoline, or to require carmakers to increase fuel efficiency?

Most economists answer these questions the same way. (No, yes, and raise the tax, respectively.) And most non-economists give the opposite answers.

It's unclear why this gap exists. One possibility is that economists simply know better. But when I talked with Sapienza today, she raised another possibility.

Economists tend to think about effects as averaged across the whole country. Non-economists may be thinking thinking more about themselves or people they know, or about people who lose out when others gain.

So, for example, NAFTA made lots of products cheaper for Americans, and it led to new jobs at U.S. companies that export to Canada and Mexico. But increased competition also meant some U.S. jobs disappeared.

"On average, citizens of the U.S. have been better off with NAFTA," Sapienza said. "But that doesn't mean that it's the best policy. It depends on how much weight you give to those people who lost their jobs."