Economist Daniel B. Klein and Zogby researcher Zeljka Buturovic have been polling hundreds of Americans to try to test their basic economic literacy. Among other things, they’ve found that college education doesn’t appreciably increase performance on the 17 questions that comprise their test.
Not surprisingly, they also found that liberals tend to answer incorrectly on questions that challenge liberal positions, while conservatives tend to answer incorrectly on questions that challenge conservative positions.
(The 17 questions are reprinted below, with the “right” answers following. I’m not sure I buy all of the Klein/Buturovic definitions of “correct.” For example, does free trade increase unemployment? The “correct” answer is no, but the answer might change if you live in a town with a shuttered textile mill.)
I want to focus on Question 9 in the survey, because it strikes right at the heart of a long-running debate here about how to fairly distribute the tax burden. Here’s the question, with the percentage of people in each ideological category who got it wrong.
Clearly, a single dollar is more important to someone with just 100 of them than it is to someone with 10,000 of them. It has higher marginal utility to that poor person than it does to the rich person. Classical economics teaches that, as does the Biblical parable of the widow’s mite.
However, once you acknowledge that basic fact, you then have to acknowledge both the wisdom and the morality of a progressive income tax. Since conservatives don’t want to do that, they find themselves forced to deny economic reality, as the poll results demonstrate.
– Jay Bookman
The Seventeen Questions
1. Restrictions on housing development make housing less affordable.
2. Mandatory licensing of professional services increases the prices of those services.
3. Overall, the standard of living is better today than it was 30 years ago.
4. Rent-control laws lead to housing shortages.
5. A company that has the largest market share is a monopoly.
6. Third-world workers working overseas for American companies are being exploited.
7. Free trade leads to unemployment.
8. Minimum wage laws raise unemployment.
9. A dollar means more to a poor person than it does to a rich person.
10. Making abortion illegal would increase the number of black-market abortions.
11. Legalizing drugs would give more wealth and power to street gangs and organized crime.
12. Drug prohibition fails to reduce people’s access to drugs.
13. Gun-control laws fail to reduce people’s access to guns.
14. By participating in the marketplace in the United States, immigrants reduce the economic well-being of American citizens.
15. When a country goes to war its citizens experience an improvement in economic well-being.
16. When two people complete a voluntary transaction, they both necessarily come away better off.
17. When two people complete a voluntary transaction, it is necessarily the case that everyone else is unaffected by their transaction.
1.) Agree; 2.) Agree; 3.) Agree; 4.) Agree; 5.) Disagree; 6.) Disagree; 7.) Disagree; 8.) Agree; 9.) Agree; 10.) Agree; 11.) Disagree; 12.) Disagree; 13.) Disagree; 14.) Disagree; 15.) Disagree; 16.) Disagree; 17.) Disagree