Sunday, November 07, 2010

Smart people think like economists

From a study by Bryan Caplan and Stephen Miller, published in the latest issue of Intelligence:
Education is by far the strongest predictor of whether a non-economist will share the economic beliefs of the average economist. (Caplan, 2001) Is the effect of education as large as it seems? Or is education largely a proxy for cognitive ability? Using data from the General Social Survey (GSS), we show that the estimated effect of education sharply falls after controlling for intelligence. In fact, education is driven down to second place, and intelligence replaces it at the top of the list of variables that make people "think like economists." Thus, to a fair degree education is proxy for intelligence, though there are some areas—international economics in particular—where education still dominates. An important implication is that the political externalities of education may not be as large as they initially appear.

5 comments:

hailtoyou said...

I wonder what they mean by "the economic beliefs of the average economist".

hailtoyou said...

the estimated effect of education sharply falls after controlling for intelligence...An important implication is that the political externalities of education may not be as large as they initially appear.

It's nice to see this admitted. By those whose bread-and-butter is the "education industry", no less.

This recalls the results of the "religious-knowledge" test. Doing well was more correlated with having a college-degree [proxy for IQ] than with religious-education or religiosity generally, surprisingly enough.

Anonymous said...

"This recalls the results of the "religious-knowledge" test. Doing well was more correlated with having a college-degree [proxy for IQ] than with religious-education or religiosity generally, surprisingly enough."

Not surprising. The intelligent knew more stuff. It would be interesting to see the knowledge of non-religious vs. the religious after controlling for intelligence. Personally, I find it annoying and disingenuous when "researchers" don't control for the single most obvious predictor such as intelligence on a test of common knowledge.

tommy said...

It's nice to see this admitted. By those whose bread-and-butter is the "education industry", no less.

Yes, smart people are more likely to watch the news, read magazines, take an economics course, and thoughtlessly regurgitate what your average economist tells them. I certainly believe they are more likely to be acquainted with the conventional wisdom for what that's worth.

Sure, I suppose a smart person is also more likely to have considered elementary economic principles like incentives and supply and demand at some point in his or her life, but I suspect on complex issues, such as trade and immigration, there really isn't much thought put into the subject by smart people. They're just repeating what they hear.

Thus, to a fair degree education is proxy for intelligence, though there are some areas—international economics in particular—where education still dominates.

That seems to jibe with my theory. Even most smart people aren't likely to know much about the international arena, so a certain exposure to this field is necessary to absorb the conventional wisdom of the average economist.

Unfortunately, economists don't have the best track record when it comes to making predictions.

Hail said...

Tommy,
I suspect on complex issues, such as trade and immigration, there really isn't much thought put into the subject by smart people. They're just repeating what they hear.

You're probably right. That's why it would be very interesting to know "the economic beliefs of the average economist" used in the study.

On issues like "the economic need for mass-migration", it's likely PC comes into play, which smart people lap up. (See here).