Ever wonder why people are not entirely rational about economics & politics?
Bryan Caplan has written about how the average person’s beliefs about economics differ from the beliefs of people who’ve studied the subject. The differences are not random. To paraphrase:
The Survey of Americans and Economists on the Economy finds that, compared to the experts, laymen are much more skeptical of markets, especially international and labor markets, and much more pessimistic about the past, present, and future of the economy. When laymen see business conspiracies, economists see supply-and-demand. When laymen see ruinous competition from foreigners, economists see the wonder of comparative advantage. When laymen see dangerous downsizing, economists see wealth-enhancing reallocation of labor. When laymen see decline, economists see progress.
Paul H. Rubin explains (I’m paraphrasing from “‘Folk’ International Economics“):
Part of the reason for the relative success of protectionist arguments has to do with evolution. We have certain tendencies and beliefs that may have been useful in evolutionary times, but they are now counterproductive. This evolved belief easily translates into a fear of loss of jobs.
The human evolutionary environment was approximately “zero sum” — resources and incomes were fixed, and more for one person meant less for another.
If Mexicans are finding jobs in the United States, then it “must” be that American citizens are finding fewer jobs because, in a zero sum world, the number of jobs is fixed. Similarly, if we are importing goods from China, or outsourcing tasks to India, then the Americans who would otherwise make those goods or perform those tasks must be losing jobs.
Our ancestors were quite warlike. Our close relatives, chimpanzees, engage in genocidal behavior when possible. Humans have evolved to be adapted to this level of warfare. This high level of conflict has led to strong, evolved, in-group and out-group preferences.
Those individuals who lose from international competition can harness innate beliefs to create obstacles to competition, such as by keeping out products made by foreigners (in the case of tariffs) or keeping out the foreigners themselves (in the case of immigration). Anti-foreigner arguments resonate because they fit into evolved mental compartments.
Understanding economics is like reading, which must be taught, not like speech, which we acquire naturally with no instruction.
I recently read Rubin’s Darwinian Politics. I think he over-reached a little in trying to make policy recommendations but otherwise made a strong argument, with page after page of references to scientific studies.
Bryan Caplan has a similarly-themed book, The Myth of the Rational Voter, but I haven’t gotten around to reading it yet, so can’t comment. Yet.
