Saturday, 14 January 2012

what students really think

Bryan Caplan over at the Library of Economics and Liberty has some clever applications of Kahnemann's ideas to economic matters, as illustrated by the way non-economists and first-year undergrads (might) approach tricky economic questions (using a simple rule-of-thumb translation):

Target Question
Heuristic Question
Does the minimum wage help low-skill workers?
Would I be happy if employers gave low-skilled workers a raise?
What policies will make Americans richer?
What policies try to hurt people I don't like?
Do anti-firing laws help workers in the long-run?
Is it bad to be fired?
How much will Obamacare improve Americans' health per dollar spent?
How bad do I feel when I think about sick people without insurance?
What is the most efficient level of tax progressivity?
How much do I admire/envy the rich?

Needless to say, economists could argue at length about which substitutions students make when we confront them with challenging questions.  Better yet, we could try to empirically - even experimentally - triangulate their substitutions.  Whatever the specifics, though, substitution is a plausible explanation of not only the absurdity of many popular views about how the economy works, but people's certainty about these absurdities.  

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