Article

Forum: What does the public know about economic policy?

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
January 2006
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Public opinion influences politicians and, therefore, public policy decisions. But what determines public opinion on economic issues? And how does the public inform itself about economic issues? Curious about this topic, Alan S. Blinder and Alan B. Krueger (both of Princeton University) conducted a random survey of U.S. public opinion. Their findings—presented at an American Enterprise Institute (AEI) panel in December—challenge the widely held notion that people know little about economic issues.

Indeed, Blinder and Krueger found that the public is actually more knowledgeable than many would expect and has a strong desire to be well informed on economic issues (74 percent of respondents). Respondents cited personal finances and a desire to be responsible citizens as the chief motivators of their interest.

Ideology matters

When the survey asked what shaped public opinion on economic policies, it found that views were more heavily shaped by ideology and beliefs than by self-interest, knowledge of economic issues, or education. Blinder and Krueger speculated that perhaps people don’t understand what is in their self-interest or perhaps the common good matters to them more than self-interest defined narrowly.

The crucial role played by ideology prompted a debate on just what ideology is and where it comes from. Blinder cited political science research that suggests ideological views are largely inherited. Steve Liesman (CNBC—a U.S. cable television station) wondered whether labels such as “liberal” or “conservative” even made sense anymore. And, as for self-interest, some panelists questioned whether people really understood which economic policies benefit them.

TV as the medium of choice

As for sources of information on the economy, the survey found, unsurprisingly, that the chief source is cable TV (46 percent of respondents), with local newspapers a distant second (18 percent), and economists faring even more poorly (1 percent). Those who relied on television, however, were much less knowledgeable than those who read specialized magazines and newspapers.

There seemed to be a disconnect, too, between the “strong desire to be informed on economic issues” and the preferences the media seemed to infer from their audiences. Liesman said that from his professional experience, television audiences seek out very little information about economics, and programmers are well aware of this. “The station [CNBC] does as much economics as it has to and not a bit more,” he said. Also, audiences have displayed a distinct preference for financial information over economic policy analysis, and that preference drives television producers to present information useful to stock market traders, for example.

The medium also dictates the message. Douglas Holtz-Eakin (U.S. Congressional Budget Office) noted that “television is about emotion. Economics is about taking the emotion out.” Given the public’s preference for television, however, Jeffrey H. Birnbaum (The Washington Post) argued that the media should do a better job of translating economic concepts into human interest pieces. While the public’s desire for more information on economic issues may be a surprise to the media, Liesman said, it is high time the media started discussing how to better educate the public. The media should not shy away from complex economic policy issues, he said. If people are left feeling confused, it is still a step in the right direction.

For more information, see Alan S. Blinder and Alan B. Krueger, “What Does the Public Know About Economic Policy, and How Does It Know It?” Brookings Papers on Economic Activity 1:2004, pp. 327-87.

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