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I occasionally post on how intellectuals tend to misuse public opinion surveys, often to argue that the public agrees with their policy preferences. I do think there are a few questions the public is capable of responding to in a semi-coherent fashion, such as “should the death penalty be abolished.” But when you get into the area of complex economic policy, then public opinion is just gibberish—it completely depends on how you frame the question. This was triggered by a recent Ezra Klein post:

Policy hasn’t tracked public preferences very closely. In polls, Americans have clearly supported higher taxes on the rich and a much more punitive approach to banker compensation.

That’s one way of asking the question—should the filthy rich and evil bankers pay more? But what if you ask the public what they consider to be the appropriate top income tax rate?

Three-quarters of likely voters believe the nation’s top earners should pay lower, not higher, tax rates, according to a new poll for The Hill. The big majority opted for a lower tax bill when asked to choose specific rates; precisely 75 percent said the right level for top earners was 30 percent or below. The current rate for top earners is 35 percent. Only 4 percent thought it was appropriate to take 40 percent, which is approximately the level that President Obama is seeking from January 2013 onward.

In another article I discovered:

Here’s how the numbers shake out:

“” 21 percent of respondents recommend a rate below 20 percent;

“” 17 percent recommend a rate of 20 percent;

“” 23 percent recommend a 25 percent rate;

“” 14 percent recommend a 30 percent rate;

“” 13 percent recommend a 35 percent rate;

“” 4 percent recommend a 40 percent rate;

“” no one recommends a 45 percent rate.

No one!!! Obama’s new tax bill calls for a top federal income tax rate of 43.4% in 2013, meaning the rich will face 50% tax rates in NY and California. Krugman and Saez favor still higher rates. I guess they weren’t asked.

Just to be clear, I’m not claiming the public agrees with me. I think both my survey an Ezra’s survey are nonsense. And one reason is that the public doesn’t understand taxes. Actually, forget about the public, I’d estimate that half the economists I talk to don’t understand that taxes on capital are double taxing the same wage income. That Buffett’s comment about paying 15% taxes is nonsense. If every voter were as well informed as Matt Yglesias (who favors a progressive consumption tax, which would amount to about a 1% income tax on Buffett), then we could survey public opinion on tax and spending questions.

But right now? Suppose you ask the public if spending $689 billion on the military is too much or too little. Then ask them whether spending 4.1% of national income on the military is too much or too little. Then ask them whether they believe we are currently spending too much or too little on the military. Those who believe in “public opinion” presumably believe there would be some sort of coherence to the answers to these three questions. (BTW, I pulled these numbers out of the air—even I have no idea how much we spend.)

And the public’s numbers don’t even add up—they want pie in the sky and lower taxes and more government goodies. If you simply sat them down and showed them the books they’d radically alter their policy views.

Pundits everywhere; can we please stop talking about public opinion on complex policy questions?

BTW, I don’t mean to pick on Ezra, who’s one of the best. Everyone does this, I just happened to run across his link in an Arnold Kling post which contains this comment:

On a substantive point, I agree [with Tyler Cowen] that public opposition to inflationary monetary policy is a factor. But is that anything new? It seems to me that since the 1960s elite economists have been periodically saying that it would be better to live with higher inflation and the public has been saying, “No!” The public opposition predates recent developments, either in terms of the recession or in terms of declining trust.]

The public has no idea what Bernanke means when he calls for higher inflation. For Bernanke, that’s a code word for “higher real incomes for Americans.” But the public sees inflation 100% in supply-side terms, as higher prices HOLDING MY INCOME FIXED. In that environment it makes zero sense to talk about the public’s view of inflation. Yes, they don’t like falling real incomes, but no one is proposing that. We’ve averaged 1.1% inflation over the past 46 months. Anybody think the public is enjoying those low inflation rates more than the 2-3% inflation of the Clinton years?

I thought not.

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This entry was posted on June 23rd, 2012 and is filed under Misc.. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.



