Do You Like Economics?
IF YOU ARE NOT an economist by training or profession you might be intrigued by economics (otherwise you wouldn’t be reading this book), but you do not necessarily like it. You probably find economic discourse abstruse, even counterintuitive. In this chapter I would like to explain why that is, describe a few cognitive biases that sometimes play tricks on us when we think about economic questions, and propose some ways of spreading an understanding of economics more widely.
Economics concerns all of us in our everyday lives; it is not just for experts. Once we look beyond appearances, and identify and overcome the initial obstacles, it is also accessible and fascinating.
WHAT PREVENTS OUR UNDERSTANDING ECONOMICS
Psychologists and philosophers have long examined the factors that shape our beliefs. Numerous cognitive biases work to our advantage (which no doubt explains why they exist) but they also occasionally mislead us. We will encounter these biases throughout this book, and see how they affect our understanding of economic phenomena and our view of society. In short, what we see – or want to see – and reality are different.
WE BELIEVE WHAT WE WANT TO BELIEVE, AND WE SEE WHAT WE WANT TO SEE
We often believe what we want to believe, rather than what the evidence points to. Thinkers as diverse as Plato, Adam Smith, and the great nineteenth-century American psychologist William James have all pointed out that the way we form and revise our beliefs serves to confirm the image we want to have, both of ourselves and of the world around us. When these beliefs are aggregated, they determine a country’s economic, social, scientific, and geopolitical policies.
Not only are we subject to cognitive biases, we also frequently seek out things that reinforce them. We interpret facts through the prism of our beliefs; we read the newspapers and seek the company of people who will confirm us in those beliefs; and thus we stick obstinately to these beliefs, whether or not they are correct. When Dan Kahan, a professor of law at Yale University, confronted Americans who voted Democrat with scientific proof of the anthropogenic factor (the influence of human beings on global warming), he observed that they were more convinced than ever of the necessity of taking action against climate change. When Republicans were confronted with the same data, many of them were confirmed in their skepticism.1 Even more astonishing, this was not a matter of education or intelligence: statistically, the refusal to face up to the evidence was at least as firmly anchored in Republicans who had advanced degrees as it was in less well-educated Republicans. No one is immune to this phenomenon.
The desire to reassure ourselves about our future also plays an important role in our understanding of economic (and more generally, scientific) phenomena. We do not want to hear that the battle against global warming will be expensive. Hence the popularity in political debate of the idea of “green growth.” The name suggests that in environmental matters we can have our cake and eat it too. But if it is really so easy, why hasn’t it already been implemented?
We like to think that accidents and illnesses only afflict others, not ourselves or those close to us. This can lead to harmful behavior, such as driving carelessly or not looking after our health (though this is not entirely negative since worrying less improves our quality of life). In the same way, we do not want to believe the possibility that an explosion of public debt might endanger the survival of our social safety net – or at least we want to believe that someone else will foot the bill.
We all dream of a world in which the law would not have to encourage or constrain people to behave virtuously, a world in which companies would voluntarily stop polluting and avoiding their taxes, in which people would drive carefully even without police officers around. That is why movie directors (and not only of Hollywood movies) invent endings that meet our expectations. These happy endings confirm our belief that we live in a fair world where virtue wins out over vice (what the sociologist Melvin Lerner called “belief in a just world”2).
When populist parties on both the right and the left promote the vision of an economy free of difficult choices, anything that questions this sugarcoated fairytale is perceived at best as scaremongering, at worst as lies put about by global warming fanatics, austerity ideologues, or other enemies of humanity. The insistence on reality rather than fairytale is one reason why economics is often called “the dismal science.”
WHAT WE SEE AND WHAT WE DON’T SEE
First Impressions and Heuristics
The teaching of economics is usually based on the theory of rational choice. To describe the behavior of an individual, economists start by describing his or her objectives. Whether the individual is selfish or altruistic, seeking profit or social recognition, or has some other ambition, in every case he or she is assumed to act as far as possible in his or her own interest. This hypothesis is sometimes applied too strongly, and not only because an individual does not always have the necessary information to make a good choice. As the victim of cognitive biases, this agent is also likely to make a mistake when evaluating the best way to attain an objective. Humans are subject to many biases in reasoning or perception. These biases do not invalidate the theory that rationality defines the choices that individuals ought to make to act in their best interest (normative choices), but they explain why we don’t necessarily make those choices.
We will make use of the notion of heuristics, as described by Daniel Kahneman,3 a psychologist who won the Nobel prize in economics in 2002. Heuristics are rules of thumb for thinking, shortcuts to an answer to a question. They are often very useful because they allow us to make decisions quickly (if we are face-to-face with a tiger, we don’t have time to calculate the optimal response), but heuristics can also mislead. They channel emotion, which can be a reliable guide but can also be very ill-advised.
For example, we are more likely to remember situations in which our activity has been interrupted. Thinking “the telephone always rings when I’m in the shower” is clearly a trick played by our memories. The call that interrupted the shower remains imprinted on our memories, unlike the calls that did not. Similarly, we are afraid of airplane crashes and terrorist attacks because they are covered at length in newspapers; we forget that car accidents and “ordinary” murders kill many more people than these fortunately rare events. Since September 11, 2001, there have been 200,000 homicides in the United States, of which only 50 were carried out by (American) Islamic terrorists.4 This does not, however, prevent terrorist acts from being etched on our psyche.
The main contribution of Kahneman and Tversky’s work has been to show that these and other heuristics often mislead us. They give many examples, but one is particularly striking: medical students at Harvard made significant errors5 when calculating the probability that a patient had cancer given certain symptoms. These were the brightest American students, yet their shortcuts in reasoning were not corrected, not even by their brilliant intellects and stellar education.6
In economic matters too, first impressions can mislead us. We look at the direct effect of an economic policy, which is easy to understand, and we stop there. Most of the time we are not aware of the indirect effects. We do not understand the problem in its entirety. Yet secondary or indirect effects can easily make a well-intentioned policy toxic.
Throughout this book we will encounter many examples of this phenomenon, but let us start with a deliberately provocative example.7 I have chosen this example because it allows us to see immediately the kind of cognitive bias that leads to poor public policy decisions. Let’s suppose an NGO confiscates ivory from traffickers who kill endangered elephants for their tusks. The NGO has to choose between destroying the ivory or selling it discreetly on the market. The immediate reaction of most readers would be that the latter choice is reprehensible. My spontaneous reaction would be the same. But let us examine this example more closely.
The NGO would receive revenue from selling the ivory, which it could use to provide more resources to detect and investigate, or to provide additional vehicles to limit the traffic in ivory. Selling the ivory might also have the immediate effect of lowering its price. The price would be a little lower if not much was sold, and a lot lower if a lot of ivory was put on the market.8 Traffickers are economically rational actors: they consider how much money they can make from their activity and consider the risks they take (in this case, prison or meeting armed police). If the price of ivory falls, it would therefore discourage some of them from killing elephants. Given this, would the NGO’s sale of ivory be immoral? Possibly. A conspicuous sale by an organization with a respectable reputation might legitimize the trade for potential buyers who would otherwise feel guilty about their desire to purchase ivory – hence my emphasis on a “discreet sale” in this scenario. But at the very least, we ought to think twice before we condemn the choice of selling the ivory, especially since doing so would not prevent the government from exercising its sovereign authority to prosecute poachers or retailers of ivory or rhinoceros horn, or from communicating to the public the importance of protecting endangered animals in the hope of changing the accepted social norms.
This hypothetical scenario helps explain why the 1997 Kyoto Protocol failed. The Protocol promised to be a major step in the battle against global warming. Because of carryover effects (known in environmental economics jargon as “the leakage problem”), whereby polluting activities tend to migrate to countries with more lenient regulations, the battle against greenhouse gases in a single region may have little or no effect on worldwide pollution. Suppose, for example, that the United States reduces its consumption of fossil fuels (oil, gas, and coal). On its own, this effort would be laudable. Experts agree that it would require similar major efforts by every country to limit the global rise in temperature to the 1.5 to 2 degrees centigrade that is considered to be a bearable level of global warming. The problem is that when one country saves a ton of coal or a barrel of oil, the price of coal and oil falls, which encourages greater consumption elsewhere in the world.
Similarly, if a virtuous country forces its resident industries to pay to emit greenhouse gas, these industries are likely to move to another country where the absence of carbon taxation would make it cheaper to produce. This would partly or entirely cancel out the reduction in greenhouse gas emissions in the virtuous country, and there would be only a weak effect on the environment. Any serious solution to the problem can only be global. In economic matters, the road to hell is paved with good intentions.
The Bias toward the Identifiable Victim
Our empathy is naturally directed toward people who are geographically, ethnically, and culturally close to us. Our natural inclination, which has evolutionary origins,9 is to feel more compassion for people in economic distress from our own community than for children dying of hunger far away, even if we recognize intellectually that the starving children are in more urgent need of help. More generally, we feel greater empathy when we identify with victims; and to do so it helps if we can recognize them. Psychologists have identified our tendency to attach more importance to people whose faces we know than to other, anonymous people.10
This bias toward the identifiable victim, no matter how instinctive it is, affects public policies. In the words of the quotation often attributed to Joseph Stalin: “The death of one man is a tragedy. The death of a million men is a statistic.” Thus, a deeply distressing photo of Aylan Kurdi, a three-year-old Syrian child found dead in 2015 on a Turkish beach, forced us to pay attention to a situation it would have been more comfortable to ignore. It had much more impact on Europeans’ awareness of refugees than the statistics about the thousands of migrants who had already drowned in the Mediterranean. The photo of Aylan had a similar impact on European attitudes toward migration as the 1972 photo of Kim Phúc, a Vietnamese girl burned by napalm running naked down a street, had on opinions about the Vietnam War. A single identifiable victim may affect many more minds than millions of anonymous victims. In the same way, an advertising campaign against drunk driving has a more powerful effect when it shows a passenger flying through a windshield than when it announces the annual number of victims (a statistic that provides, however, far more information about the consequences of drunk driving).
The bias toward the identifiable victim also leads astray the employment policies practiced in Southern European countries, in which some permanent jobs are strongly protected while other jobs are insecure. In many countries with this kind of strong employment protection, the media focuses on the battles to save jobs fought by employees with permanent contracts; their tragedy is made more acute because they live in a country where they have little chance of finding another similarly secure job. These victims have a face. Yet the media reports ignore the much larger group of people who alternate between short-term jobs and spells of unemployment. They have no faces, they are only statistics. As we will see in chapter 9, they are the victims of institutions – some of them set up to protect the first set of employees on permanent contracts – that cause firms to prefer to hire employees on fixed-term contracts rather than create stable jobs. While we worry about dismissals of protected workers, we forget the people who are excluded from the labor market in the first place, even though these groups are two sides of the same coin.
A Tale of Two Professions
The contrast between economics and medicine is striking: in contrast to its low opinion of “the dismal science,” the public regards medicine – rightly – as a profession devoted to people’s well-being (we call it “the caring profession”). Yet economics takes a similar approach to that of medicine. The economist, like the oncologist, makes a diagnosis on the basis of the best available (though necessarily imperfect) knowledge, and then either proposes the most suitable treatment on that basis or recommends no treatment at all, if none seems necessary.
These diverging perceptions of medicine and economics are easy to explain. In medicine, the victims of secondary effects are for the most part the same people who are being treated (epidemiology is an exception – think for example of the consequences of the spreading resistance to antibiotics, or of the loss of herd immunity when vaccination levels decline). A doctor has only to remain faithful to the Hippocratic Oath and recommend what is in the best interest of the patient. In economics, the victims of secondary effects are rarely the same people who received the original treatment, as the example of the labor market shows very clearly. An economist is obliged to think about invisible victims as well, and so the public sometimes accuses that economist of being indifferent to the sufferings of the visible victims.
THE MARKET AND OTHER WAYS OF MANAGING SCARCITY
Air, water from a stream, or a beautiful landscape can be enjoyed by one person without others being prevented from benefiting as well. But for most goods, one person’s consumption means that others cannot consume it too. An essential question in organizing societies is how to manage the scarcity of goods and services that we all want to consume or possess, in rivalry with other people’s demands: the apartment we rent or buy, the bread we buy at the bakery, or the rare earths needed to make metal alloys, or dyes, or green technologies. Although society can diminish scarcity by producing goods more efficiently, either by innovation or by commerce, it must also manage people’s consumption of goods from one day to the next. Societies vary widely in how well they do this.
Historically, scarcity has been managed in many ways: queues when there are shortages of vital goods such as food or gasoline; drawing lots for green cards, concert tickets, or organ transplants; distributing goods administratively to priority groups; fixing prices below the level that would balance demand and supply. Scarcity is also managed by corruption, favoritism, violence, wars, and, finally, by the market. The market, then, is only one of many ways to manage scarcity. Though the market prevails today and allocates resources between firms (B2B), between firms and individuals (B2C, as in e-commerce), and between individuals (C2C, on platforms such as eBay), it hasn’t always been so.
The alternatives, though, all imply prices set below the market clearing level that would match demand and supply. Buyers in these cases search for a “windfall” (economists call this “economic rent”) created by this excessively low price. Suppose that buyers are all prepared to pay one thousand dollars for a good available in limited quantities, and that there are more buyers than available goods. The market price is the one that balances supply and demand. At more than one thousand dollars, no one buys; at less than one thousand dollars, there is excess demand. The market price is therefore one thousand dollars.
Now suppose the state sets the price of the good at four hundred dollars and prohibits its sale at a higher price. There are more interested buyers than there are goods available. Buyers would each be prepared to spend six hundred dollars more than the set price to get the good. If they have an opportunity to spend other kinds of resources to get their hands on this scarce good, they will take it. Take the example of the queue, a method used systematically in the Soviet Union (and still used today to allocate seats at some sporting events or concerts). Consumers may arrive several hours early and wait in line, sometimes in the cold,11 to obtain the scarce commodity. Lower the price further, and the queue will form even earlier. This loss of utility means that, in addition to the other perverse effects of a price that is too low (to which we will return later), the so-called “beneficiaries” of the low-price policy are actually not benefiting at all. The market is not working through prices, but through the use of another “currency”: time. This leads to a considerable loss of social well-being. In the example given above, the equivalent of six hundred dollars per purchase has disappeared: the (public or private) owner of the resource has lost six hundred dollars per sale, and yet the buyers have gained nothing – their financial advantage has evaporated because they had to spend time in a queue.
Some methods of allocating goods, such as corruption, favoritism, violence, and war, are profoundly unjust. But they are also inefficient for society as a whole, once we take into account the costs paid or imposed by the actors in their ambition to get their hands on goods without paying the market price for them. There is no need for us to dwell on the inadequacy of these methods of allocating goods.
As long as they are not tainted by favoritism or corruption, waiting in line, drawing lots, and the administrative distribution of rationed goods are fairer solutions. But they cause three kinds of problems. The first has already been mentioned: a price that is too low leads to waste through the search for an advantage (for instance, by standing in a queue). Second, the quantity of the good in the example was fixed, but in general it is not. Clearly, if the price of the good was one thousand dollars, sellers would produce more of it than they would if it was four hundred dollars. In the long run, setting a price too low leads to a shortage. That is what we see when rents are capped: the stock of quality housing gradually diminishes, creating scarcity and ultimately penalizing the potential beneficiaries. Finally, some mechanisms lead to a bad allocation of something in fixed supply. For example, drawing lots to allocate seats at a sporting event will not necessarily give the seats to those who have the greatest desire to be there (unless there is a secondary market to resell the tickets); or, to return to the waiting-in-line example, a mechanism may allocate the good to those who are available on a particular day, or to those who least feel the cold, rather than to those who have the greatest desire to consume the good in question.
A poor allocation of resources arises when they do not necessarily go to those who value them most. If they are distributed administratively, essential goods may fall into the hands of people who already have them or who would prefer other products. That is why it would never occur to anyone to allocate housing in an arbitrary way. The housing unit given to you would probably not be the one you desired in terms of location, square footage, or other characteristics – unless it could then be traded without restriction for one you did want. But that brings us back to the market.
The assignment of scarce radio spectrum is another relevant example here. Bandwidth is a resource that belongs to the community, but unlike air, the quantity of airwaves available to consume is limited. There is a high demand for bandwidth from telecommunications and media companies, so there is a problem of how best to allocate it to them. In the United States, a 1934 law ordered the agency regulating telecommunications (the Federal Communications Commission or FCC) to allocate spectrum frequencies “in the public interest.” In the past, the FCC often held public hearings at which the candidates competing for licenses had to present their cases, at the end of which licenses were granted to the candidate that seemed make the best case. These hearings consumed time and resources; moreover, we don’t really know whether the FCC made good choices, because competence in this process is not the same thing as good strategic planning or good management. The FCC also sometimes used lotteries to grant licenses.
When using either a hearing or a lottery, the United States government granted private agents a public resource free of charge (in many countries, valuable taxi licenses have been similarly granted free of charge). Furthermore, there was no guarantee that the person or firm receiving this privilege would be capable of making the best use of it. For that reason, selling licenses on a secondary market was authorized, or at least tolerated. When it is possible to transfer a license, the allocative benefits of the market reappear. But the giveaway remains: the benefit derived from scarcity goes into the pockets of private individuals, rather than to the community to which it belongs.
So for the past twenty years, the United States (like most countries now) has used auctions to assign spectrum licenses. Experience shows that auctions are an efficient way to make sure that the licenses are assigned to the companies who will make the most of them,12 while at the same time recouping the value of the scarce resource for the community. For example, auctions of bandwidth in the United States have earned about sixty billion dollars for the US Treasury since 1994. This is money that would otherwise have gone, without any justification, to private actors. Economists’ role in designing these auctions has helped to increase greatly the financial benefit they brought to the state.13
WHAT WE WANT TO DO AND WHAT WE CAN DO
You might now be asking what the connection is between this discussion of the mechanisms of managing scarcity and the cognitive biases discussed earlier. When the state decides to set the price of a scarce good at four hundred dollars rather than its market price of one thousand dollars, it has the laudable intention of making this good accessible to more people. But it does not consider the indirect effects: in the short run, that means waiting in line or some other form of inefficiency; in the longer run, it means a depletion of property supply due to a price that is set too low.
When the state tries to allocate bandwidth free of charge to those it judges able to make the best use of it, it often confuses what it would like to do with what it can do, forgetting that it does not have all the information needed to make the right decision. Information is at the heart of the issue, and the mechanism of the market reveals it. The state does not know which firms have the best ideas or the lowest development costs for a particular slice of the radio spectrum, but bandwidth auctions reveal which firms are prepared to pay the most for it.14 Generally speaking, the state hardly ever has the information it needs to make allocation decisions by itself. That does not mean the state has no room to maneuver, but it has to accept its limits. We shall see later in the book how hubris – in this case, a government’s excessive confidence in its ability to make complex choices in the realm of economic policy – can lead to harmful environmental and labor-market outcomes especially if combined with the desire to retain oversight and thereby the power to distribute favors. Citizens may worry about a world in which a faceless market makes the decisions: they want real people to look out for them. But citizens should also recognize that public officials are not superheroes. Voters are entitled to expect officials to implement what is feasible and useful, but should not label them as incompetent or corrupt when they fail to work miracles.
THE RISE OF POPULISM AROUND THE WORLD
Throughout the world, populist parties on both the right and left are gaining ground. “Populism” is hard to define because it takes many forms, but one common thread is the exacerbated eagerness to exploit the ignorance and prejudice of voters. Fanning widespread hostility to immigrants, distrust of free trade, and xenophobia plays on people’s fears. Rising populism clearly has specific causes in different countries, but anxieties about technological change and employment, the financial crisis, the slowdown in economic growth, rising debt, and increasing inequality seem to be universal factors. On a purely economic level, the contempt that populist programs have for elementary economic mechanisms, and even for simple public accounting, is striking.
Economists – and academics in general – have to ask themselves how much influence they have. Take the example of the vote in the UK referendum in favor of leaving the European Union (“Brexit”) on June 23, 2016. We cannot measure the impact on the electorate of the nearly unanimous message from British and international economists (as well as reputable organizations such as the Institute for Fiscal Studies, the IMF, the OECD, and the Bank of England) that the United Kingdom had nothing to gain economically, and possibly a great deal to lose, by leaving the European Union.15 To be sure, the election seems to have been determined by other concerns – immigration in particular – that were also easy for populists to misrepresent. The British electorate did not seem engaged by what it believed (or wanted to believe) was an esoteric debate among economic experts who were popularly regarded as unable to agree among themselves. The same might be said of the high degree of consensus amongst economists against President Trump’s proposed economic policies during the US election campaign.16
HOW TO MAKE ECONOMICS BETTER UNDERSTOOD
Economics is like any culture, for instance music, literature, or sports. We like it more the better we understand it. So how can we make economic culture more accessible?
ECONOMISTS AS CONVEYERS OF KNOWLEDGE
First of all, economists themselves could play a more active role in sharing their knowledge.
Researchers respond, like anyone else, to the incentives they face. Academic careers are universally judged on the basis of the research academics publish and the students they train, but only rarely on public outreach or impact. What’s more, staying safely in the ivory tower is much more comfortable for academics, because, as we shall see in chapter 3, switching from academic debate to communicating with the public is not as simple as it seems.
The most creative researchers often do not engage in public debate. Unless they have exceptional energy, it is difficult for them to combine their mission to create knowledge and impart it to their students with communicating ideas to the public. No one would have expected Adam Smith to make predictions, produce reports, speak on television, write a blog, and compose popular economics books. Each of these new demands that society makes are legitimate, but they sometimes open a gap between those who create knowledge and those who convey it.
Even economists exercising their mission as strictly defined are not exempt from criticism. They need to make greater efforts to construct a pragmatic and intuitive education, relying not only on their tried-and-tested conceptual frameworks, simplified for pedagogical purposes, but also on empirical observation. Teaching obsolete economic ideas or less-than-rigorous debates between earlier economists – or, conversely, promoting an exaggeratedly mathematical approach – does not meet the needs of secondary school and university students. The overwhelming majority of students will not become professional economists, and very few will be researchers in economics. They need a pragmatic initiation into the subject that is both intuitive and rigorous.
EVERYBODY’S RESPONSIBILITY
Our personal economic understanding, like our scientific or geopolitical understanding, guides the choices made by our governments. The conventional wisdom agrees with Joseph de Maistre that “every nation gets the government it deserves.” That may be true – even if, as the philosopher André Comte-Sponville observed, it is better to constructively help public officials than to constantly criticize them.17
What I do know is that we get the economic policies we deserve, and as long as a lack of economic understanding prevails among the general public, making good policy choices will take a lot of political courage. Politicians hesitate to adopt unpopular policies because they fear an electoral backlash, so if the public had a better understanding of economic mechanisms, this would be a public good. We want others to make the intellectual investment required to encourage political decision makers to make more rational collective choices, but we are often not prepared to make that intellectual investment ourselves. We lack intellectual curiosity, and so behave like “free riders” who leave others to put in the effort to understand economic mechanisms rather than bothering to do so ourselves.18
In his book The Age of Diminished Expectations: U.S. Economic Policy in the 1990s (MIT Press, 1997), Paul Krugman, a Nobel laureate and one of the few economists who has succeeded in making difficult economic concepts accessible, describes the situation like this:
There are three kinds of writing in economics: Greek-letter, up-and-down, and airport.
Greek-letter writing – formal, theoretical, mathematical – is how professors communicate. Like any academic field, economics has its fair share of hacks and phonies, who use complicated language to hide the banality of their ideas; it also contains profound thinkers, who use the specialized language of the discipline as an efficient way to express deep insights. For anyone without graduate training in economics, however, even the best Greek-letter writing is completely impenetrable. (A reviewer for the Village Voice had the misfortune to encounter some of my own Greek-letter work; he found “equations, charts, and graphs of stunning obscurity … a language that makes medieval scholasticism seem accessible, even joyous.”)
Up-and-down economics is what one encounters on the business pages of newspapers, or for that matter on TV. It is preoccupied with the latest news and the latest numbers, hence its name. “According to the latest statistics, housing starts are up, indicating unexpected strength in the economy. Bond prices fell on the news …” This kind of economics has a reputation for being stupefyingly boring, a reputation that is almost entirely justified. There is an art to doing it well – there is a Zen of everything, even short-run economic forecasting. But it is unfortunate that most people think that up-and-down economics is what economists do.
Finally, airport economics is the language of economics bestsellers. These books are most prominently displayed at airport bookstores, where the delayed business traveler is likely to buy them. Most of these books predict disaster: a new great depression, the evisceration of our economy by Japanese multinationals, the collapse of our money. A minority have the opposite view, a boundless optimism: new technology or supply-side economics is about to lead us into an era of unprecedented economic progress. Whether pessimistic or optimistic, airport economics is usually fun, rarely well-informed, and never serious.
We must all take responsibility for our limited understanding of economic phenomena, our desire to believe what we want to believe, our relative intellectual laziness, and our cognitive biases. We all have the ability to understand economics, but as I have already shown, errors in reasoning cannot necessarily be explained away by IQ or educational level.
Let’s admit it: it’s easier to watch a film or devour a good thriller than to launch into a book on economics (this is not a criticism, by the way: I myself read too little about climate science, biotechnology, medicine, and other scientific fields that influence public policy design). When we muster the resolve to do so, we expect the economics book to be easy to understand, exemplified in an extreme form by the simplistic theses of what Paul Krugman calls “airport economics” books. In every area of academic study, going beyond appearances requires more effort, less certainty, and more determination in the quest for understanding. But that is the price we have to pay if we are to get the policies we deserve.