More Misconceptions About Economics

At Marginal Revolution, Alex Tabbarok reports on a survey of ignorant factual errors on the part of polled macroeconomic principles students at SUNY-Oswego (and hold the SUNY-Oswego jokes):

the median student believes that 35% of workers earn the minimum wage and a substantial fraction think that a majority of workers earn the minimum wage (Actual rate in 2007: 2.3% of hourly-paid workers and a smaller share of all workers earn the minimum wage, rates are probably somewhat higher today since the min. wage has risen and wages have not).

When asked about profits as a percentage of sales the median student guessed 30% (actual rate, closer to 4%).

When asked about the inflation rate over the last year (survey was in 2009) the median student guessed 11%.  Actual rate: much closer to 0%.  Note, how important such misconceptions could be to policy.

When asked by how much has income per person in the United States changed since 1950 (after adjusting for inflation) the median student said an increase of 25%.  Actual rate an increase of about 248%, thus the median student was off by a factor of 10.

The full survey results.

Bryan Caplan wrote a Reason cover story back October 2007 in on some of the theoretical misunderstandings most people have about economics, "The Four Boneheaded Biases of Stupid Voters (And We're All Stupid Voters)."