Believing in Economic Theory: Sex, Lies, Evidence, Trust and Ideology

Andrew Austin and Nathaniel Wilcox

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: People's beliefs about how well economic theory predicts outcomes may affect policy through democratic processes. Knowing what determines those beliefs is then important. We investigate how individual attitudes and characteristics correlate with those beliefs using a classroom Double Auction experiment, combined with a survey and ex-ante and ex-post elicitations of student beliefs. We find that Sex is a robust correlate of both ex-ante and ex-post beliefs: women are more skeptical than men in both instances. An index of "socially desirable responding" is positively related to prior belief in the theory: subjects who manage their image by telling Lies to please others also claim less skepticism on the ex-ante survey about the economic theory's predictive power. Subjects respond to Evidence in a minimally reasonable way: those who saw prediction errors in their experimental demonstration change their beliefs less between the ex-ante and ex-post surveys than those who saw none. While Trust-specifically, "trust of authority" - strongly correlates with Ideology, it is an insignificant predictor of beliefs. Finally, Ideology has complex effects on beliefs. As expected, the relatively liberal respondents are relatively more skeptical about economic theory in the ex-ante belief elicitation. Surprisingly, however, the relatively conservative respondents update beliefs in response to evidence much less strongly than their more liberal counterparts and, as a result, are actually relatively more skeptical than them in the ex-post belief elicitation.

Keywords: Ideology; Double auction; Economic and political attitudes. (search for similar items in EconPapers)
JEL-codes: A11 A13 C42 C90 (search for similar items in EconPapers)
Date: 2004-09
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