1
Left or Right?
Who Has a Better Grasp of Economics and Current Economic Information?
Michael Murawski, Barry Stormer, Ryan Vrabec, Tai Tan Huynh
Mdm108, Bas108, Rdb7, Th56
Department of Economics the University of Akron Fall 2013
Abstract
The purpose of this research paper is to identify how political ideology affects attitudes and
values on economic issues and current economic information. Specifically, participants selfidentified whether or not they were "left leaning" or "right leaning;" participants were a part of the
Department of Economics’ annual Computer Skills Class public and student survey. This paper
draws upon the data collected from the years 2009 to 2013. A Cross tabulation of inputs--left or
right leaning--was combined with the following outputs to see who had a better grasp of economic
theory: free trade between countries and outsourcing jobs overseas. Participants either answered,
"Good," "Bad," or "Doesn't make much difference." Conversely, a means test was
also correlated with 2013 unemployment data to identify which side better knew current
economic information. Similarly, a cross tabulation between inputs and the question "How do you
think the economy is doing now?" was completed. Respondents answered in six ways, from
"Growing at a high pace," to "In a depression." Results showed that those who identified as right
leaning better understood economic theory, responding, at a higher percentage, that free trade is
good and outsourcing jobs is good as well. However, they only received slightly better marks than
those who were left leaning. Left leaning people, nevertheless, did receive better marks when it
came to who knowing the current state of the economy: they responded more often that the
economy was growing slowly. Lastly, right leaning respondents were closer to the current
unemployment rate than those who were left leaning, but this is statistically irrelevant because
both sets of respondents were far off from the actual number of 7.3 percent and both said that the
unemployment rate was 10.5 and 11.2 respectively.
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Introduction
Over the past several years the Economics Department at the University of Akron has
been conducting a survey to collect data on the local populations’ view of the national economy.
Included in this survey are responses from over 2000 people, ranging in differences from gender
to race to age. The survey included questions concerning empirical data such as the nation’s
current unemployment rate to perception based questions in respect to the individuals view on
the national economy. When conducting this survey and using the data to raise particular points,
it is interesting to see how both opinion and perception differ from economic reality, as well as
what those opinion’s thik about the current economy.
Research
With some investigation into the survey’s data it is easy to begin raising questions about
how or why people think as they do in regards to the national economy. Such as; what causes
them to make that statement about the health of the economy? Or, why do they believe the
unemployment rate is at that level? However, upon further inspection of the data, this study
became focused on two things. The first being how a person’s political affiliation and allegiance
affects his or her answers on the survey questions? And secondly whether or not one side of the
political spectrum is more accurate in answering said economic questions. To do this, certain
survey questions were chosen to allow for more specific data set. Said questions were the
following; 1) “When it comes to economic issues are you more left-leaning (as are many
Democrats) or right leaning (as are many Republicans)?”(2) “Free Trade between countries is
(good, bad, or doesn’t make much difference)?” (3) “How do you think the economy is doing
right now? (Growing at a high pace, slowly growing, no growth, in a recession, in a depression)”
(4) “What was the last reported unemployment rate?” (5) “Outsourcing jobs overseas is? (Good,
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bad, doesn’t make much difference). By using these five questions the organization of specific
data became possible. By asking which way they leaned politically the study was provided with
two distinct groups, left leaning and right leaning. By using the questions “how do you think the
economy is doing right now? And “whether outsourcing jobs overseas was good or bad” the
study tested the two groups upon their knowledge of basic economic theory. Finally, the
questions referring to the latest unemployment rate and the health of the economy were used as
factual testing points or ways to test current economic knowledge. As will be seen in the
following pages, there is indeed a slight correlation between a person’s political stance and the
answers that they provided on the survey.
Outsourcing
Outsourcing jobs has many implications, positive and negative, within the domestic
economy. Firms outsource jobs for one reason, to exploit cheap foreign labor. Reducing labor
costs can dramatically reduce production costs. As production costs are reduced, production
efficiency increases. With increases in production efficiency, firms see higher profit margins.
Higher profit margins means firms will have more money available for capital investments,
hiring, and various other investments that lead to expansion. Expansion of firms means more
jobs, increased tax revenue for the domestic government, and an all-around healthier economy.
As business grows, so does domestic GDP.
Right leaning politicians are usually associated with the Republican Party, which is often
referred to as the “pro-business” party. The public often considers being “pro-business,” a bad
thing, associating being “pro-business,” with cronyism, and big business take over. However
what the public is failing to realize in this scenario, is that business growth leads to job
opportunities, and increased tax revenue for the government. Increased tax revenue actually
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directly benefits many citizens through adequate funding of social welfare programs, police and
fire fighting services, and improvements in infrastructure.
(Figure 1) (Stormer)
Respondents in Favor of "Outsourcing Jobs"
16
14
Percentage
12
10
8
6
4
2
0
Left Leaning
Right Leaning
Political Tendency
In our survey analysis we looked at right and left leaning respondents, and compared
their views on outsourcing jobs. What we found supported the notion that right leaning
respondents would be more in favor of outsourcing jobs. This is interesting because many right
leaning politicians advocate for the reduction of outsourcing jobs by U.S. firms. This includes
the most recent Republican candidate for president, Mitt Romney, who said he would
“…discourage companies from moving operations to China…” Why would he say that if he is
“pro-business?” Well our survey results made this quite apparent.
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Respondents on Outsourcing
"Good"
"Doesn't make a difference"
"Bad"
(Figure 2) (Stormer)
As is represented in our survey population, the majority of U.S. citizens are opposed to
outsourcing jobs. This is clearly depicted in the pie chart above. Publicly supporting outsourcing
would be political suicide for any Republican candidate.
In regard to the purpose of this study—that being to find out which political affiliation
tended to be more accurate with its answers—the data shows that while neither side has a very
large percentage of its population in favor of the outsourcing of jobs, those that leaned right
tended to say that they were in favor of the outsourcing of jobs. As with free trade, from a
theoretical economic view, it is more advantageous to a firm to outsource labor if doing so will
in fact lower its operation costs and result in higher profits. Due to that theoretical perspective,
the study is inclined to say that those who are right leaning tend to have a better grasp of
economic theory.
Free Trade between Countries
Free trade is the unrestricted purchase and sale of goods and services between countries
without any regulation or policy that restricts international trade. It is one of the top economic
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issues countries always consider. There are lots of ideas about free trade, both positive and
negative. Indeed, as with everything else, free trade has both advantages and disadvantages.
While the World Economy is slowly recovering, perhaps a heavier emphasis on free trade can
help quicken the world’s economic recovery.
(Figure 3) (Stormer)
Respondents in Favor of "Free Trade"
65
64
Percentage
63
62
61
60
59
58
57
Left Leaning
Right Leaning
Political Tendency
The chart above shows the results of a survey conducted at the University of Akron.
There were over 1500 participants who were asked to present their opinions about free trade. The
people were separated into two groups: right leaning and left leaning participants. In the results
of the survey, 59.54% of those who said they leaned left viewed free trade as a good thing,
whereas 63.77% of those who said that they leaned right said they believed free trade to be a
good thing.
Free trade enables countries to specialize in the production of commodities in which they
have a comparative advantage. According to Adam Smith—the father of modern economics—
free trade leads to specialization, which helps countries take advantage of the efficiencies
generated from economies of scale and increase output. For example, because of differences in
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soil and climate, the United States is better at producing wheat than Brazil, while Brazil is better
at producing coffee then the United States. Both countries are better off when Americans
produce wheat and exchange a portion of it for some of the coffee that Brazilians produce.
Free trade also increases the size of a firm’s market, resulting in lower average costs and
increased productivity, ultimately leading to increased production and total benefit. Moreover,
free trade will help producers save money by producing a product in a foreign country that has
lower labor cost. For example, nearly all Apple’s products are made in China due to its lower
labor cost.
The most important reason why free trade is good, is that consumers gain more benefits
from free trade. There is a greater variety of goods and services due to free trade policies. In
addition the increased competition ensures a higher quality of goods and services while
supplying them at the lower prices. Because of free trade, people can have any kind of product
and service in the global market with lower costs. Nevertheless, free trade may lead to increased
unemployment in the short term, but when individuals are fired from one line of work, it releases
capital for investment in other lines of production. Consequently when people feel that their jobs
may be threatened, they will do anything to keep their job; because of this there are some that are
against the idea of free trade.
For the purpose of this paper, both those who are left and right leaning display a sold
grasp of economic theory; nevertheless, right leaning respondents even better understand that
free trade is an advantageous concept, answering at a higher percentage that free trade is good.
Economic growth
When an economist asks “How is the economy doing?” he is implicitly asking, “What is
happening to Gross Domestic Product?” which is the most powerful statistic to analyze the size
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and direction of an economy. It reflects the total market value of all goods and services produced
in a country. Thus, when an economy is growing, GDP is increasing. In the United States, during
the Great Recession, growth in real GDP stagnated and fell, wiping out approximately 700
billion dollars in real GDP; real GDP fell from its highest of 14.996 trillion dollars to 14.356
trillion dollars. However, since then, real GDP has increased to 15.679 trillion dollars (FRED).
Therefore it is evident that the economy has in fact been growing. Nevertheless, the current GDP
growth rate is below the historical average; over the last two years real GDP growth rate has
been between 1.3 and 3.3, not even reaching previous levels of growth near or over four percent.
Thus respondents should have answered that the economy is “Growing slowly.”
Respondents on How They Think The U.S. Economy is
Doing
Political Tendency:
Opinion on How The
U.S. Economy is
*Right
*Left Leaning
Doing:
Leaning
Growing at a fast
2.01
9.02
pace
47.65
45.86
Slowly growing
17.45
18.8
No growth
32.88
26.31
Contracting1
149
Total Frequency:
*Denotes percentage of total frequency
who answered said category.
133
* Total frequency limited to three response
categories.
1
“Contracting” + “In a Recession” + “In a
Depression”
(Figure 4) (Stormer & Murawski)
By a very narrow margin left leaning respondents answered more often that the economy
was slowly growing. Right leaning respondents were only 1.79 percent behind left leaning
respondents however. Interestingly, almost one tenth of right leaning respondents said that the
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economy was growing at a fast pace despite historically weak trends in weekly jobs added
(Labor). Similarly almost one third of left leaning respondents answered that the economy was
either contracting, in a recession, or in a depression, despite over 3 years of positive economic
growth.
Unemployment
When testing for economic knowledge between two politically leaning groups, using the
unemployment rate is a simple, yet effective, tool to use. It is not perception based and is strictly
numerical; unlike some questions to test aspects of economic knowledge, this question requires
current knowledge in order to make an accurate statement. Thus allowing for an accurate, nonbiased question-and- answer format to test a person’s or groups economic knowledge.
After conducting the survey and collecting the results, the question as to whether or not a
person’s political stance, whether left or right leaning, has an effect on their economic
knowledge seems to have been proved, at least in respect to their knowledge of the countries
unemployment rate. As it turns out, when asked the question “what was the last reported
unemployment rate”? Both sides of the political spectrum, on average, were off by a
considerable margin, both believing the last reported unemployment rate to be over ten percent.
However, at the time this survey was being conducted the last reported unemployment rate was
just over seven percent (Bureau of Labor Statistics).
(Figure 5) (Stormer)
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Respondents on Current U.S.
Un-Employment Rate
12.00
10.00
7.2%
Current
Rate
Percent
8.00
6.00
4.00
Left Leaning
2.00
Right Leaning
0.00
Mean Un-Employment Rate
Standard Deviation
Statistical Measure
As the Chart above shows, both left and right leaning sides were on average, incorrect.
That being said, a portion of this study was to find what political stance was more accurate.
When looking at the data for this, the test found that those who said that they were right leaning
were on average more accurate than those who said that they were left leaning politically. The
average percentage given by those who said they were right leaning was 10.46%, while the
average number given by those who claimed to be left leaning was 11.21%. While this is no
monumental difference, those who claimed to be right leaning were on average more accurate
than those who were left leaning. What these numbers show is that while the difference comes
down to tenths of a percent, those who were more right leaning politically were more accurate
and arguably more economically knowledgeable then their left leaning counterparts in regards to
the countries unemployment rate.
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Conclusion
After looking at these four variables and comparing the two group’s answers to each
other, some conclusions can be drawn from this study. The first being that in fact, personal
political views can have an effect on how a particular person answers questions related to
economics. When looking at the study, left leaning people tended to view things differently from
their political adversaries. The second conclusion that can be drawn from this study is that while
throughout the study both political leanings were at times close to each other in their answers, in
three out of the four variables people that claimed to be right leaning politically and
economically tended to be more accurate with their answers. Nevertheless, in one variable—
“how is the economy doing”—right leaning participants were barely edged out by left leaning
participants. Thus, this finding answers the second part of this study by showing that those who
tend to lean a certain way politically and economically are more accurate than the other.
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References
"Benefits of Trade." Office of the United States Trade Representative. Executive Office of The
President. Web. 13 Oct 2013. <http://www.ustr.gov/about-us/benefits-trade>.
Bureau of Labor Statistics, "Bureau of Labor Statistics; Labor Force Statistics from the Current
Population Survey."
Christopher, Rugaber. The Associated Press, "Obama And Romney’s Positions On
Outsoucring."
Last modified October 22, 2012. Accessed October 30, 2013.
http://jobs.aol.com/articles/2012/10/22/obama-and-romneys-positions-on-outsourcing/.
FRED. (n.d.). Real gross domestic product, billions of chained 2009 dollars, quarterly .
Retrieved from
http://research.stlouisfed.org/fred2/graph/?utm_source=research&utm_medium=website
&ut_campaign=data-tools
United States Department of Labor, "Employment, Hours, and Earnings from the Current
Employment Statistics survey (National)." Accessed October 31, 2013.
http://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth.
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SAS Code
LIBNAME e226data 'E:\Analysis Economics\Assignment_8';
ODS HTML file = 'C:\Users\bas108\Desktop\SAStables.xls';
proc format;
value econknow 1 ='E226 Class'
2 ='Course and Experience'
3 ='Course and no Experience'
4 ='No course, has Experience'
5 ='no course and no experience';
value $satis
'a'='Satisfied'
'b'='Dissatisfied';
value $howheal 'a'='Public Health Insurance'
'b'='Private Health Insurance'
'c'='Won''t have'
'd'='Don''t have';
value $morf
'a'='Male'
'b'='Female';
value $age
'a'='18-24'
'b'='25-30'
'c'='31-35'
'd'='36-40'
'e'='41-50'
'f'='50-65'
'g'='65+';
value $edu
'a'='did not complete HS'
'b'='high school grad / ged'
'c'='some college'
'd'='2 year / associates'
'e'='4 year / bachelors'
'f'='Masters or higher';
value $yn
'a'='Yes'
'b'='No'
'c'='uncertain/don''t know';
value $goup
'a'='Go up'
'b'='Go down'
'c'='Stay about the same';
value $news
'a'='Newspaper/Magazines'
'b'='Television news'
'c'='Internet news services'
'd'='Family/Friends/Acquaintances'
'e'='Radio news'
'f'='The Daily Show and/or Colbert Report (or similar comedy show)'
'g'='News talk show (10-13 only)'
'h'='Social media, blogs, twitter (13 only)';
value $taxes
'a'='Too high'
14
'b'='Too low'
'c'='About right';
value $taxcut
'a'='Help the economy'
'b'='hurt the economy'
'c'='Have no impact on the economy';
value $welfare
'a'='Be increased to recipients'
'b'='Be decreased to recipients'
'c'='Be increased to some and decreased to others'
'd'='Benefits should not change';
value $onek
'a'='Spend it'
'b'='Save or invest it'
'c'='Pay down debt';
value $eleconc
'a'='Economy'
'b'='Environment'
'c'='Education'
'd'='National Security'
'e'='International Relations'
'f'='Taxes';
value $global
'a'='It hurts our economy'
'b'='It helps our economy'
'c'='It has little or no effect on our economy'
'd'='No opinion';
value $globfin
'a'='Yes'
'b'='No'
'c'='No strong opinion';
value $taxuse
'a'='Efficiently'
'b'='Inefficiently';
value $trade
'a'='China'
'b'='Canada'
'c'='Mexico'
'd'='European Union'
'e'='Saudi Arabia';
value $presjob
'a'='McCain'
'b'='Obama'
'c'='Both McCain and Obama would be about equal'
'd'='The president has little impact on job creation';
value $helphurt
'a'='Help the US economy'
'b'='Hurt the US economy'
'c'='Has little impact on the US economy';
value $ob
'a'='Obama'
'b'='McCain'
'c'='Other';
value $moreless
'a'='more'
'b'='less'
15
'c'='about the same';
value $eye
'a'='Too much'
'b'='Too little'
'c'='Just right';
value $ustrade
'a'='Imports more than it exports'
'b'='Exports more than it imports'
'c'='Imports and exports are about the same';
value $globpres
'a'='McCain'
'b'='Obama'
'c'='Both Obama and McCain are about the same'
'd'='No strong opinion';
value $outsource
'a'='It should be illegal'
'b'='It should be encouraged'
'c'='No opinion'
'd'='It needs more regulation';
value $usdebt
'a'='Japan'
'b'='China'
'c'='Canada'
'd'='U.K.';
value $debtamount
'a'='$500 billion'
'b'='$50 billion'
'c'='$10 Trillion (correct)'
'd'='$20 trillion';
value $ustrade
'a'='Imports more than it exports'
'b'='Exports more than it imports'
'c'='Imports and exports are about the same';
value $bad
'a'='Bad'
'b'='Doesnt make much difference'
'c'='Good';
value $grow
'a'='Growing at a high pace'
'b'='Slowly growing'
'c'='No growth'
'd'='Contracting'
'e'='In a recession'
'f'='in a depression';
value $higher
'a'='higher'
'b'='about the same'
'c'='lower';
value $emp
'a'='Working full time'
'b'='Working part time'
'c'='not working'
'd'='out of the labor force';
16
value $often
'a'='Several times a day'
'b'='Daily'
'c'='Weekly'
'd'='Monthly'
'e'='Less often than monthly'
'f'='Never';
value $station
'a'='Public TV'
'b'='NBC'
'c'='CBS'
'd'='ABC'
'e'='MSNBC'
'f'='FOX news'
'g'='CNN'
'h'='other';
value $hicost
'a'='increase the cost'
'b'='decrease the cost';
value $strong
'a'='Strongly agree'
'b'='Agree'
'c'='Neither agree nor disagree'
'd'='Disagree'
'e'='Strongly disagree';
value $fail
'a'='Yes only large companies'
'b'='Yes only small companies'
'c'='Yes all companies'
'd'='no, no companies'
'e'='uncertain dont know';
value $bailbank
'a'='Yes only large banks'
'b'='Yes only small banks'
'c'='Yes all companies'
'd'='no, no companies'
'e'='uncertain dont know';
value $hiresp
'a'='Government responsible'
'b'='Individuals responsible';
value $leaning
'a'='Percentage'
'b'='In the middle, neither left or right'
'c'='Percentage';
value $issue
'a'='Yes'
'b'='No'
'c'='undecided'
'd'='dont know what this is';
17
value $bushtax
'a'='everyone'
'b'='the middle class'
'c'='let them expire';
value $economist
'a'='generally right'
'b'='generally wrong'
'c'='sometimes right, sometimes wrong';
value $tariff
'a'='increased'
'b'='decreased'
'c'='kept about the same';
value $ssoc
'a'='keep as is'
'b'='raise the retirement age'
'c'='raise the max contribution amount'
'd'='raise the payroll tax'
'e'='better to eliminate or replace it';
value $presnow 'a'='Obama'
'b'='Romney'
'c'='Other'
'd'='undecided';
run;
DATA work.Years0913_sanitized;
SET
e226data.Years0913_sanitized;
IF leaning='d' THEN leaning='';
IF leaning='s' THEN leaning='';
IF leaning='c' THEN Republicans=leaning;
IF leaning='a' THEN Democrats=leaning;
RUN;
PROC FREQ
DATA=work.Years0913_sanitized PAGE;
TABLES Republicans*outsour /NOCOL NOFREQ NOPERCENT OUT=SAStables;
FORMAT outsour $outsource. Republicans $leaning.;
TITLE 'Republicans on Outsourcing';
/*For this format i had to go in and change the proc format $leaning to
'c'=percentage and 'a'=percentgae. this is in correct and i know
there is a better code, but i will have to talk to ben.*/
RUN;
PROC FREQ
DATA=work.Years0913_sanitized PAGE;
TABLES Democrats*outsour /NOCOL NOFREQ NOPERCENT OUT=SAStables;
FORMAT outsour $outsource. Democrats $leaning.;
TITLE 'Democrats on Outsourcing';
/*For this format i had to go in and change the proc format $leaning to
'c'=percentage and 'a'=percentgae. this is in correct and i know
there is a better code, but i will have to talk to ben.*/
RUN;
ods all close;