July, 2004

Straight Talk About Economic Literacy

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In this paper, Professor Bryan Caplan addresses the subject of economic literacy in the United States.

Caplan writes, "It is fair to say that an ample majority does not understand the basics of how markets work. They are especially confused about labor and international markets. Voters also have severe misconceptions about how government spends their tax dollars, and are extraordinarily pessimistic about long-run economic conditions.

The problem is not that voters lack thorough expertise in economics, or make an occasional careless error. We still call someone "literate" even if they misspell a word every now and then. Most voters lack elementary understanding of economics."