David Eiser asks how much difference do economic arguments make to people’s attitudes and voting intentions?
Whether the issue was currency choice, the affordability of future policy proposals, or the policy options available to a small, open economy in a globalised world, economic arguments were at the heart of Scotland’s referendum debate.
The opening salvos of the General Election campaign have also been fundamentally economics driven. How important is continued deficit reduction? Which policies will stimulate real wage growth? And so on.
Underpinning these economic debates is a vast amount of economic research and analysis, sometimes produced by political parties and government, but often produced by politically unaligned academics, research institutes and think tanks.
But how does the public interpret economic research and analysis? And how much difference do economic arguments make to people’s attitudes and voting intentions?
These were the questions considered at a conference organised by the University of Stirling/ Centre for Constitutional Change before Christmas. Some participants felt that economic arguments had not held as much sway with the public as they would have expected. But how responsive should we expect public attitudes to economic research to be?
Much of the economic analysis produced as part of the referendum campaign was complex and subject to significant uncertainty. On many occasions different pieces of research came to different conclusions regarding the likely economic outcomes of particular scenarios. How does the public weigh-up evidence that is complex and contradictory?
Whether a particular piece of analysis gains traction in the public eye is likely to depend on how people perceive the competence, partiality and honesty of the organisation producing it. During the referendum, both the ‘yes’ and ‘no’ sides were keen to (selectively) reference independent analysis in their own reports in order to capitalise on this effect.
But if ‘experts’ are seen as having a vested interest, this may undermine the public’s trust in what those experts say. There were times in the debate when the independence of particular experts was (implicitly or explicitly) questioned by the ‘yes’ and ‘no’ sides in the hope of limiting the influence of that expert’s findings.
The way in which the referendum debate is framed is also likely to effect the outcome, because it determines how people judge the risks. Throughout the campaign, the ‘No’ side always framed independence as a loss relative to the status quo (lower growth, a greater fiscal deficit, etc). On the other hand, the ‘yes’ side often framed independence as a gain (e.g. “you will be £400 better off under independence” etc.).
Why does this matter? Insights from psychology and behavioural economics tell us that people are risk averse in the context of gains but risking seeking in the context of losses (i.e. they'd rather take the risk of a larger loss than accept a certain but smaller loss). Arguably, it was during the later phases of the referendum campaign, when the ‘Yes’ side started to frame remaining in the Union as a loss (an inferior NHS, an unfair welfare system, higher inequality, etc. under Union) – that they began to have more success in the polls. So the way that research findings are framed can affect how it is interpreted.
Individuals’ risk perceptions and decisions can also be influenced by peers. Because our friends tend to share our attitudes, and we are more likely to accept advice from our friends, such influence can reinforce existing attitudes. And if individuals develop a conviction in favour of independence or Union, they are likely to become very insensitive to the findings of new evidence.
The media clearly plays an important role in shaping how research findings are presented and interpreted. Occasionally, some arguments can become engrained in popular belief simply by virtue of having been quoted repeatedly. Oxford economist Simon Wren-Lewis has coined the term ‘mediamacro’ to describe the way that large swathes of the media have become transfixed with the deficit over and above what many economists would see as more fundamentally important issues (such as the productivity decline).
To summarise, there are many reasons why economists would be naïve to think that the public weighs-up their research in a rational cost-benefit type way. Public attitudes are often well embedded and can be ‘sticky’, especially if shared by peers or embedded into ideological conviction. Framing effects and the perceived impartiality of research will also influence the extent to which particular analyses gain traction. But economics plays an important role in most public policy debates, as it surely will at the General Election (and if there is a referendum on Brexit). Economists should do all they can to ensure their research is reported clearly and fairly.