Ignoring Good News

November 2, 2010
Posted by Jay Livingston

I’m writing this before the polls close, but like everyone else, I expect this to be an anti-Obama election. And like most people, I think the reason is the economy. But . . .

• Obama has lowered taxes for almost all Americans.
• Most of the TARP money for Wall Street has been recovered, and the country will make about $16 billion in profits from it.
• The economy has grown by 3% in the past year, the Dow and S&P are up for the year.

In thread on a previous post, there was some discussion about ignorance – what people know, and what they think they know but are wrong about. A Bloomberg poll today showed that most people

• believe taxes have increased
• think the TARP money has disappeared down the drain (or into the bankers’ pockets)
• think the economy has been shrinking

The ignorance on these items is, of course, greater among Republicans. But many Independents and Democrats also share the erroneous perceptions.

Why? The head of the company that did the poll blames the Democrats for their failure to communicate the good news. My guess is that it’s more like a halo effect, or what Bruce Oppenheimer (political science, Vanderbilt), quoted in the article, calls “a dark cloud.”

The halo or cloud is the overall global impression that people form. From that general perception they deduce the specifics. If your overall impression is that the economy sucks, then you'll guess that anything that has to do with the economy is going the wrong way – taxes going up, the economy shrinking, the big bad bankers getting away with robbery, etc.

Oppenheimer thinks that the dark cloud is unemployment. True, no doubt. I suspect that real estate – home values and sales – also plays a part. It’s not just that people pay more attention to bad news than good. But the information on TARP, growth, and even taxes is more remote. Taxes you pay only once a year. Does anyone make close comparisons of the deductions in their check stubs from last year? TARP – would anyone have first-hand knowledge of that?

But if you own a home, you might know about its value. And you can see empty, unsold houses with the naked eye, “For Sale” signs lining the streets like Burma-Shave signs. Unemployment isn’t just a number like 9.5%. If you’re out of work, or if you know people who can’t find a job, it’s right there in the room with you, and you just might not care all that much about GDP numbers or the stock market.

Update: I heard about this survey only today. Turns out it was released three days ago and covered in a few places including WaPo and NPR. That same day, David Dayen at FireDogLake had the same reaction that I did today. Or as he put it, the survey showed “that Americans don’t pay attention to CBO or NBER reports or watch C-Span very often.”