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June 22, 2012 11:47 AM Americans Think Economy Isn’t So Bad In Their City but Is Crappy Nationally and Globally

By Andrew Gelman

Frank Newport of Gallup reports (link from Jay Livingston):

Americans become progressively less positive about economic conditions the farther away from home they look. Forty-nine percent rate economic conditions in their local area as excellent or good, but that drops to 25% when rating the U.S. economy, and to 13% when assessing the world as a whole.

This is really wack:

I can see how it might make sense for Americans to think conditions are worse in other countries, but it’s hard to see a rational reason for the Lake-Wobegon-like pattern of people thinking things are ok locally but not nationally.

Gallup highlights the partisan breakdown, which I graphed here:

Unsurprisingly (given that their party controls the presidency and one house of Congress), Democrats are more optimistic than Republicans. This is just the flip side of University of Chicago economist Casey Mulligan claiming in October 2008 that the economy is not that bad because “the current unemployment rate of 6.1 percent is not alarming.” Something happened in November of that year that dramatically changed Mulligan’s perspective on the economy!

Two things that surprised me about the partisan comparisons were, first, that the differences in views of the local and state economies were so small, and, second, that Independents were basically identical to Democrats. It is the Republicans who stand out, both in their gloomy views of the national economy and also internationally. This is consistent with David Brooks’s recent claim that Republicans believe that we are “on the cusp of the fiscal and institutional collapse of our welfare state, which threatens not only the future of government finances but also the future of American capitalism.”

I do not think this is something that Republicans felt when George W. Bush was president, but right now they do seem worried. It would be easy to criticize this as just partisanship, but a more charitable view would be that this pessimism is warranted. If what it takes to have such a view is to lose a couple of elections, so be it.

In any case, the differences between the parties are only a matter of degree. Just about all the numbers in the above graph are below 50%, and an overwhelming majority of Democrats and Independents also rate the U.S. economy as “fair” or “poor.”

Frank Newport concludes:

This local positivity bias is not uncommon in surveys, but in this context suggests that the average American is not in as dire straits economically as would be thought based on national economic confidence ratings alone. These data are in line with previous research showing that Americans rate their personal financial situations more positively than they rate the national economic situation.

This sort of survey reminds me of other results such as most Americans hating Congress but liking their congressmember, or complaining that we spend too much money on foreign aid while overestimating the share of the federal budget that goes to foreign aid by over a factor of 10, or dramatically overestimating the percentage of people in the country who are immigrants. It’s never clear how much these confusions are a product of misinterpreting the local situation and how much arises from faulty generalization to the rest of the country.

[Cross-posted at The Monkey Cage]

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Andrew Gelman is a professor of statistics and political science and director of the Applied Statistics Center at Columbia University.

Comments

  • boatboy_srq on June 22, 2012 2:00 PM:

    1) The US has always thought it did better than anyone else.
    2) Economics may be global, but paychecks and mortgages are local.
    3) There are a few of us who think where we are now is OK, but where we just left is in appalling shape (hence leaving there to be where we are now). Don't discount the migration of labor to healthier markets as a factor in the survey.

  • Matt McIrvin on June 23, 2012 11:28 AM:

    Maybe the general perception (discounting the partisan differences) is actually accurate!

    Suppose we gauge general economic conditions (as is reasonable and humane) by the condition of the least-well-off. After all, the average American worker has a job, but we still worry about unemployment.

    Things are generally better in most metropolitan areas than in rural America, which is economically devastated. But more people live in metropolitan areas. So it may well be that things are generally worse for the US as a whole than in the vicinity of the mean or median American.

  • Neildsmith on June 23, 2012 1:47 PM:

    I have a job. My employer is doing well and I will be getting a promotion soon. But Krugman and the economists tell me we're having a depression even though everyone I know who wants a job, has one.

    So the problems must be terrible elsewhere.

  • Matt McIrvin on June 23, 2012 8:13 PM:

    I certainly know people who want a job and don't have one. But it's way better than it was in 2009.