Weekend Economists Thanksgiving Leftovers November 29-30, 2014

[Demeter]

11. Dean Baker | The Problem of "Stupid" in Economics

http://www.truth-out.org/opinion/item/27482-the-problem-of-stupid-in-economics

MIT Professor Jonathan Gruber has inadvertently become a YouTube celebrity as a result of a video of him referring to the public as "stupid." The immediate point of reference was the complexity of the design of the Affordable Care Act (ACA), which Gruber was describing as being necessary politically in order to deceive the public. With the right-wing now in a state of near frenzy after the Republican election victories, the Gruber comment was fresh meat in their attack on the ACA.

Apart from merits of the ACA, there is something grating about seeing a prominent economist refer to the US public as "stupid." ...There is some truth to Gruber's comment in that most people are ill-informed about major public policy issues, including health insurance. This is in large part due to the fact that, unlike Gruber, most people have day jobs. They put in their shift at work and then often have child care and other family responsibilities. Most of them probably don't have much time to read the Congressional Budget Office's latest report on the health care system. But even worse, when people do take the time to get informed, the media let them down badly. Stories even in the best of outlets, like the New York Times and National Public Radio, often present information in ways that are misleading and often meaningless to nearly all readers. The New York Times gave us a great example of misleading reporting this weekend in an article headlined, "Cost of Coverage Under the Affordable Care Act to Increase in 2015." The piece then highlighted a number of plans which are increasing premiums by large amounts in 2015.

Anyone reading this article would likely get the impression that most people are seeing big insurance price increases in 2015. This is 180 degrees at odds with reality. The Kaiser Family Foundation found that the average cost of benchmark plans in the ACA exchanges actually fell slightly in 2015. (The chart accompanying the NYT article would show a story of declining prices or modest increases.) This is remarkable given the fact that insurance costs have been rising sharply for the last half century. Rather than highlighting the fact that for most people in the exchanges premiums are rising little or actually falling, the NYT decided to highlight that some people will pay more, if they don't change plans...

MORE AT LINK ON THE HOUSING BUBBLE AND THE ECONOMISTS WHO MISSED IT..

Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.