Sunday, July 27, 2008

Knowledge is Disperse

This week's Economist notes
And just 6% [of Americans] view the economy positively. Yet many Americans combine despondency about the big picture with personal contentment. More than 80% say they are satisfied with their own circumstances. Even more are satisfied with their jobs.
In other words, the concerns about the economy are overblown.

Skeptics of the positive outlook should tread carefully. One of the core rules of economics--knowledge is disperse--tells us to trust the local claim over the big picture perception. What is an individual more likely to accurately estimate: their personal circumstances or the budgets and incomes of millions of strangers?

1 comment:

Jenny said...

Over-blown! That's for sure. I remember back in 2003, everyone was complaining about how bad the economy was - it was the perfect thing to lay blame for anything. But when I asked why they claimed it was bad, what proof was there that things were so bad, no one could ever give me a straight answer. :roll:

I remember once reading that the "Great Depression" - at least in the US - didn't really affect a majority of the population. I'm sorry to say that, when my elderly relatives complain about how bad things during it, a casual listener can miss an important detail of their stories: They're complaining about late '30s and early '40s!