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Americans think economy isn’t so bad in their city but is crappy nationally and globally

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.


  1. ralmond says:

    I strongly suspect that media bias plays a role here. Nationally and in Europe, the headlines are full of bad news about how bad both the National Economy and Europe are. (Even the R versus D things is partially media bias, as the media sources the R’s consume, such as Fox and Friends, are likely to put a more negative spin on the economic stories.) Locally, where people can see that the headlines still mean that the local pizza parlor is still open, they don’t feel like they are as bad. State wide, my local media mostly reports press releases from the state government, which is likely to put a positive spin on things.

    This hypothesis doesn’t really hold with the World numbers. Actual news stories are about how well Brazil, India, China and other places are doing relative to U.S., Europe & Japan. I guess people aren’t reading those.

  2. Conundrums of this sort are not uncommon. As another example, it is typically the case that Americans think their own health care is ok, but that of their fellow citizens is deficient. For a recent example of this phenomenon,

    For those who don’t want to read the whole thing, the money quote is this:
    “Generally speaking, Americans are much more positive about these two aspects [quality and coverage] of their own healthcare than about the same aspects of healthcare in the United States as a whole. Gallup has found this disparity consistently in the annual Healthcare survey.”

  3. Lord says:

    I usually have problems with questions like this. Are things as bad as they were or could be? No. Are you worse off than last year? No. Better? Not really. Are they improving? Yes, but glacially with two steps forward and one back. Will next year be better? Probably, slightly. Are there a lot of risks that it won’t be? Yes. Will it be back to where it should be? No. Are they as good as they could or should be? No. If you have a job, you are probably doing fairly well. If you found one you are probably doing better. Few are losing jobs so not that many are worse off. If you don’t have a job, you have probably acclimatized to that by now, so while poor you may not be that much worse off.

    • Lord says:

      Or, if you are headed in the right direction, but not at the speed you should be, is it still the right direction? If your reference is stationary then yes, but if your reference is where things should be or how fast we should be getting there, then no. Economists focus on gdp, but people focus on gdp/capita or incomes. The economy can be going in the right direction while the economic reality may not be.

  4. Jon says:

    Interesting. So Republicans have a more accurate view of how the national economy is doing. I guess their partisan bias is managing to somewhat counteract the status quo/anchoring biases that make people see 8% national unemployment as “good” or “excellent”.

    I would guess that the reason for the lower assessment of the national economy than local economies is that people think of the local economy in terms of how people they know are doing and think of the national economy in terms of statistics. When you hear talk of 8% unemployment and millions more unemployed than 5 years ago it sound terrible. When you think of your 4/50 unemployed friends it doesn’t seem that bad. Hey, that’s just 4 people!

  5. Shouldn’t you graph with US and Europe in parallel? Europe, on the axis, shouldn’t really be “to the right” of US in terms of nesting, or even scope, although maybe you could justify it in terms of “mean absolute geographic distance of member of the relevant economic population from the survey respondent”.

  6. Wes Skogan says:

    Not dissimilar to ratings of neighborhood safety. In surveys most respondents think their area is safe, but their city less safe. And, of course, they are RIGHT. That is, crime is typically so heavily concentrated in a few areas that most neighborhoods ARE way below the mean, and the few above the mean dive up the city average. No mystery here — its the distribution.

  7. Mike Rulle says:

    That is interesting.

    That supports my suspicion that while we are in fact marginally worse off today than (say 5 years ago), at the individual level it is very hard to perceive this directly. But our entire media complex is focused 24/7 on the “the worst economy since the great depression”. Is it surprising we think it is horrible? My contention is that if one just focused on their job (yes, 1-2 out of 50 people are not working that used to be) we would hardly notice it.

    I am not suggesting we dont have important problems to solve. I am suggesting that it makes sense that when people focus on their own condition it is not as bad as it seems as the over all condition. In sports, I like to say great players can still be over rated and bad players can still be underated. In economies, bad economies can still be overrated.

  8. Ann says:

    There’s a similar effect for crime rates. Americans think their own area is relatively crime-free, but the rest of the country is more dangerous, due to watching the news which reports crimes from all over the place.

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