Analogous Situations with Educational Systems

If our understanding of systems theory is correct, we ought to be able to analyze the misconceptions in economics as structurally correspondent assimilations to particular kinds of understandings of living systems. Educational, psychological, economic, social, biological systems are all subclasses of the general class of living systems; they therefore should have some general properties in common as well as more specific properties that distinguish then one from another.

For example, the exchanges between the biological organism and its environment are material exchange whereas the cognitive exchanges between the subject and the subject's object of thought are purely functional with no material "content." Both are systems of exchange so the correspondence is between the organism/environment and the subject/object. In social systems, the environment or object is itself another living system so the exchanges are not between an active agent and a passive object but between two active agents. In economics, the buyer seller relationship that constitutes an economic exchange is the correspondent structure. Thus, one of the most basic relationships we might examine in people’s economic thinking is whether both sides of the exchange are understood as mutually constituent aspects of a single interactive exchange or whether exchanges tend to be understood in terms of one-way relationships. Don Boudreaux mentions a myth in which people think "8. Prices and wages are arbitrarily set by businesses.". Do not consumers have a role? Apparently not. So, we might investigate the hypothesis that a person who expresses this view is seeing the dynamics of only one side of the relationship, namely the choices of sellers in the setting the price without seeing the reciprocal role of buyers' choices in what they are willing to pay. In fact, the generic form of the buyer/seller relationship is that both are exchanging something of lessor value for something of greater value. Whether the values are embodied in products or money or time or opportunity costs can all be generalized to exchanges of values. If this understanding is not general as the form of economic understanding, then other misperceptions may arise as well. For example, in the case in which people think if tolls are charged as congestion pricing, road usage is no longer free. In this case, they don’t see the value of drivers time as a cost. Hence, congested roads are free of any exchange of value on their part.

The task then is to investigate these understandings and explain, from a systems point of view, the exact nature of these assimilations and how they develop such that they produce the misconceptions and the more advanced forms of understanding of economists.

This kind of systems analysis seems particularly challenging because the tendency is to stop with the expression of a misconception and simply dismiss it as wrong while then proceeding to explain the correct interpretation. We do that all the time with students. We essentially ignore their system of understanding. We only correct their mistakes, we do not try to understand them. Some mistakes are, of course, simple mistakes but in education, misconceptions are generally cognitive systems that are inadequate according to an adult standard of validity but these systems of understanding are natural and useful, even adequate, methods of understanding from the students point of view.

Now if we really do intend to promote a change in thinking, we must begin with the system as it is currently operating in the learner and work with it to promote its change, not with simply attempting to impose our completed form of understanding on the learner. There is a caveat to this principle. When the learner's system of understanding is close to developing the form of understanding we want them to have, our explanations can have great effect as Inhelder et al found in their learning studies. It is when there is a large lag between the learner's system of understanding and the one we are teaching that verbal methods are insufficient and ineffective, perhaps even negative in their effects. In that case, the emphasis on verbal presentations seems to produce memorized effects in the learner (when the learner is so motivated) rather than change in understanding. Since the learner can "get the right answer", the problem appears to be solved and their may be no cognitive discomfort as in the case when a response doesn't seem to work.

We found this verbal learning when we investigated students' understanding of place value. Verbal instructions were often memorized as procedures to follow such as in borrowing operations during subtraction. In other words, the importance of collecting economic misperceptions and misconceptions is not to correct them but to see that they form the raw data for beginning research into the system of thought that produces the notions so as to understand how the system operates the way it does and thereby to appear to distort the facts.

Is African Poverty Caused By Their Policies or By Our Stinginess?

We often hear people advocating more aid for poor African nations (Bono and now Blair). It seems compassionat but the assumption seems to be that the cause of their poverty can be cured or at least ameliorated by more foreign aid. Don Boudreau, economist at George Mason, points out what is commonly known—that we have given African nations almost a half trillion dollars in aide over the last forty years but these impoverished nations are no better off. Why then do people focus on us giving more aid as if we are stingy and at fault for the plight of poor nations?

Aid clearly does not alleviate, poverty. Its real effect seems to be to support repressive government. The alternative policy would be to put pressures on corrupt governments to mend their ways. But advocating change in nations’ repressive economic and political policies seems heartless, like blaming the victim. Is that is why we are so reticent in discussing the root causes of their poverty or is it simply misunderstanding of the principles of economic development?

What To Do Regarding Misperceptions About the Poor

A Federal Researve Bank of Dallas annual report "By Our Own Bootstraps," 1995 Annual Report. FRB, Dallas lists some of the gloomy and common misperceptions folks commonly hold regarding the poor. See if these aren’t familiar:

o The rich are getting richer, and the poor are getting poorer. Most of us are getting nowhere.
o Upward mobility is the privilege of a select few, those lucky enough to win at life's lottery.
o The middle class is vanishing.
o Today's 20-something job-seekers face meager prospects and may be the first Americans in history not to live as well as their parents.

The report discusses the factual evidence that shows these perceptions to be largely false; they are misperceptions of the situation of the poor. Here’s why:

This picture of the income distribution would be useful if America were a caste society with rigid class lines keeping those in the bottom today there tomorrow. But if ours is not a caste society, such statistics tell us virtually nothing—particularly about opportunity. By nature, opportunity is personal, an assessment of how well-off you can be tomorrow relative to today. Even the most sophisticated income distribution studies fail to tell us what we really want to know: are most Americans losing their birthright—a chance at upward mobility?

Tracking individuals' incomes over time gives a startlingly different view of the forces shaping America's income distribution. Let's begin with the people who were in the bottom fifth of income earners in 1975. The conventional view leads us to think they were worse off in the 1990s. Nothing could be further from the truth. In the University of Michigan sample, only 5 percent of those in the bottom quintile in 1975 were still there in 1991.

This account doesn’t come from a newspaper columnist or politician. I chose this report because it was written by the vice president of the Dallas Federal Reserve Bank W. Michael Cox, and another economist, Richard Alm. Mr. Cox conducted the research, and in his position, he obviously must produce carefully documented findings and conclusions. He must be objective, factual, research based in his conclusions since holding his highly respected position requires that he be an economic scholar and leader for everyone he serves no matter their ideology or politics; his job depends on how well he develops objective conclusions derived from honest facts. He dare not distort things for ideological purposes, and he has no incentive to do so. He can be considered a solid source if we want the truth of the matter from an objective scholar with advanced knowledge of economics. So, having established his credibility, here’s more of what they say:

Even more important, a majority of these people had made it to the top 60 percent of the income distribution—middle class or better—over that 16-year span. Almost 29 percent of them rose to the top quintile. This is a far cry from the popular vision of a society in which the poor are getting poorer. In fact, the evidence suggests that low income is largely a transitory experience for those willing to work, a place where people may visit but rarely choose to live…(I omitted his charts.)

There's further evidence that being in the low-income bracket isn't, for a large majority of people, permanent. Less than 0.5 percent of the sample showed up in the bottom quintile every year from 1975 to 1991.[3] Nearly a quarter of those in the bottom tier in 1975 moved up the next year and never again returned. More than three-quarters of the lowest 20 percent in 1975 made it into the top 40 percent of income earners for at least one year by 1991. In fact, the poor made the most dramatic gains in the income distribution. Those who started in the bottom quintile in 1975 had a $25,322 average gain in real income by 1991. In the top quintile, the increase was $3,974. In other words, the rich have gotten a little richer, but the poor have gotten much richer. (I omitted another chart.)

The patterns are similar in other quintiles. Among the second poorest quintile in 1975, more than 70 percent had moved to a higher bracket by 1991—with 26 percent going all the way to the top tier. From the middle grouping, almost half of the income earners managed to make themselves better off. A third of the people in the second highest quintile made it to the highest fifth during these 17 years. All through the University of Michigan data, there's a consistent, powerful thrust…salary income was primarily responsible for pushing people upward in the distribution, indicating that work, not luck, is the widest path to opportunity. Ours is not a Wheel of Fortune economy.

Now these are old data and conditions may have radically changed. There have been follow-on studies showing the mobility not as great. But I strongly doubt that the factors of economic mobility have somehow stopped functioning altogether to now make the misperception suddenly become true but we need research to know for sure. The factor of mobility is apparently real and measurable. But besides more research into income mobility, there is something else from a research point of view that would be quite interesting and useful. I would find research into the prevalence and stability of the misperceptions regarding the income levels and mobility not only interesting but then leading us to investigate why and how these misperceptions arise and present stable phenomena. It would be useful research because the misperceptions are probably strongly correlated with political ideology. So if that is true, what seems to me to be of even great importance would be some kind of research into the sources and origins of these misperceptions.

This kind of misperception research has been conducted in many other areas of human thought. Researchers particularly have found stable, pervasive misperceptions by naïve people in the area of science, geometry and math. Usually research into misperceptions uses children at various ages as a source of data. Children are shown a situation often involving a change in some aspect of the situation. The researcher poses the change as a problem to be explained and interviews the children about what they see and how they explain the changes they see.

For example, yesterday on NPR there was a discussion about the gender differences that relied on research into perceptions of the tilting jar. The tilting jar task has a well established research history. One way to trigger this phenomenon is to cover, or even to leave uncovered, a jar partially filled with water. Tip the jar. Put it aside and then ask students what they saw regarding the change in the water level. Students are shown or asked to draw pictures of what they saw regarding the change in the water level. Some people have a great deal of difficulty seeing that the water level remains parallel to the horizon; for others, they see it as horizontal no matter how the jar is tipped. There are quit remarkable differences in the ability to see the water level objectively as always horizontal. And differences appear between male and female. So, what is the source of these differences and what should be done about them as a matter of public ed policy? Hence the NPR radio show.

Now the researchers don’t simple measure differences in perceptions, some being correct and others more or less incorrect (naïve people do not draw the water line as horizontal when the jar is tipped). Researchers are interested in the underlying conception that forms the ability to objectively see and record the water level. It is the underlying ability that is key and that ability can be more precisely identified as the particular concept that is at work. That conceptual ability is that of the system of horizontal and vertical spatial axes that appears in human thought around the late elementary grades. In the developing child, the sense of up and down appears very early if not a birth but the representation in thought of up and down requires the development of some cognitive machinery that puts together the mental system of axes so that it can then be used to interpret situations factually, see the facts objectively consciously in the mind’s eye, and re-present the facts in thought when the objects are no longer present.

The basic principle here is that concept and percept go together. What we see depends on what we see with. So the challenge for the researcher is to study and eventually explain mentally of exactly what the system of spatial axes consists once it is fully formed and how it arises and develops in the mental activity of human thought. This kind of study of the origins of various kinds of scientific knowledge, that is, how knowledge as a phenomenon of the human species arises in the form of human thought about the world, forms the science of epistemology (as opposed to the philosophic version of epistemology).

Now this same kind of epistemological research into the origins of scientific thought has not yet been applied to economic conceptions. When we find economic misperceptions that are common and stable in spite of the facts, these percepts could give rise to research into the form of the concepts they depend upon. In the case of the income of the poor, we should look at the concepts people implicitly or explicitly use to arrive at their view of the situation. We can take the experet economist views and compare them to naïve views. We could investigate how what people see regarding income of the poor is shaped by what they see with. Their percepts are controlled by their concepts. So an investigation into misperceptions actually investigates what misconceptions are producing the misperceptions. Misperceptions are only the outward indicators of a specific conceptual ability at work so it is the conceptual abilities that will prove important.

In the income misperceptions we may have some clues what these differences in conceptual ability might consist such that they could lead to hypotheses we might investigate. The conceptual differences between those holding the misperceptions and the economists’ views may lie in whether the income groups are understood as descriptive of a fixed group of people that comprise an income level or whether the income levels represent varying membership. Are the poor as a group represented by an income level or as a group with more or less income mobility.

There seems to be an essential difference between whether income is seen properly as a descriptions of a fixed group of people or whether the income of people should be understood as is a variable measuring change or mobility across income levels. If income of the various levels is a fixed property of a single group of people, then people in the low income group aren’t progressing because the low income level hasn’t changed much. But if income is a variable of people such that they move around the income levels, then mobility rather than the income levels becomes the essential factor describing the poor since an income level at different points in time represent a different groups of people. From this point of view of income mobility, the poor are much better off because they aren’t conceived as a group of people represented by the bottom income level.

The misperceptions about income may well depend on the notion that each of the income levels represents a single group of the same people at various points in time. The "over time" is important because it is essential to the idea of income mobility. It is necessary if we want to shift from a static description of the states of people at various income levels to measuring changes in people’s income over time, income mobility as a factor. When scientific description advances beyond static descriptions of properties to reconceptualize descriptive concepts as changes in the concepts, that is, as variables, then these changes over time can be organized into larger explanations, that is, into causal explanations that transcend simple description. They become part of theories. For example, we can teach young children to understand mass, energy, and speed as descriptions of objects but helping the to organize them as variables into an equation for energy and its equivalent to mass times the speed of light squared is conceptually much more advanced and difficult. They same relative difficulty levels may exist in economics in understanding the income of people versus understanding changes in income level over time particularly as to its causes.

From the public policy perspective if we want to do something about poverty, this kind of research could be important for it makes all the difference in the world whether we base our policies on a view of the poor as a fixed group of people described by the lowest income level or whether we base our policies on the variable of income mobility of the poor. The first view of fixed position probably leads to entitlements policies, job guarantees, and the welfare state while the second view may lead to expanding opportunities by reducing barriers like minimum wage, licensure requirements, etc. Research could be important in understanding these policy differences both of which share a common goal but which have radically different means.

Since we find glaring differences among people in their economic perceptions of the very same situations, we might suppose that differences in conceptual machinery exists. Unless there is no objective reality and we deny the fact that human scientific activity makes progress over time in more objectively understanding reality, we have to postulate that some perceptions are obviously closer to the objective truth of a situation than are others. Why and how do these subjective misperceptions develop into more objective perceptions as they appear differently in people’s thought such that they produce differences regarding the same reality being addressed? The psychological fact that these misperceptions might exist in the face of contrary economic facts indicates something very powerful is at work shaping and controlling people’s perceptions of what they believe to be fact. By extending misconception research from other areas into the area of economics, we can formulate hypotheses that the differences in perceptions have to do with the adequacy of the conceptual machinery people use to see and record their perceptions. We can study the development of the conceptions that are necessary in objectively understanding an economic situation.

Since something other than facts shape people’s perceptions, namely concepts, changing their economic thought means promoting their concept development, not correcting their facts, a quite different approach. Without conceptual change, people holding misperceptions not only will but must continue to believe in their misperceptions regardless of more facts simple because their facts depend on their concepts. Even though it is most likely that most people have never been given the facts about poverty, the widespread nature of the misperceptions suggests that the problem lies with their concepts, not their perceptions of facts. As result, we should not expect their convictions to be easily changed by facts. Their views may exist in spite of the objective facts, not because of the facts. But w cannot know if this is true in economics as it is in science until research is conducted.

Most ideological disputes, most contentious public policy issues, most political rhetoric apparently arises over very different but very stable conceptions and perceptions. Over time these may change with intellectual growth but we don’t know yet what exactly causes change over time. For example, recently there was an Israel/Palestine debate hosted by Harvard between Chomsky and Dershowitz. It presented such a challenge from the point of view of differences in perceptions that one student did some fact checking, and his results were reported thanks to Power Line: Webber fact-checks Chomsky. These kind of debates usually remain at the level of throwing out assertions of perceptions of the situation. It’s not really possible to dig into the conceptual machinery of the participants, and the complexity of human thought and the situation would make it impossible to do so in a debate, but how fascinating it would be if a researcher could isolate one difference in perception among people and investigate the conceptual differences that account for the differences in perceptions of the facts. Here in the Harvard debate are two scholars well along in their careers with radically different perceptions. How can that be? What exactly about their differences in conceptual machinery is it that leads to their vast differences in perception?

Less spectacular are the misperceptions the economists regularly note regarding free trade, minimum wage, licensure, drug safety, welfare, and poverty. (I find Don Boudreaux one of the best at identifying and setting misperceptions aright.) Rather than arguing these issues themselves, each of these issues could raise interesting research possibilities into how misperceptions arise in people's thought first as misperceptions and then with more advanced thought as more objective perceptions. We surely can ask whether "the rich are getting richer, and the poor are getting poorer" and "Most of us are getting nowhere" are true but once the economists have conducted the research and produce objective results, then a new type of research into the question of why these myths persist becomes important. It is the only way I know of that holds the possibility of resolving contentious economic issues.

Iraq Perceptions and Research

The issue of how to deal with terrorism and evil regimes in the world seems to provoke strong polarized opinions. With these often come misperceptions of the actual state of affairs. People seem to selectively use and distort information to support their position. We see this when we ask people whether Iraqi citizens are better or worse off than they were before the iraqi war; the split in opinion seems clearly along ideological lines. Some perceive, often strongly believe, the Iraqi’s are worse off. Their living conditions are worse, they have poorer life because of the destruction of their infrastructure, they have no economy or income, and the war against the terrorism is going badly. Of course on the other side, people paint a picture of improving living conditions. Their perceptions of conditions in Iraq are exactly the opposite. With this difference of opinion about conditions, what seems interesting and important might be the source of people’s information, whether they seem to have actual facts that support their judgments. Sorting this all out is of course a highly charged task, so not only do we have the challenge of locating the facts of the situation but then finding facts and explanations for why such large difference of opinion might exist, some in spite of the actual facts and other because of them.

Now we don’t make progress in reaching agreement by throwing assertions at each other but research using objective methods provides real progress. We should be able to conduct research and find facts that we can all agree upon and then do the same into the secondary problem of why those how misperceive the facts hold those views. For example to establish the facts of the condition of Iraq, IBD reports that before 2003 there were no independent media outlets in Iraq. Today there are 44 commercial TV stations, 72 radio stations, and over 100 newspapers. Are these objective facts reflecting the Iraqi condition? What kinds of indicators should we choose to investigate? Max Boot reports per capita income has doubled since 2003 and the Iraqi economy is projected to grow at 16.8% next year. There are 5 times more cars than under Saddam, 5 times more telephone subscribers, 32 times more internet users, and 14 of the 18 provinces are violence free. And of course we probably can agree that the genocide, the rape rooms, the torture and killing that occurred under Saddam has stopped.

These facts, if they are facts, don’t seem to be determined by one’s ideological predisposition. We could also count terrorist attacks. I don’t have good data here but the facts I have seen report there were 347 attacks on Americans and Iraqis before the January elections and 13 attacks before the later October elections. If we have objective methods for investigating Iraq’s conditions, these should be reasonably objective facts that we can easily agree on but they do seem in scarce supply in the rather opinionated columns and news stories. Typically columnist throw out generalities without substantiating them with citations of research and specific findings.

But regardless of these difficulties in finding objective facts reflecting the truth of the matter, since the average citizen doesn’t have the time or need to conduct a personal investigation into the facts, many may adopt second hand opinions such as those they perceive from the mainstream media. So it is also important to have some sense of the public’s sources for their opinions particularly the rather notorious reputation polling shows the public sometimes has for stupid ideas and misperceptions. This ignorance should not be considered unusual since it is rational on the part of the citizens not to waste their time conducting factual research into things such as foreign policy that are not an important part of their daily lives. People do seem to usually have a rather surprisingly profound and comprehensive knowledge surrounding their jobs but on topics tangential to their daily concerns they often express a degree of ignorance that we should expect. So we might expect citizens to generally adopt views and perceptions regarding foreign policy from easily and widely available media sources. So a search for the source of public misperceptions (if they are misperceptions) could focus on the media and their possible biases.

But again this secondary matter of whether there is media bias seems itself to be in dispute. To assert that public opinion and perceptions of American foreign policy in Iraq are shaped by the media itself depends on an ideologically loaded perception. How would one transcend ideology to factually examine the issue of media bias? Does it exist or is this another case of a fact that depends on one’s point of view?

Again, research based on objective methods should lead the way. One way would be to conduct research that attempts to actually measure bias. For example, the Media Research Center reviewed every Iraq story on the evening news programs of ABC, CBS, and NBC from January through September and found 61% of the stories were negative or pessimistic while only 15% were positive or optimistic, a 4 to 1 ratio of negative to positive. It found 79 of the stories focused primarily on allegations of wrongdoing by American forces in Iraq including Abu Ghraib rehashes while 8 focused on heroism or good works.

Now if we had good research into these questions, the problem then becomes determining whether citizens’ ideological predispositions lead them to read and adopt views consonant with their points of view or whether they are rather passive consumers and adopters of what is presented to them. Can biased media significantly alter public opinion or is opinion rather stable and tied to ideological position?

So it seems there are interesting research questions here made important by the great credence given in our Democratic society to public opinion. Who would do this? I'm not sure. It seems our research function is largely filled by the universities but I wonder whether they could or would do it. Think tanks might be another possibility. Certain non-profits have established reputations for objective research and often draw in researchers from across the ideologic spectrum. But research into the source and origins of perceptions and conceptions that form the basis for public policy seems almost essential if we are to make progress in overcoming fundamental differences of opinion.

Are We Still In a Recession?

People worry about the economy and whether we are making it out of the recession. Are we in a recession? Apparently 43% of Americans think the economy is in recession while only 28% thought so in July (as reported by IBD 12/1/05).

The facts are that America has doubled its total wealth over the last decade, to $50 trillion. The GDP is growing at a 4.3% rate, unemployment is down to 5%, core inflation is at 2%, energy prices are dropping (gas in Sandy is $2.04 per gallon), predictions from many sources are for continued growth next year in the 3-4% range, the dollar hasn’t declined as predicted, and interest rates still remain relatively low.

But the most remarkable fact is that if the economy continues to grow, as is predicted, this will be the first time in history that the economy will have gone through a significant Fed tightening (it raised rates incrementally 12 quarter points) without a slowdown or recession. In a speech Alan Greenspan remarked that the most surprising thing to him during his service as Fed Chairman was the resilience of the U.S. economy. The economy has withstood several disasters without faltering that in the past always dragged it down. He found that a new phenomenon and truly remarkable.

By no economic indicators are we in a recession; just the opposite has been true in recent years. Now why, in the face of positive economic facts and good news about the growth of the economy do so many people think we are in a recession?