Believing in Economic Theory: Sex, Lies, Evidence, Trust and Ideology

In many empirical studies, ideology significantly predicts political outcomes, even after controlling for interests. This may reflect ideology’s influence on descriptive beliefs about the workings of the economic world. We investigate these beliefs about supply and demand theory, using survey methods and an experimental demonstration. As expected, relatively liberal respondents have more skeptical ex-ante beliefs (before viewing the experiment) about the theory. Surprisingly, however, relatively conservative respondents update beliefs (after viewing the experiment) so much less strongly that they have more skeptical ex-post beliefs. We explore and discount alternative explanations for these relationships between ideology and beliefs. First draft: October 2003. This revision: October 2004. Acknowledgments. We have benefited from comments and help from Sarah Austin, Thilo Bodenstein, Dirk Engelmann, Jan Kmenta, Kathleen Knight, John Matsusaka, Andreas Ortmann and Christopher Wlezien, as well as seminar participants at the Public Choice/Economic Science Association meetings in San Antonio, Economic Science Association meetings in Barcelona and Tucson, the European Economic Association meetings in Venice, the California Institute of Technology, Technische Universität Chemnitz and the Max Planck Institut Strategic Interaction Group in Jena. Of course, none of these people are responsible for remaining errors or ambiguities.