Arnold Kling explains the Economic Illiteracy Quadrifecta:
In the minds of the public, prices apparently go up when businesses suddenly start to feel greedier. Economists, in contrast, expect businesses to be greedy year-in, year-out; but depending on market conditions, greed may call for prices to go up, go down, or stay the same.
— Bryan Caplan, Straight Talk About Economic LiteracyBryan Caplan has compared the answers of economists and non-economists to identical questions about markets and the economy. Caplan found that the differences could be grouped into four categories of economic illiteracy: anti-market bias, as explained above; anti-foreign bias; pessimistic bias; and make-work bias.
I will discuss these biases in the context of the current election. In fact, it turns out that in the second Presidential debate, even though economic issues were only touched on in a few of the questions, Democratic candidate Senator John Kerry managed to appeal to all four of the economically ignorant biases identified in Caplan’s paper. You could say that Kerry hit the economic illiteracy quadrifecta!