Economics 849 Final

Prof. Bryan Caplan

Fall, 2003




        You have 2 hours, 45 minutes to complete this exam.

        Write all answers directly on the exam.

        You may use any books, notes, or other materials that you wish, but avoid spending too much time on any one question.

        Partial credit may be awarded on all questions.

        The maximum possible number of points is 200.

        You should have 7 pages, counting this one, PLUS one page with a regression.


Part 1: True, False, and Explain

(10 points each - 2 for the right answer, and 8 for the explanation)

State whether each of the following six propositions is true or false. In 2-3 sentences (and clearly-labeled diagrams, when helpful), explain why.


1. T, F, and Explain: Productively inefficient firms have a weaker incentive to lobby for monopolies.











2. Optimal tax theory does not take account of individual's ability to pay.


T, F, and Explain: Coincidentally, however, optimal tax theory advises against taxing "necessities" - on which the poor spend an especially large fraction of their income.











3. T, F, and Explain: In a simple median voter framework, divergence between mean and median preferences can lead to platform divergence.













4. Overall, men and older people score higher on tests of political knowledge.


T, F, and Explain: As you would expect, Delli Carpini and Keeter find that the male-female knowledge gap is smallest on gender issues, and the age gap is smallest on knowledge of current events.













5. Poole and Rosenthal find that voting in the U.S. Congress has usually been one-dimensional


T, F, and Explain: This finding moderately bolsters Wittman's case for democratic efficiency.












6. Caplan argues that at least after adjusting for self-serving and ideological bias, belief gaps between economists and the public should be interpreted as irrationality on the part of the public.


T, F, and Explain: One implication is that upwardly mobile people are more rational than the rest of the population.







Part 2: Short Essays

(20 points each)

In half a page each, answer all of the following questions.


1. Largely due to technological change, women's wages have risen relative to men's since 1900. Keeping in mind the "market for marriage," analyze the ultimate incidence of this change for men.



















2. Does rational irrationality provide an extra argument in favor of federalism? Why or why not?




















3 "Much of the (limited) evidence in favor of the SIVH can be reinterpreted as group-interested voting." Discuss this statement, using an empirical example from either Peltzman or Sears and Funk.


















4. Members of third parties often accuse Democrats and Republicans of "collusion" against the public. Discuss TWO forms of evidence believers in collusion would advance to prove their case. How would Wittman respond to this evidence?

5. The SAEE asks respondents if they think that "Too many people are on welfare" is "a major reason the economy is not doing better than it is, a minor reason, or not a reason at all."


0="Lower"; 1="About the same"; 2="Higher"


The next page shows a regression of responses to this question on some respondent characteristics. Carefully explain the ways in which the results are empirically typical of public opinion in general and beliefs about economics in particular. Are there any exceptions to the usual rules? If so, what are they? What is your best guess for why they appear in this regression?


6. Does Kuran and Sunstein's theory of availability cascades shed any new light on Zaller's work on the mainstream and polarization effect? Explain, using an example from Zaller.






















7. Use Brennan and Lomasky to undermine my defense of free-market anarchism.