Nonexpert beliefs about the macroeconomic consequences of economic and noneconomic events

Economists assume that individuals think about the economy like economists, which is especially important in all rational expectations and economic voting models. Despite contrasting evidence, there has been little research on actual nonexpert macroeconomic beliefs. In this paper, I present the results of a survey among students designed to find out whether they distinguish macroeconomically relevant from irrelevant events. I find that even people with some economic background tend to overestimate the effects of noneconomic events. This bias is a function of gender, economic training, and the preferred means of mass communication.