Sadly, as Rob Atkinson writes in The Washington Post, that is the world in which we now live: In many areas of economic policy, initial studies turn out to be incorrect, yet they take on a life of their own, being quoted, cited and tweeted to such an extent that few people bother to question their veracity. Cognitive scientists refer to this as the “truth effect,” which occurs when people believe something simply because it is widely repeated.
Four prime examples of urban myth economics in action are:
- “Small businesses are the font of job creation!”
- “Technology is destroying jobs!”
- “Top earners are making off with all the income gains!”
- “Monopolies are jacking up prices!”
Demonstrably wrong though these myths may be, they have had a very real impact on policy.