Paper

Monday, November 28th: Hongyi She (University of Rochester), presents:

Title: Learning About Trade

Abstract: How do Americans form their opinions on international trade? Recent studies have questioned the economic self-interest foundation of trade theories, arguing that citizens are unable to connect their pocketbooks to international trade. This paper shows that, despite widespread misperceptions, the public is able to form accurate beliefs in response to true information about the economic consequences of trade. I conduct a survey experiment on a nationally representative sample of Americans to examine how they learn about sector/education-specific and country-level consequences of the Chinese import shock. I show that respondents rationally update their beliefs about the economic consequences, consistent with Bayesian updating. I illustrate further that information only influences trade policy choices through beliefs. In addition, by accounting for potential individual biases toward trade partners as well as along party and racial lines, I find that biased preferences do not result in biased information processing. Furthermore, I document individual heterogeneity in learning rates by gender, numeracy, and trade knowledge.