Last week, I wrote about the gap between reality and perceptions about the economy. One of my favorite economists, Paul Krugman, wrote about the same thing. He used the issue of perceptions of crime to explain this phenomenon.
He showed how surveys show that the public believes that crime in their local area is less of a problem than in other areas, predominantly urban places. Nevertheless, there is the continual gentrification of “newly safe central cities” by affluent Americans.
Krugman used the reality vs. perception gap in crime to explain the reality vs. perception gap concerning the economy. He sees the same phenomenon happening in economics. Survey respondents report that the economy is doing poorly, but they are doing okay. So, they are spending more than expected in a poor economy—since they are doing okay.
“People proceed as they perceive” was an expression we used in the Black Power Movement. What people perceive is what they know, and they act on that knowledge. That is the lesson to be learned from the perception versus reality phenomenon.
Krugman’s use of the perception of crime phenomenon reminds me of the difficult time I had with the crime issue in the decade of the 1990s. Politicians of all stripes were continually saying that violent crime was on the rise while I went around proclaiming to audiences and the media that violent crime was going down, not up.
The violent crime rate dropped from a high of 758.2 per 100,000 in the population in 1991 to 523 in 1999, a decrease of 31 percent. Predictably, I was treated like Chicken Little, who ran around warning that the sky was falling when only an acorn fell on its head. However, Chicken Little’s experience warns us of the consequences of having faulty information and following erroneous perceptions.
In the 1990s, the consequence was President Clinton’s disastrous Crime Bill, the bill Hillary Clinton had to disavow when campaigning for the presidency. She encountered severe criticism from Black advocates for supporting the largest crime bill in the history of the country. This bill provided funding for 100,000 more police officers and nearly $10 billion for new prisons, which were filled up disproportionately by Black Americans, as detailed by Michelle Alexander in her book, The New Jim Crow.
This bill facilitated harsher sentencing requirements and incentives for states to adopt tough-on-crime laws, all while the crime rate was decreasing.
Observers credited Bill Clinton with responding to the public anxiety about crime; however, the false narrative about crime fueled this anxiety. And that false narrative was driven by intentional lies. I still do not believe that leaders of this monstrous effort, including Bill Clinton, did not know that the crime rate was going down.
The economy is doing well, but Krugman notes the significant gap between the public’s upbeat assessment of their financial well-being and their low perception of the national economic well-being. Notably, this gap increased from 25 percentage points in 2019 (when Trump was in office) to 55 percentage points in 2022 (when Biden was president).
How does the public come to have these perceptions about the economy? Krugman proposes:
“I don’t think Americans are stupid. I think they have jobs to do and children to raise and lives to live. They don’t have time to study policy issues, so most of them get their sense of what’s happening to the country from what they see on TV or hear from politicians. Unfortunately, some of what they’re told isn’t true.”
I agree with Krugman, but I will add a bit more: what a large portion of the public gets from their favorite media and politicians nowadays is often intentionally misleading. But that is what they come to “know.” So, they proceed according to their perceptions, and there are consequences.
The consequences will include voting to replace Democrats in Congress and the White House with Republicans. That is what their media and politicians tell them about the economy, so that is what they perceive to be the facts. Thus, they proceed as they perceive.
