Can Facts Reverse the Backlash to Globalization?

One of the defining transformations of the 20th century was globalization. Since the end of World War II, countries and cultures have become more interconnected than ever before, through free trade agreements, technology, multi-national corporations, and the creation of structures such as the IMF and the World Trade Organization. Trade economists liked to think that the benefits of globalization—economic growth, more consumer choice, lower prices—had made it unassailable. But cracks in the international order have started to appear.

In 2016, the surprise result of the Brexit referendum was seen as a repudiation by the U.K. general public of the decades-long European integration process. In 2018, the Trump administration, seizing on the loss of U.S. manufacturing jobs from offshoring and concerns about unfair industrial practices, instituted a range of tariffs on goods exported from China. President Biden has maintained the tariffs, even though they have led to higher prices and a decrease in the real income of American households. To this day, anti-globalization is a common theme in political campaign rhetoric. This rhetoric, while usually not supported by facts, has been incredibly persuasive, leading a large share of the American electorate to support measures that further limit free trade.

Associate Professor of Business Administration Davin Chor is the globalization chair at Dartmouth and the Harvey H. Bundy III T’68 Faculty Fellow. He teaches Global Economics for Managers in the Tuck MBA program.

Davin Chor, an international trade economist at Tuck and a globalization chair at Dartmouth, was curious if evidence-based information derived from research, communicated in a concise way, could shift people’s preferences for trade protection. To answer this question, Chor and colleagues Laura Alfaro of Harvard Business School and Maggie Chen of George Washington University, conducted a series of survey experiments on a representative sample of the U.S. population from 2018 through 2022. As they explain in their new working paper—“Can Evidence-Based Information Shift Preferences Towards Trade Policy?”—what they found was both expected and surprising.

In the surveys they conducted, which were administered by the survey company Qualtrics, they presented four randomized information treatments providing a concise summary of evidence established by economic researchers on the gains and losses from trade.

These treatments are described as follows:

Trade Hurts Jobs: The rise in imports from China hurt the labor market outcomes of manufacturing workers in the U.S.
Trade Helps Jobs: The growth of imports of goods from China led the U.S. to specialize more in its service sectors.
Trade Helps Prices: The rise in imports from China led to lower prices for durable and non-durable goods.
Tariffs Hurt Prices: The tariffs imposed in 2018 raised the prices of tariff-related goods and lowered U.S. real income.

After presenting these treatments, the surveys asked a series of questions to solicit the respondents’ preferences about a range of trade policy tools, such as import tariffs, free trade agreements, and a minimum wage.

Unsurprisingly, when respondents were given the “Trade Hurts Jobs” narrative, they were significantly more likely to react by preferring more limits on imports, compared to a control group who received no information narrative. Since limiting imports has been associated with the Republican party’s recent trade policy platforms, the authors summarize the size of the effect of this information treatment as making respondents “one-third more Republican.”

Things got more interesting when respondents instead received information expressing the benefits of trade. When presented with the “Trade Helps Jobs” narrative, there was a rise in the respondents’ overall preferences for trade restrictions. “Even more strikingly,” they write, “exposing participants to either the ‘Trade Helps Prices’ or the ‘Tariff Hurts Prices’ information induces a strong protectionist response: learning that imports from China have contributed to lower prices, or that the recent tariffs on these imports have hurt U.S. consumers, still raises respondents’ propensity to favor more limits on imports.” The researchers gleaned from these responses that people don’t react symmetrically to information that highlights the gains rather than the losses from trade. In other words, learning about the benefits of trade makes some people dislike free trade even more. “That caught us off guard,” Chor says.

After ruling out some basic explanations for this asymmetry, such as respondents’ misunderstanding the information, they began drilling deeper into the correlation between the trade policy preferences and the respondents’ political affiliations (based on the party they voted for in the last presidential election). They found some traction there. “If you told a Republican supporter that trade has hurt jobs, it accentuates their preferences,” Chor explains. “But if you tell them that trade has had some benefits, that also amplifies their protectionist tendencies. So it’s almost like they double down on their pre-held beliefs.” The researchers found this to be true for Democrat supporters as well, but with their preferences for trade restrictions instead easing up, consistent with there being less opposition to free trade in the Democratic party’s recent trade policy positions. When told that trade has benefits, the information dampens their preferences for protection. But when told that trade has done some damage, it also moves them in a less protectionist direction.

If you want to try to persuade people with evidence that there are benefits to trade you’re probably not going to do it unless you figure out how to address their pre-held concerns, whether these might stem from their political identity, or their prior concerns about American jobs or about trade with China.
— Davin Chor, Associate Professor of Business Administration

To better understand the mindset of the respondents who preferred more limits on trade, the researchers asked them directly about their pre-held beliefs in this area. Their top concerns were imports from countries like China and the loss of American jobs. The researchers believe these two concerns weighed heavily on the respondents’ survey responses and may illuminate a deeper truth about human nature: it’s very difficult to alter someone’s preexisting beliefs. In this case, appealing to mere facts wasn’t enough.

“If you want to try to persuade people with evidence that there are benefits to trade,” Chor says, “you’re probably not going to do it unless you figure out how to address their pre-held concerns, whether these might stem from their political identity, or their prior concerns about American jobs or about trade with China. In fact, you could end up intensifying their beliefs.”