The wisdom of crowds isn’t working very well for this wikipedia entry

Last summer, June 10 to be exact, a Slate writer published a piece about the fallacy of an economic theory called the wealth effect, which essentially states that when people are objectively wealthier, or subjectively think or feel wealthier, their spending rises.

In the behavioral economics setting, the wealth effect has come up prominently in the famous mug trading experiments supporting the endowment effect. Some economists initially worried that the experiment’s results were driven by a wealth effect in which those given mugs were wealthier than those without mugs leading them to value mugs more than money. But back to the point about crowd wisdom.

Zubin Jelveh wrote a response to the Slate piece, linking to statistics and papers showing some evidence of the wealth effect during the past housing boom. At the time, he noted that wikipedia’s entry on the wealth effect contained only one reference citation on the subject – to the Slate article debunking it! – and pleaded, “Wisdom of crowds don’t fail us now.” Seven months later, not much has changed. Jelveh’s piece is now listed at the very bottom of the page, under external links, not references. In the entry itself, the only sentences about the theory’s validity claim “it is not observable in economic data,” before going on to cite some points from the Slate piece. 



4 Responses to “The wisdom of crowds isn’t working very well for this wikipedia entry”

  1. Jebidah Yoder Says:

    If wikipedia is wrong, don’t just blog about it, edit it! That’s the whole point.

  2. christina wodtke Says:

    Size of audience is critical to effectiveness of wikipedia… the nodes are neglected, and the high traffic pages have to be locked. Wisdom of the crowds is only effective in the sweet spot of traffic… something most folks don’t take into account when they rely on wikipedia. More here

  3. LB Says:

    The entry on the The Permanent Income Hypothesis is even shorter.

  4. CarlInTO Says:

    OTOH, maybe the “real world” behavior of Wiki’ens belies the academic world of the Author/Theorist?

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