The Myth of the Rational Voter
Encyclopedia
The Myth of the Rational Voter: Why Democracies Choose Bad Policies is a 2007 book written by Bryan Caplan
challenging the notion that voters are reasonable people that society can trust to make laws. Rather, Caplan contends that voters are irrational in the political sphere and have systematically biased ideas concerning economics.
, trade
, welfare
, economic growth
, and so forth). Using data from the Survey of Americans and Economists on the Economy, Caplan categorizes the roots of economic errors into four bias
es: make-work, anti-foreign, pessimistic, and anti-market.
. The degree of benefit is rarely equalized, but it is always positive for both parties. Caplan notes how the anti-foreign bias is rooted in pseudo-racist attitudes: trading with Japan and Mexico is much more controversial than trading with Canada and England, the latter of whom speak our language and look like white Americans.
and his book, The Ultimate Resource
, which argues society continues to progress despite claims of environmental degradation and an increasing use of natural resources.
, and Harvard University
Survey Project. The SAEE asked 1,510 random members of the American public and 250 people with PhD
s in economics the same questions concerning the economy. In addition to its 37 topical questions, the SAEE also inquired about the participants income, income growth, education, and other demographic information.
The answers to the questions are often different: the public often blames technology
, outsourcing
, high corporate profits
, and downsizing as reasons for why growth isn’t as high as it could be. Economists, on the other hand, barely pay any heed to such arguments. Some 74% of the public blame greedy oil companies for high gas prices while only 11% of economists do. The public tends to believe real incomes are decreasing while economists take the opposite stance.
Caplan notes that the chasm between economists and the general public might arguably be due to bias on the expert’s part. Self-serving bias
(economists are rich and so they believe whatever benefits them) and ideological bias (economists are a bunch of right-wing ideologues) are two challenges the author addresses. Caplan writes: "Both the self-serving bias and the ideological bias are, in principle, empirically testable. Economists’ views are the product of their affluence? Then rich economists and rich noneconomists should agree. Economists are blinded by conservative ideology? Then conservative economists and conservative noneconomists should agree." In turn, if self-serving bias is unavoidable, it would likewise skew the perceptions of the non-wealthy, causing them to believe both the " 'ought' claim" that government should reduce inequality of wealth and the " 'is' claims" that existing inequalities of outcome are severe and are perpetuated by corporate and governmental power structures.
Using data from the SAEE (which includes measures for ideology, income, job security, and other measures), Caplan simulates what people would believe if they had the same circumstances as economists—a technique often used in political science
called “enlightened preferences”. If the ideological and self-serving biases are true, most of the difference between the “enlightened public” and economists should disappear. If, however, the enlightened public is not much closer to economists, then something else is going on, as those explanations have been neutralized. Caplan believes that that something else is the biases he enumerated earlier. The data tends to favor Caplan’s argument, with most (but not all) of the enlightened public closer to economists than to the public.
, people are assumed to be rational
; the notion of systematic bias is considered to be a sloppy assumption. In many ways, Caplan agrees with this: most people are rational when it comes to choosing a job, buying milk, hiring employees, and selecting a business strategy. They can be wrong, of course, but a systematic bias rarely—if ever—occurs.
But the author argues they are only rational because it is costly to be wrong. A racist will still hire a qualified Black person because going to the second best option will be expensive to the company. A protectionist will still outsource because he has to achieve as many advantages over his competitors as he can to stay in business. A woman who thinks a discount store
is haunted will seriously question her conclusions when she finds her budget to be tight.
Sometimes, however, it is virtually costless for the individual person to hold on to their preconceived beliefs, and people like those beliefs. Rational irrationality simply states that when it is cheap to believe something (even when it is wrong) it is rational to believe it. They refuse to retrace their logic and seriously ask themselves if what they believe is true. For some people, thinking hurts and they’ll avoid it if they can. This often appears in politics. Caplan argues that, "Since delusional political beliefs are free, the voter consumes until he reaches his “satiation point,” believing whatever makes him feel best. When a person puts on his voting hat, he does not have to give up practical efficacy in exchange for self-image, because he has no practical efficacy to give up in the first place."
. Conventional public choice either emphasizes the efficiency of democracy (as in the case of Donald Wittman) or, more commonly, democratic failure due to the interaction between self-interested politician
s or bureaucrat
s, well-organized, rent-seeking
minority interests and a largely indifferent general public (as in the work of Gordon Tullock
, James M. Buchanan
, and many others). Caplan, however, emphasizes that democratic failure does exist and places the blame for it squarely on the general public. He makes special emphasis that politicians are often caught between a rock and a hard place: thanks to advisors, they know what policies would be generally beneficial, but they also know that those policies are not what people want. Thus they are balancing good economic policy (so they don’t get voted out of office due to slow growth) and bad economic policy (so they don’t get voted out of office due to unpopular policies).
Bryan Caplan
Bryan Caplan is an American economist, a Professor of Economics at George Mason University, Research Fellow at the Mercatus Center, adjunct scholar of the Cato Institute, and blogger for Econlog. He is best known for his work in public choice theory and for his libertarian ideology.-Personal...
challenging the notion that voters are reasonable people that society can trust to make laws. Rather, Caplan contends that voters are irrational in the political sphere and have systematically biased ideas concerning economics.
Overview
Throughout the book, Caplan focuses on voters’ opinion of economics since so many political decisions revolve around economic issues (immigrationImmigration
Immigration is the act of foreigners passing or coming into a country for the purpose of permanent residence...
, trade
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
, welfare
Welfare economics
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to economic efficiency and the resulting income distribution associated with it...
, economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
, and so forth). Using data from the Survey of Americans and Economists on the Economy, Caplan categorizes the roots of economic errors into four bias
Bias
Bias is an inclination to present or hold a partial perspective at the expense of alternatives. Bias can come in many forms.-In judgement and decision making:...
es: make-work, anti-foreign, pessimistic, and anti-market.
Make-work bias
Caplan refers to the make-work bias as a “tendency to underestimate the economic benefits from conserving labor.” Caplan claims that there is a tendency to equate economic growth with job creation. However, this is not necessarily true, since real economic growth is a product of increases in the productivity of labor. Dislocation and unemployment can be caused by productivity gains making certain jobs no longer necessary. All things being equal, economic rationality would require that these people make use of their talents elsewhere. Caplan makes special emphasis of the movement away from farming over the past two hundred years—from 95% of Americans as farmers to just 3%—as an illustrative example. Those millions who are no longer farming can be employed to do computer programing, maintain communication networks, and services; as of now, we have a service based economy.Anti-foreign bias
Caplan refers to the anti-foreign bias as a “tendency to underestimate the economic benefits of interaction with foreigners.” People systematically see their country of origin as in competition with other nations and are thus averse to free trade with them. Foreigners are seen as the “enemy” even if the two governments are at a lasting peace. The principles of comparative advantage allow two countries to benefit a great deal from tradeTrade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
. The degree of benefit is rarely equalized, but it is always positive for both parties. Caplan notes how the anti-foreign bias is rooted in pseudo-racist attitudes: trading with Japan and Mexico is much more controversial than trading with Canada and England, the latter of whom speak our language and look like white Americans.
Pessimistic bias
Caplan refers to the pessimistic bias as a “tendency to overestimate the severity of economic problems and underestimate the (recent) past, present, and future performance of the economy.” The public generally perceives economic conditions as declining. Caplan alleges that there is often little or no evidence to back up such perceptions. Among challengers Caplan cites is Julian Lincoln SimonJulian Lincoln Simon
Julian Lincoln Simon was a professor of business administration at the University of Maryland and a Senior Fellow at the Cato Institute at the time of his death, after previously serving as a longtime business professor at the University of Illinois at Urbana-Champaign.Simon wrote many books and...
and his book, The Ultimate Resource
The Ultimate Resource
The Ultimate Resource is a 1981 book written by Julian Lincoln Simon challenging the notion that humanity was running out of natural resources...
, which argues society continues to progress despite claims of environmental degradation and an increasing use of natural resources.
Anti-market bias
Caplan refers to the anti-market bias as a “tendency to underestimate the benefits of the market mechanism.” In Caplan's view, the populace tends to view themselves as victims of the market, rather than participants of it. Corporations, and even small-scale suppliers, are seen as greedy monopolists that prey on the consumer. Caplan argues that all trade is a two-way street. Cheating people is bad for business and the existence of multiple firms offering similar products demonstrates there is competition, not monopoly power.Survey of Americans and Economists on the Economy
The author pays special attention to the 1996 Survey of Americans and Economists on the Economy (SAEE), created by the Washington Post, the Kaiser Family FoundationKaiser Family Foundation
The Henry J. Kaiser Family Foundation , or just Kaiser Family Foundation, is a U.S.-based non-profit, private operating foundation headquartered in Menlo Park, California. It focuses on the major health care issues facing the nation, as well as the U.S. role in global health policy...
, and Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
Survey Project. The SAEE asked 1,510 random members of the American public and 250 people with PhD
PHD
PHD may refer to:*Ph.D., a doctorate of philosophy*Ph.D. , a 1980s British group*PHD finger, a protein sequence*PHD Mountain Software, an outdoor clothing and equipment company*PhD Docbook renderer, an XML renderer...
s in economics the same questions concerning the economy. In addition to its 37 topical questions, the SAEE also inquired about the participants income, income growth, education, and other demographic information.
The answers to the questions are often different: the public often blames technology
Technology
Technology is the making, usage, and knowledge of tools, machines, techniques, crafts, systems or methods of organization in order to solve a problem or perform a specific function. It can also refer to the collection of such tools, machinery, and procedures. The word technology comes ;...
, outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
, high corporate profits
Profit (economics)
In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs of a venture to an entrepreneur or investor, whilst economic profit In economics, the term profit has two related but distinct meanings. Normal profit represents the total...
, and downsizing as reasons for why growth isn’t as high as it could be. Economists, on the other hand, barely pay any heed to such arguments. Some 74% of the public blame greedy oil companies for high gas prices while only 11% of economists do. The public tends to believe real incomes are decreasing while economists take the opposite stance.
Caplan notes that the chasm between economists and the general public might arguably be due to bias on the expert’s part. Self-serving bias
Self-serving bias
A self-serving bias occurs when people attribute their successes to internal or personal factors but attribute their failures to situational factors beyond their control. The self-serving bias can be seen in the common human tendency to take credit for success but to deny responsibility for failure...
(economists are rich and so they believe whatever benefits them) and ideological bias (economists are a bunch of right-wing ideologues) are two challenges the author addresses. Caplan writes: "Both the self-serving bias and the ideological bias are, in principle, empirically testable. Economists’ views are the product of their affluence? Then rich economists and rich noneconomists should agree. Economists are blinded by conservative ideology? Then conservative economists and conservative noneconomists should agree." In turn, if self-serving bias is unavoidable, it would likewise skew the perceptions of the non-wealthy, causing them to believe both the " 'ought' claim" that government should reduce inequality of wealth and the " 'is' claims" that existing inequalities of outcome are severe and are perpetuated by corporate and governmental power structures.
Using data from the SAEE (which includes measures for ideology, income, job security, and other measures), Caplan simulates what people would believe if they had the same circumstances as economists—a technique often used in political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
called “enlightened preferences”. If the ideological and self-serving biases are true, most of the difference between the “enlightened public” and economists should disappear. If, however, the enlightened public is not much closer to economists, then something else is going on, as those explanations have been neutralized. Caplan believes that that something else is the biases he enumerated earlier. The data tends to favor Caplan’s argument, with most (but not all) of the enlightened public closer to economists than to the public.
Rational irrationality
In standard neoclassical economicsNeoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...
, people are assumed to be rational
Rationality
In philosophy, rationality is the exercise of reason. It is the manner in which people derive conclusions when considering things deliberately. It also refers to the conformity of one's beliefs with one's reasons for belief, or with one's actions with one's reasons for action...
; the notion of systematic bias is considered to be a sloppy assumption. In many ways, Caplan agrees with this: most people are rational when it comes to choosing a job, buying milk, hiring employees, and selecting a business strategy. They can be wrong, of course, but a systematic bias rarely—if ever—occurs.
But the author argues they are only rational because it is costly to be wrong. A racist will still hire a qualified Black person because going to the second best option will be expensive to the company. A protectionist will still outsource because he has to achieve as many advantages over his competitors as he can to stay in business. A woman who thinks a discount store
Discount store
A discount store is a type of department store, which sells products at prices lower than those asked by traditional retail outlets. Most discount department stores offer a wide assortment of goods; others specialize in such merchandise as jewelry, electronic equipment, or electrical appliances...
is haunted will seriously question her conclusions when she finds her budget to be tight.
Sometimes, however, it is virtually costless for the individual person to hold on to their preconceived beliefs, and people like those beliefs. Rational irrationality simply states that when it is cheap to believe something (even when it is wrong) it is rational to believe it. They refuse to retrace their logic and seriously ask themselves if what they believe is true. For some people, thinking hurts and they’ll avoid it if they can. This often appears in politics. Caplan argues that, "Since delusional political beliefs are free, the voter consumes until he reaches his “satiation point,” believing whatever makes him feel best. When a person puts on his voting hat, he does not have to give up practical efficacy in exchange for self-image, because he has no practical efficacy to give up in the first place."
Relation to public choice theory
The book is notable in use of irrationality, a rare assumption in economics. Yet the work is also a challenge to conventional public choice, where voters are seen as rationally ignorantRational ignorance
Rational ignorance occurs when the cost of educating oneself on an issue exceeds the potential benefit that the knowledge would provide.Ignorance about an issue is said to be "rational" when the cost of educating oneself about the issue sufficiently to make an informed decision can outweigh any...
. Conventional public choice either emphasizes the efficiency of democracy (as in the case of Donald Wittman) or, more commonly, democratic failure due to the interaction between self-interested politician
Politician
A politician, political leader, or political figure is an individual who is involved in influencing public policy and decision making...
s or bureaucrat
Bureaucrat
A bureaucrat is a member of a bureaucracy and can comprise the administration of any organization of any size, though the term usually connotes someone within an institution of a government or corporation...
s, well-organized, rent-seeking
Rent seeking
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value...
minority interests and a largely indifferent general public (as in the work of Gordon Tullock
Gordon Tullock
Gordon Tullock is an economist and retired Professor of Law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of economic thinking to political issues...
, James M. Buchanan
James M. Buchanan
James McGill Buchanan, Jr. is an American economist known for his work on public choice theory, for which he received the 1986 Nobel Memorial Prize in Economic Sciences. Buchanan's work initiated research on how politicians' self-interest and non-economic forces affect government economic policy...
, and many others). Caplan, however, emphasizes that democratic failure does exist and places the blame for it squarely on the general public. He makes special emphasis that politicians are often caught between a rock and a hard place: thanks to advisors, they know what policies would be generally beneficial, but they also know that those policies are not what people want. Thus they are balancing good economic policy (so they don’t get voted out of office due to slow growth) and bad economic policy (so they don’t get voted out of office due to unpopular policies).
External links
- Caplan’s Homepage
- "The Myth of the Rational Voter" (essay)
- Caplan on voting Caplan discusses his book on EconTalkEconTalkEconTalk is a weekly podcast hosted by professor Russell Roberts at George Mason University. Roberts interviews guests—often professional economists—on topics in economics....
- "Fractured Franchise" (New Yorker review of The Myth of the Rational Voter by Louis Menand)
- "Book Review" (New Perspectives on Political EconomyNew Perspectives on Political EconomyThe New Perspectives on Political Economy is a peer-reviewed semi-annual bilingual interdisciplinary open access scientific journal that publishes papers related to political economy mainly from the point of view of Austrian economics and liberty-oriented thinking...
. Volume 3, Number 1, 2007, pp. 123 – 128 by Prema Popat and Benjamin Powell)