The Myth of the Rational Voter

The Myth of the Rational Voter
Author(s)	Bryan Caplan
Country	United States
Language	English
Genre(s)	Nonfiction
Publisher	Princeton University Press
Publication date	2007
Media type	Print (Hardback)
Pages	276 (2007 edition)
ISBN	ISBN 978-0-691-12942-6 (2007 edition, hbk)
OCLC Number	71581737
Dewey Decimal	320.6 22
LC Classification	HD87 .C36 2007

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.

Overview

Throughout the book, Caplan focuses on voters’ opinion of economics since so many political decisions revolve around economic issues (immigration, 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 biases: 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.”^[1] 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.^{[citation needed]} 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.”^[2] 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 trade. 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.^{[citation needed]}

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.”^[3] 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 Simon and his book, The Ultimate Resource, 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.”^[4] 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 Foundation, and Harvard University Survey Project. The SAEE asked 1,510 random members of the American public and 250 people with PhDs 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.^{[citation needed]} 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."^[5] 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.

Rational irrationality

Main article: Rational irrationality

In standard neoclassical economics, 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."^[6]

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 ignorant. 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 politicians or bureaucrats, 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).^{[citation needed]}

See also

• Bryan Caplan
• James M. Buchanan
• Rationality
• Behavioral economics

Sources

1. ^ Bryan Caplan, The Myth of the Rational Voter: Why Democracies Choose Bad Policies, (Princeton University Press, 2007), pp 40.
2. ^ Bryan Caplan, The Myth of the Rational Voter, pp 36.
3. ^ Bryan Caplan, The Myth of the Rational Voter, pp 44.
4. ^ Bryan Caplan, The Myth of the Rational Voter, pp 30.
5. ^ Bryan Caplan, The Myth of the Rational Voter, pp 54.
6. ^ Bryan Caplan, The Myth of the Rational Voter, pp 132

External links

• Caplan’s Homepage
• "The Myth of the Rational Voter" (essay)
• Caplan on voting Caplan discusses his book on EconTalk
• "Fractured Franchise" (New Yorker review of The Myth of the Rational Voter by Louis Menand)
• "Book Review" (New Perspectives on Political Economy. Volume 3, Number 1, 2007, pp. 123 – 128 by Prema Popat and Benjamin Powell)