The Myth of Voter Irrationality

An article in Sunday's NYT magazine prompted me to look at Bryan Caplan's book The Myth of the Rational Voter. I haven't read the whole book, just the bits that are online. It is a thought-provoking piece, and a god read. But I am not convinced.

Here is what Caplan says:

This book develops an alternative story of how democracy fails. The central idea is that voters are worse than ignorant; they are, in a word, irrational — and vote accordingly.  [C]ommon sense tells us that emotion and ideology — not just the  facts or their "processing" — powerfully sway human judgment. Protectionist thinking is hard to uproot because it feels good. When people vote under the  influence of false beliefs that feel good, democracy persistently delivers bad policies.

And later:

On the naive public-interest view, democracy works because it does what voters want. In the view of most democracy skeptics, it fails because it does not do what voters want. On my account, democracy fails because it does what voters want.

First, I have a problem with the economics in the book. Consider the key exhibit in Caplan's case, the fact that many or most people are skeptical about free trade even though most economists are in favor. Caplan interprets this as evidence that people just don't get the argument about free trade's benefits (to themselves as well as the economy overall). But in fact there is nothing in the economic case for free trade to suggest that all or most of the individuals in the economy will be better off with free trade. The median individual/voter could well end up worse off (as may have been indeed happening during the last quarter century). So the difference of views between the economist and the person on the street may be reflecting the former's own social preferences instead of the latter's misunderstanding.

And even with respect to the aggregate gains from trade, the economist's case hinges on a large number of auxiliary assumptions. These may well be violated in the real world. I would bet my dollar on the common person having an instinctive understanding of these imperfections before I would trust a Chicago or GMU economist's priors on it.

In fact, there is good evidence that people's view on trade are shaped (at least in part) by pocketbook considerations. Anna Maria Mayda and I recently looked at individual attitudes on trade in a large sample of countries, and found that they were aligned exactly the way that the Stolper-Samuelson predicts. More skilled individuals are in favor of trade in skill-abundant countries, but against trade in skill-scarce countries. The reverse holds for less skilled people. We found that values mattered too--but the evidence that people understand how trade will work out for their own pocketbook is strikingly strong.

There is also a fair amount of empirical work on the advantages of democracy more broadly. To cite again my own work, democracies deliver more stable and more predictable growth, are better at handling shocks, and deliver more equitable economic outcomes, even if in the long-run their average growth performance is no different than autocracies'. Poor and ethnically divided countries experience higher growth after making a transition to democracy.  In short, democracies tend to do pretty well, and are much less prone to the fatal pathologies that Caplan worries about.

I think Caplan is doing us a service by taking on the holy cow of the rational voter, which permeates so much of the contemporary literature on political economy. It takes a lot of faith to believe that voters are fully rational and sufficiently well informed. But it is an equal leap to go from this to the pervasive pathologies for which Caplan wants to make the case.

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Comments

[dale]

There's a lot that can be said in opposition to the growing calls for authoritarianism in our nation. But the author of the NYTimes review of Caplan's book says it well:

"Caplan’s view of democracy is all about efficiency, not legitimacy"

As if legitimacay is not at the heart of what qualifies as a rational political system. There is no way to legitimacy outside of the democratic process.

These narrow, one-sided definitions of rational would be funny if not for their link to technocratic fascism proposals. Let's call authoritarianism by its name. Let's not let it hide behind economic theory.

[bluematter.blogspot.com]

Bravo! Dani, you are spot on.

[Matt]

Caplan's book is nothing if not controversial. While his analysis of the current system seems sensible on the surface--and I am usually happy to see any work that pokes holes in the pop culture concept of our 'ideal democracy'--it is not without its share of flaws, as you have pointed out.

Where he really looses me though, is when he uses that unsteady foundation as the base for his proposals for alternatives which are radical, at best, and downright frightening, at worst.

[marko]

You really believe that the average man on the street is better at assessing the impact of trade policy than the average economist?

And, quite frankly, I don't think its fair that you replaced Brian's claims about "average economist's" with "Chicago or GMU economist". His findings are based on the survey of economists in general, not just free market fundamentalists.

About your own research on democracy, I think it's great, but pretty irrelevant in this case. Brian did not do a comparative assesment of democracy vs authoritarian systems and concluded that democracy is the poorer alternative. He is suggesting a system that hasn't really been tested anywhere.

[Robin Hanson]

Caplan admits that experts/educated can make mistakes, and that there is some pocketbook voting. The issue is the overall trends, so your pointing out what you think is a particular mistake and particular pocketbook voting isn't a very strong critique. The data on democracy doing well didn't compare them to the alternatives that Caplan proposes, so I don't see how that evidence is relevant.

[Martin]

Completely agree... voters can't be said to be geniuses to be sure. But it's pretty scary when you really think about what he is arguing for. In addition, his book is full of illogical and contradictory arguments, mangled terms, cultural prejudice, and a whole lot of other weaknesses. Like a lot of cloistered academics, he’s hermetically sealed inside his own thinking and theories, and totally unhinged from the real world... past and present. I won’t recap the whole list of objections here... but it’s on my site. (literalmayhem.com)