The Myth of the Rational Voter

 

by Bryan Caplan

 

In all of Donald Wittman's writings, here is the passage that influenced me more than any other:

 

Behind every model of government failure is an assumption of extreme voter stupidity, serious lack of competition, or excessively high negotiation/transfer costs.

 

He's right. If voters are rational, politicians compete, and transactions costs are low, then democracy works well. In his book, moreover, Wittman makes a convincing case that elections are competitive and political deals are cheap. After reading The Myth of Democratic Failure a few times, I was left with one major objection: What makes Wittman so sure that voters are not "extremely stupid" or, in technical terms, "irrational"?

 

Now it's important to realize that economists including Wittman - mean something specific and testable by "rational." When economists say that beliefs about something are rational, they mean their errors are random rather than systematic. So when you look at the beliefs of a group of rational people, their mistakes should cancel out. In a group of rational people, some will underestimate the benefits of free trade, others will overestimate the benefits, but their errors will roughly balance. In other words, their average belief will be true.

 

Years before I actually looked at any data on public opinion, I found it shocking that Wittman would be so quick to accept this conclusion. After all, he teaches economics to undergraduates! And if there is one thing that almost every teacher of economics notices, it is that students arrive with similar sets of bizarre beliefs about how the economy works. Before they study economics, students fail to understand the invisible hand of the market; they fear economic interaction with foreigners; they evaluate economic performance by employment instead of production; and they overreact to minor problems instead of seeing the big picture of massive human progress.

 

At least that's how fresh undergraduates seem to me, to almost all economists I talk to, and to textbook authors. And if we're right, it's scary, because the average undergraduate is an above-average citizen. Furthermore, if voters are irrational, Wittman's other arguments actually strengthen the case against democracy. If voters are irrational, intense political competition compels politicians to actually deliver the counterproductive policies that the public loves.

 

But maybe economic educators are wrong about our students. Maybe we just imagine that our students arrive with similar sets of bizarre beliefs about how the economy works. In social science, we expect stronger evidence than a bunch of people saying "That's how it seems to me" even if those people do have Ph.D.s.

 

Fortunately, stronger evidence is available. Wittman inspired me to go to the data and test the rationality of the public's beliefs. Using the Survey of Americans and Economists on the Economy, I was able to see whether the average non-economist agrees with the average economist on a wide range of economic issues. That is, after all, what the assumption of voter rationality predicts.

 

The data show that most economic educators are right and Wittman is wrong: The average non-economist and the average economist deeply disagree on almost every issue. Furthermore, they almost always disagree in the way that economic educators would expect: Non-economists are more pessimistic about markets, especially international and labor markets, and think the world is going from bad to worse.

 

The only way to avoid the conclusion that the public is seriously irrational is to say that the public is right and the economists are wrong. And there are plenty of people willing to take the plunge. Critics of the economics profession frequently argue that economists suffer from self-serving bias we allow our high incomes and tenure to cloud our judgment. Others maintain that economists are a bunch of right-wing ideologues who mistake their prejudices for science. Fortunately, these too are testable claims: If income and job security explain economists' unusual views, then economists and non-economists with the same income and job security should agree. They don't not even remotely. Similarly, if economists only hold their contrarian views because they are right-wing ideologues, then a moderate Democratic economist should be really different from the typical economist. He isn't probably because the typical economist is a moderate Democrat!

 

In prior exchanges with Wittman, he gave up a lot of ground on the question of voter rationality but still stuck by his thesis of democratic efficiency. Frankly, this doesn't make a lot of sense. If voters' average beliefs are deeply false and democracy gives them what they want, then democracy is going to work poorly. And it does. Instead of apologizing for the economic illiteracy of the public, we need to confront it. Yes, it's an uphill battle. But as in Alcoholics Anonymous, the first step is get the public to admit that it has a problem.