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.