The Myth of the Rational Voter: Why Democracies Choose Bad Policies – New Edition by Bryan Caplan (PDF)

Description

The greatest obstacle to sound economic policy is not entrenched special interests or rampant lobbying, but the popular misconceptions, irrational beliefs, and personal biases held by ordinary voters. This is economist Bryan Caplan’s sobering assessment in this provocative and eye-opening book. Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand. Boldly calling into question our most basic assumptions about American politics, Caplan contends that democracy fails precisely because it does what voters want. Through an analysis of Americans’ voting behavior and opinions on a range of economic issues, he makes the convincing case that noneconomists suffer from four prevailing biases: they underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse. Caplan lays out several bold ways to make democratic government work better–for example, urging economic educators to focus on correcting popular misconceptions and recommending that democracies do less and let markets take up the slack. The Myth of the Rational Voter takes an unflinching look at how people who vote under the influence of false beliefs ultimately end up with government that delivers lousy results. With the upcoming presidential election season drawing nearer, this thought-provoking book is sure to spark a long-overdue reappraisal of our elective system.

User’s Reviews

Editorial Reviews: Review “The best political book this year.”—Nicholas D. Kristof, New York Times”Caplan thinks that democracy as it is now practiced cannot be salvaged, and his position is based on a simple observation: ‘Democracy is a commons, not a market.'”—Louis Menand, The New Yorker”One of the two or three best books on public choice in the last twenty years.”—Tyler Cowen, Marginal Revolution”Like a few recent best sellers–Freakonomics, The Tipping Point, The Wisdom of Crowds–The Myth of the Rational Voter unwraps economic theories and applies them to everyday life. Mr. Caplan’s thesis, though, lacks any semblance of a compliment: The ‘unwisdom of crowds’ is closer to his point. He believes that the American public is biased against sensible, empirically proved economic policies about which nearly all economists agree. Voters, he says, are not just ignorant in the sense of having insufficient information. They actually hold wrong-headed and damaging beliefs about how the economy works.”—Daniel Casse, The Wall Street Journal”[P]rovocative.”—Elsa Dixler, New York Times Book Review”The Myth of the Rational Voter usefully extends the discussion [about democracy] by linking it with ‘public choice’ theory. . . . Public choice theory faces a dilemma. A rational and self-interested person has no incentive to study political issues, as the chances of his or her determining the outcome are negligible. This has become known as ‘rational ignorance’. Caplan maintains that the reality is much worse. He shows that voters are not just ignorant but systematically biased in favor of mistaken views.”—Samuel Brittan, Financial Times”Caplan is right to detect a stubborn irrationality in ordinary voters and he correctly points out to his rational choice colleagues that their models are hopelessly unrealistic.”—Martin Leet, Australian Review of Public Affairs”Caplan argues convincingly that irrational behaviour is pervasive among many of us today. . . . Caplan’s point, however, is that most voters are irrational. And that is worse than being ignorant. . . . Their irrationality comes with a host of misconceptions that drive policy choices.”—Fazil Mihlar, The Vancouver Sun”This engaging and provocative volume describes why democracy gives us far less than its promise. Countering existing theories of rationally ignorant voters, Caplan argues persuasively that voters are irrational, registering systematically biased beliefs–and consequently votes–against markets and other sound economy policy metrics. . . . [T]his is a compelling book, offering readers a well-written and well-argued competing theory for why democracy fails and why we should limit what is done through the political process.”—M. Steckbeck, Choice”[Caplan] argues that voters’ own irrational biases, rather than flaws in the democratic process, compel voters to support policies that are not in their interest. While one may quibble with his specifics, the overall argument is convincing and applicable across a variety of fields…Forces the reader to take a second look at our nation’s unshakable faith in the wisdom of the electorate.”—Pio Szamel, Harvard Political Review”A brilliant and disturbing analysis of decision making by electorates that–[Caplan] documents–are perversely ignorant and woefully misinformed.”—Neil Reynolds, The Globe and Mail”Scintillating. . . . Outstanding.”—Gene Epstein, Barron’s Magazine”Kudos to Caplan for not wanting to leave well enough alone, but he could have given democracy more credit for diffusing–to the relatively benign act of voting–irrational and reactionary human behaviour that has in the past led to violence and war. In the meantime, it certainly would not hurt for more people to learn about the law of supply and demand.”—Adam Fleisher, International Affairs”Caplan’s book is a major accomplishment, which breaks new ground in our understanding of democratic politics and opens up a new research territory for further exploration.”—Gene Callahan, Independent Review”[Persons] who do not grasp the lessons in Bryan’s book cannot understand politics as well as persons who do grasp those lessons. Buy a copy. Read it. Ponder it. Learn.”—Don Bourdreaux, Café Hayek Review “Caplan offers readers a delightful mixture of economics, political science, psychology, philosophy, and history to resolve a puzzle that, at one time or another, has intrigued every student of public policy.”―N. Gregory Mankiw, Harvard University, former chairman of the President’s Council of Economic Advisers”Why democracies so often make a hash out of economic policy is one of the great questions of political economy. Bryan Caplan suggests some provocative, and highly original, answers. This book may make you smile or it may make you scowl, but it will definitely not make you bored.”―Alan S. Blinder, Princeton University”The Myth of the Rational Voter discredits the fashionable view that democratic politics necessarily prevents socially harmful policies. Voters lack incentives to become well informed about political controversies, Bryan Caplan shows, and their policy choices tend to be based on deeply, persistently, and systematically mistaken models of reality. Caplan’s findings lead inexorably to the conclusion that democratic governance can be improved only through reforms based on realistic assumptions about human cognition. Anyone concerned about political efficiency should read this elegant book carefully.”―Timur Kuran, author of Islam and Mammon”Bryan Caplan blends economics, political science, and psychology in an arresting and informative polemic that is witty, crisp, cogent, provocative, and timely. You may or may not agree with his assessment of our democracy, but you will be entertained, challenged, and perhaps angered, but also enlightened.”―Scott Keeter, Pew Research Center”The argument Caplan offers is basically right and is extremely important. I suspect this book will stir up a certain amount of controversy. The argument challenges conventional public choice in that it radically undermines the notion of substantively rational voting. At the same time, it is in the same skeptical tradition as public-choice orthodoxy, challenging the claims of democratic enthusiasts. It is a book that deserves to be taken very seriously.”―Geoffrey Brennan, coauthor of The Economy of Esteem”Poorly informed voters are a big problem in democracy, and Caplan makes the interesting argument that this is not necessarily a problem that can be easily fixed―it may be fundamental to the system. Caplan thinks that voting itself is the problem.”―Andrew Gelman, Columbia University From the Back Cover “Caplan offers readers a delightful mixture of economics, political science, psychology, philosophy, and history to resolve a puzzle that, at one time or another, has intrigued every student of public policy.”–N. Gregory Mankiw, Harvard University, former chairman of the President’s Council of Economic Advisers”Why democracies so often make a hash out of economic policy is one of the great questions of political economy. Bryan Caplan suggests some provocative, and highly original, answers. This book may make you smile or it may make you scowl, but it will definitely not make you bored.”–Alan S. Blinder, Princeton University”The Myth of the Rational Voter discredits the fashionable view that democratic politics necessarily prevents socially harmful policies. Voters lack incentives to become well informed about political controversies, Bryan Caplan shows, and their policy choices tend to be based on deeply, persistently, and systematically mistaken models of reality. Caplan’s findings lead inexorably to the conclusion that democratic governance can be improved only through reforms based on realistic assumptions about human cognition. Anyone concerned about political efficiency should read this elegant book carefully.”–Timur Kuran, author of Islam and Mammon”Bryan Caplan blends economics, political science, and psychology in an arresting and informative polemic that is witty, crisp, cogent, provocative, and timely. You may or may not agree with his assessment of our democracy, but you will be entertained, challenged, and perhaps angered, but also enlightened.”–Scott Keeter, Pew Research Center”The argument Caplan offers is basically right and is extremely important. I suspect this book will stir up a certain amount of controversy. The argument challenges conventional public choice in that it radically undermines the notion of substantively rational voting. At the same time, it is in the same skeptical tradition as public-choice orthodoxy, challenging the claims of democratic enthusiasts. It is a book that deserves to be taken very seriously.”–Geoffrey Brennan, coauthor of The Economy of Esteem”Poorly informed voters are a big problem in democracy, and Caplan makes the interesting argument that this is not necessarily a problem that can be easily fixed–it may be fundamental to the system. Caplan thinks that voting itself is the problem.”–Andrew Gelman, Columbia University About the Author Bryan Caplan is associate professor of economics at George Mason University. He is the coeditor of the Weblog EconLog. Read more

Reviews from Amazon users which were colected at the time this book was published on the website:

⭐Economists have spent a lot of time discussing market failures. The implicit assumption is that we should get the government involved to fix the problem. Free markets got their revenge with classical public choice theory. It applies an economic analysis to the government and finds that “government failure” is widespread. Don’t assume that governments will do a better job – it may do a much worse job. Compare the incentives of consumers to that of voters. Consumers who do their homework can usually get a better quality product at a lower price. By contrast, voters do not have an incentive to do their homework because their one vote is unlikely to change the election. They will get the same government regardless of whether or not they do their homework. Thus voters suffer from “rational ignorance.” The outcome is bad government.The scoreboard so far: liberals 0, libertarians 1.Clearly the stakes of public choice theory are very high. Enter Donald Wittman who launched a powerful challenge that turned the tables. Do you remember

⭐? (If not then buy it now. Do not pass go, do not collect $200). He opens with the story of a contest at a county fair. The goal is to guess the weight of an ox after it had been slaughtered and dressed. The crowd all entered their guesses. After the contest was over the statistician Francis Galton took the entries and calculated the average guess. Galton was a eugenicist who expected that the average guess would be very poor. After all, you couldn’t expect a bunch of commoners to do as well as learned, educated men. But it turned out that the average guess of the crowd was 1723 and the weight of the ox was 1722. The collective wisdom of the crowd was only off by one pound! The reason is simple: as long as errors are random then they will generally cancel out. As you get more and more people in the crowd the average guess will get closer and closer to the real value.Wittman uses the wisdom of crowds effect to defend democracy. Suppose A and B are running for a political office and A is the better candidate. If voters are fully informed then A would get 100% of the vote. If voters have are completely ignorant – if they have no information at all – then they will be forced to pick at random. They would pick the winning candidate 50% of the time, as often as flipping a coin. Now, we know that voters are ignorant but they do have some information. Voters aren’t 100% ignorant. Suppose they only have a small amount of information which lets them pick the superior candidate 51% of time. Then A will win the election with 51% of the vote. The wisdom of crowds refutes classical public choice theory.The scoreboard at this point: liberals 2, libertarians 1.That is where Bryan Caplan enters the picture. He picks up Wittman’s guantlet. As Surowiecki points out, the wisdom of crowds effect only works if the errors are random – if people are just as likely to guess a weight that is too high as too low. It does not work if voters make systematic errors. E.g. suppose that a highly respected cattleman were to loudly claim that he believed that the weight was about 2000 pounds. This would cause the crowd to systematically err to the high side. Caplan musters empirical evidence to show that voters are systematically irrational. He identifies four main areas: (1) voters do not appreciate the vital role of profits and prices, particularly when they are high, (2) voters do not appreciate the benefits of free trade, (3) voters incorrectly put jobs ahead of productivity, and (4) voters are overly pessimistic.With the empirical data settled Caplan’s task is to explain why voters make systematic mistakes. His explanation of “rational irrationality” basically draws from

⭐by Robert Edgerton. Edgerton is an anthropologist who is critical of the myth the noble savage – that primitive societies are happy and harmonious. He conclusively shows that they are quite often ugly, violent, and irrational (actually Lawrence Keely was the first to take down the myth of the noble savage). But there is a crucial point. Very few primitive societies have irrational beliefs about how to hunt. But they do often have irrational beliefs about the weather, magic, and medicine. The lesson could be put this way: the needs of day-to-day survival are harsh. Irrational beliefs are punished swiftly and harshly. An irrational belief about hunting will lead to an empty belly and that will provide a powerful reason to change it. Thus people will not harbor irrational beliefs when there is immediate feedback. But what about irrational beliefs that do not provide immediate feedback? Those are beliefs that people can hang onto.That takes us in the same direction as rational ignorance: democracies do not punish irrational beliefs because one vote is unlikely to change the election. A consumer with an irrational belief is punished by buying an inferior product. That gives him an incentive to get change his belief. Voters are never punished for having irrational beliefs. If you are a liberal you can blame the problems in society on corporate greed. If you are a libertarian you can blame the problems in society on big government. One of those beliefs is wrong and one is right, but you will never be punished for having the wrong belief because your vote will not change society. Thus voters are systematically irrational and bad government is the outcome.Final scoreboard: liberals 2, libertarians 3

⭐Overall, this was an excellent book. Caplan does a great job at questioning the status quo of the wisdom of democracies. However, he’s trying to play two hands. On the one hand, he’s directing this book to laymen. On the other, he’s also directing this at policy wonks. I think the book does an excellent job at the former and a mediocre, at best, job at the latter.Caplan does an immaculate job at showing the public is pretty stupid when it comes to basic economic concepts. Concepts that tend to be very important in politics. Granted, Caplan runs with the little evidence that economic policy is the most important political matter. He almost uniformly ignores social research (and even alludes that many social issues are actually economic). He also does a good job showing that markets are, overall, very good. Markets can solve many problems. Markets are usually better than government policy to solve problems (what “government policy” is to Caplan is ambiguous). With the right instructor this book would be great for a Freshman seminar.However, Caplan does a poor job at framing his argument for more educated readers. He does occasionally point out these gems:”An outsider who eavesdrops on Krugman’s or Stiglitz’s debates with other economists might get the impression that the benefits of markets remains controversial. To understand the conversation, you have to notice what economists are not debating. They are not debating whether prices give incentives, or if a vast business conspiracy runs the world. Almost all economists recognize the core benefits of the market mechanism; they disagree only at the margin.”This is absolutely correct. The problem is when Caplan mixes-and-matches what he calls capitalism. Caplan often cites liberal economists to prove basic economics tenets. Then he will cite conservative economist, espousing public choice theory, when his arguments get controversial (something almost no liberal economists agree with). He will argue against command-and-control policies but then pretend that cap-and-trade is a market solution. It is in a way but not in a way conservatives would accept. It’s a market but, to use the words of my first econ professor, it’s an “artificial market”. It’s been created exclusively by the government and is a government controlled program. It’s not the same type of market Adam Smith wrote about. It’s really not much different than taxes to curb behavior. Caplan completely glosses over that.Caplan focuses his research on 4 different microeconomics policies. He mostly uses examples that have been decided 50+ years ago (free trade, price controls). He fails to mention many of the things taught by economists (ex: Oligopolies) were once considered heresy by conservative economist. He completely ignores macroeconomics. Macroeconomics (FED + Fiscal policy) may be more important than all of the micro issues discussed combined. Nobody has a clue how the FED works and an econ 101 class is never going to change that.And this gets to the big issue: It’s the micro subjects he discusses that most favor his political ideology. It’s the micro issues that would probably do best with less regulation and more markets. If you start talking about macro then you run into some huge ideological rifts. The average person is never going to understand aggregate supply/demand and the IS-LM model. It’s easy to argue under a Keynesian or Minsky-esque model of the economy that a large, inefficient government is still better than a small, efficient one. This is something Caplan ignores. Ironically, this book was written in 2007. A year before the crash.My opinion: This book makes an excellent argument for having a more technocratic government. Placing less control within the hands of popular opinion and more control in bureaucracy. Imagine if fiscal policy was controlled the same way monetary policy is controlled? Essentially, Caplan is asking for an Aristotelian aristocracy. He’s probably right.

⭐Der Autor ist mit dem Buch in den USA recht bekannt geworden. Es werden zahlreiche Fakten zusammengestellt die die die Unkenntnis und teilweise auch irrationale Handlungsweise von Wählern illustrieren. Daraus wird der Schluss gezogen, dass die Demokratie keine gute Regierungsform sei. Die Konklusion folgt nicht aus den Prämissen. Leider ist die Argumentation in dem Buch oft sehr unsauber. Schade.Why do poorer, conservative Americans vote for the Republicans who will take away their benefits? Why do affluent liberals in New York vote to raise their own taxes?Bryan Caplan suggests a common economic model for understanding voter behavior: that we vote in our rational self-interest, is false. Political scientists have rejected this idea in the face of clear evidence, but the model persists in economics. Caplan, suggests an alternative model which would explain the evidence we see from political science and observing how government functions. The model has three parts:1. That voters have almost zero incentive to vote rationally. The chance an individual ballot will change the outcome of an election is so small, that individuals can vote nearly however they like knowing that, individually, their decision will not have costs.2. That voters have preferences over beliefs. Put simply, there are beliefs that voters hold which they prefer over other beliefs, perhaps because those beliefs make them feel better about themselves, those beliefs signal group loyalty or those beliefs operate as default human assumptions about the world and require effort to be disabused.3. This mild preference over beliefs dominates the low individual cost of voting misconduct, therefore voters consistently elect politicians that represent these preferenced beliefs, rather than either their self-interest or sense of public welfare.Bryan Caplan enumerates four types of these beliefs which create harmful policy:1. Anti-foreign bias. We distrust foreigners, so we limit trade and immigration much more than is necessary.2. Anti-market bias. We don’t understand how markets and pricing mechanisms work, so we don’t employ them in many situations where they would be preferable to command and control type solutions.3. Make-work bias. We think in terms of jobs, not in terms of production, even though production is what matters. Labor saving technologies are viewed as destroying jobs, when they really should be viewed as saving people toil.4. Pessimistic bias. We are overly pessimistic about the future, which leads to poor decisions.Caplan’s conclusion is that we would be better off if fewer decisions were put in the hands of the electorate and left to markets.

⭐Arrived, book as advertised. All good. It was a gift so I did not read it but receiver enjoying.

⭐A provocative and well constructed essay, although data basis is limited and there is excess discussion. The message is that voters chose to vote wrongly not because they don’t know better but because they feel better by it and they lose nothing.

⭐Awesome book, very accessible academic book. Caplan makes a compelling case as always. Could have a more fleshed out conclusion.

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