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The Myth of the Rational Voter
Why Democracies Choose Bad Policies
by Bryan Caplan
Princeton University Press © 2007
• Voters often know little about what they vote for, but they vote anyway.
• Voter ignorance of basic economics is surprisingly widespread.
• This ignorance leads to a number of pervasive biases.
• Voters underestimate the benefi ts of markets.
• Voters mistrust foreigners.
• Voters support make-work over effi ciency.
• Voters are irrationally pessimistic about the economy.
• Voters choose ideology over fact.
• Educated voters are less susceptible to these biases.
• Economic education may lead to more enlightened economic policies.
Rating (10 is best)
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democracy is a
in practice it
gives them a
“The reason why
economics is that
it is at the heart
of most modern
What You Will Learn
In this Abstract, you will learn: 1) How little the voting public knows about basic
economics; 2) Why this is a problem for democracy; and 3) What to do about it.
Economists on the right and the left agree on a surprisingly large number of policy
issues. They believe free trade is good, the U.S. budget defi cit is not a problem and most
human beings are better off now than in the past. Yet the democratic public doesn’t agree.
It fears trade and foreigners, thinks the budget defi cit is a big problem and is pessimistic
about the economy even during periods of record economic growth. But the worst part,
says economics professor Bryan Caplan, is that the public votes. Drawing on empirical
research about voter attitudes, Caplan describes how voters are mistaken about many
policy issues and – more importantly – why they are wrong. His account is frighteningly
plausible, but so is his solution: more economic education. getAbstract recommends
this pithy volume to anyone concerned about voters’ ostensibly self-defeating behavior.
Democracy may be better than the alternatives, but no one said it was easy.
The Enlightened Public
If the average American is any indication, voters are shockingly ignorant. For instance,
each state in the United States has two senators. Europeans can be forgiven for not
knowing this elementary fact about U.S. politics, but you would think most Americans
would know it. Nope. Small wonder, then, that fewer than 40% of U.S. voters can name
both their senators. Fewer still know their senators’ party affi liations, even though a
random guess gives them a 50% chance of being correct. And only about a quarter of
voters know how long senators serve (six years).
Perhaps worse, voters seem to be shockingly knowledgeable about political trivia. Take
the 1992 campaign for the U.S. presidency. Fewer than 20% of voters knew Bill Clinton’s
environmental record. But almost 90% knew that vice presidential candidate Dan Quayle
picked a fi ght by criticizing a television character. Quayle, the candidate who couldn’t
spell “potato” and stressed the importance of “bondage between mother and child,” lit
into Candice Bergen’s character, Murphy Brown, over the “immorality” of being a
single mother. Only 15% of voters knew the candidates’ positions on the death penalty.
Thankfully for the health of the American republic, though, 86% of voters could name
the incumbent president’s dog.
It’s the Economy, Stupid
Voters consider the economy the “most important problem” in almost every election.
(Recall Bill Clinton’s 1992 campaign mantra: “It’s the economy, stupid.”) But do
voters understand the economy? In 1996, the Harvard University Survey Project, the
Washington Post newspaper and the Kaiser Family Foundation decided to fi nd out. Their
“Survey of Americans and Economists on the Economy” asked 1,510 randomly chosen
Americans and 250 people who held doctorates in economics a list of 37 questions
about the economy, and then compared the results. They found that voters’ grasp of
The Myth of the Rational Voter © Copyright 2007 getAbstract 2 of 5
is the primary
activity of the
among the most
– if not the most
“Voters are worse
than ignorant; they
are, in a word,
irrational – and
“An irrational voter
does not only hurt
is, as a result of
more likely to live
charge – the
voters – are doing
to pass basic
basic economics – supply and demand, gains from trade, the benefi ts of increased labor
productivity – was, at best, impressionistic. At worst, it was frightening.
The survey asked respondents for likely reasons why the American economy was not
doing better. Respondents were given a number of possible explanations and asked whether
each was “a major reason,” “a minor reason” or “no reason at all” for weak economic
performance. For instance, foreign aid: Is it a brake on the U.S. economy? The public
overwhelmingly said yes. Is it? No. Foreign aid is a tiny percentage of the U.S. economy
– less than 1% of GDP. Accordingly, economists almost unanimously considered it “no
reason at all” for poor economic performance. What about people on welfare? Are those
“welfare queens” hurting economic performance? The public thinks so. In fact, the public is
even more worried about people on welfare than about foreign aid. Economists, in contrast,
don‘t worry about welfare, which is a small bit of the U.S. budget.
Who else does the public blame for a misfi ring economy? It blames those nefarious
immigrants, of course. But economists have a different answer: The putative “surplus”
of immigrants has almost no effect on the economy. What about taxes? The public thinks
high taxes in the U.S. are hurting the economy. Economists say, generally, no, although
they do have some effect. In fact, though they are seen as “conservative,” economists
generally don’t share the public’s support for tax cuts. The public also blames “women
and minorities” who “get too many advantages under affi rmative action.” What say the
economists? Affi rmative action has essentially no deleterious effect on economic health.
Are these Ph.D.’s really apostles of what Carlyle called the “dismal science”? Their
outlook hardly seems grim.
The survey also asked about specifi c issues, such as gas prices. Is gas too expensive in the
U.S.? Most economists think it’s not expensive enough. The public feels differently. When
it comes to the explanation behind these “too high” prices, economists cite normal supply
and demand. The public prefers to blame oil companies for “gouging” the customer. When
asked about unemployment, the public blames technology, downsizing and “sending jobs
overseas.” Economists do not oppose downsizing that keeps a fi rm alive and saves other
jobs, though “everyone reviles a profi table fi rm that downsizes…to be more profi table.”
Economists don’t necessarily oppose off-shoring, because “there are more remunerative
ways to use domestic labor.” And they don’t think technology is destroying good jobs.
They thank technology not just for iPods, HDTVs and new medicines, but also for
increasing workplace effi ciency – and thus improving human welfare.
Who Are You Calling Biased?
Survey respondents who are not economists demonstrate four well-entrenched, systematic
biases that cloud their thinking on economic (and most likely other) policy issues: an
“antimarket bias,” an “antiforeign bias,” a “make-work bias” and a “pessimistic bias.”
• Greed is bad – Most voters don’t consciously appreciate the benefi ts of markets. They
voice many variations on this antimarket theme. Some people focus on the “base”
motives of business people. Others think that if a business has high profi ts, it must
be “gouging” customers or it must have a monopoly – another popular idea of why
markets must be evil. But, at least since Adam Smith, and probably before, writers on
economics have described, in detail, how irrelevant motives are in a market. They also
have described again and again how the corporate desire for profi t benefi ts consumers.
Yes, monopolies sometimes arise, but they are far less common than supposed and
collusion to keep prices high is much more diffi cult (and rare) than it seems.
The Myth of the Rational Voter © Copyright 2007 getAbstract 3 of 5
never take a
and other foolish
the religion of
the adherents of
many people fi nd
comfort in their
and greet critical
the price of
is close to zero.
So we should
to ‘satiate’ their
them feel best.”
many of the most
socially benefi cial
ideas in human
combated many of
the most virulent.”
• Foreign devils – Around the world, people blame foreigners for all sorts of ills. This
is unfortunate, because interactions with foreigners can deliver huge benefi ts to all
sides. Trade is not warfare, though many enjoy conceiving of it as a battle. Even if
one country (say, Germany) can make every product more effi ciently than another
(say, Greece), trading is still in both countries’ interests. Nor is immigration so bad.
Economists often argue over trade and immigration policies, but few in the very
wide mainstream of economics, right or left, deny that foreign interactions are, on
balance, good for everyone.
• Creating things vs. adding value – In the view of most voters, Sisyphus was lucky. Sure,
his task of pushing a boulder up a hill every day wasn’t particularly productive, and
it must have been frustrating to watch it roll down again after manhandling it to the
summit. But at least he had work. This is the make-work bias – the idea that having a job
is more important than creating value effi ciently. When asked about higher productivity
in the abstract, voters are generally supportive. When asked about policies that “create
jobs,” however, voter concerns about productivity go out the window. Economists, on
the other hand, have known for a long time that productivity is good, even if it leads
to (temporary) unemployment. Technology, which is the main engine of productivity,
also creates jobs – different ones. In 1800, nearly 95 of every 100 Americans worked to
provide food for the country. Today, only three out of every 100 labor to produce food.
What are those other 97 Americans doing? Other jobs.
• The glass is half-empty – When it comes to economic problems and overall economic
performance, voters are pessimists. They look back – far back – with nostalgia. They
see symptoms of “decline” everywhere and fear the future. By any measure, most
human beings today are better off than people have ever been. Yet, the pessimistic
bias remains. Could things be better? Absolutely. But the gap between perceptions of
well-being and actual well-being seems to be increasing. Even when economists get
“pessimistic” about, say, GDP growth, such pessimism is usually about relative growth
rates – say, from 3% growth to 2% growth. This hardly means the end is nigh.
Tu Quoque? (You, too?)
Maybe it’s not the public who is biased. To borrow a phrase from Ludwig von Mises,
maybe economists are, “Sycophantic apologists of the unfair class interests of the
bourgeois exploiters.” The tendency of economists to extol the virtues of markets, trade
and effi ciency, and to see a rosy economic future may be the result of at least two biases:
an “ideological bias” and a “self-serving bias.” After all, most Ph.D. economists have
cushy tenured jobs that protect them from the market forces they laud in journals and on
the editorial pages of The Wall Street Journal. And, economists can hardly be expected
to renounce the conclusions of their own profession.
Neither of these objections hits the mark for a couple of reasons. First, the data from the
“Survey of Americans and Economists on the Economy” allows analysis of a subset of
the public: Educated people. When attributes like gender, income and age are controlled,
education narrows the gap between the public and the trained economists. The so-called
“enlightened public” generally agrees with the economists. Easy to explain, you say:
“Educated” people have been indoctrinated at the university. Perhaps, but consider the
second response: Could a whole fi eld be so wrong about the very subject it exists to study?
Certainly experts can be mistaken. But is an entire fi eld more likely to be wrong than
nonexperts? Compare: Who is more likely to be right about plate tectonics – geologists or
the layman? The economists’ consensus, then, seems more likely to be correct than not.
And remember, economists across the political spectrum generally agree with each other.
The Myth of the Rational Voter © Copyright 2007 getAbstract 4 of 5
“I see neither
Instead, I see
fall short because
voters get what
benefi ts of
at no cost
Supply and Demand
Even if economists can be trusted to know about their fi eld of study, the fact that the public
gets things so wrong is certainly strange. What could explain it? Supply and demand,
believe it or not. People have preferences about their preferences. They want to believe
some things and disbelieve others for a number of reasons: to preserve their self-images, to
go along with the crowd and to remain consistent, to mention three. These are the benefi ts
of ignoring evidence. What about the cost? If you move into a new neighborhood where
you are the only liberal (or conservative or moderate), you may be less likely to maintain
your beliefs. You may be hectored or ostracized for going against the grain.
Now suppose that the people in your new neighborhood don’t care about your political
beliefs. You have opposing values, but they don’t think that is a big deal. This brings
the cost of your “strange” beliefs down toward zero, while maintaining the benefi t to
you (consistency). Now you have little reason to change. It’s a little like pollution. If you
produce toxic waste and can dump it in a nearby river without cost, you might do so.
Economists call this an “externality”: a cost that is not born by the person who benefi ts.
Political beliefs are, likewise, a kind of externality because – in a democracy – people
can indulge in them without much, if any, cost.
Why? Because in a democracy, one vote is unlikely to decide an election. As the size
of the electorate increases, the effect of your individual vote decreases almost to zero.
So you have little reason not to “vote your conscience” or to go along with your friends.
Consider rich movie stars who consistently vote for candidates who promote higher
income taxes. Sure, if their candidate wins, they’ll pay more – probably a lot more. But
their vote most likely makes little difference in the election, so why not vote based on
ideology? That way, these stars can fl aunt their ideological credentials without limit.
They get the benefi ts without the costs.
The Miracle of Aggregation
Is the democratic ship of state, then, being piloted by a drunk? Traditionally, political
scientists and theorists of “public choice” say no. The “miracle of aggregation” saves
ignorant voters from themselves. This is the “wisdom of crowds” applied to democracy
rather than being used, say, to guess how many jelly beans are in a jar. Given enough
voters, the “errors” cancel each other. If a whole segment of the electorate randomly
votes “yeah” or “nay,” the miracle of aggregation holds that all the ignorant voters offset
each other, leaving the enlightened few in command.
One problem, though: systematic bias undermines the “wisdom of crowds.” Independence
is a condition for wise crowds. If the crowd is systematically biased (and crowds generally
are), then the “wisdom of crowds” becomes “the folly of herds.” What can be done about
that? The solution is hidden in the data from the survey: Education. The more educated
the democratic electorate is, the less biased it will be. A long tradition of economic
thinkers, from Adam Smith to New York Times columnist Paul Krugman, have tirelessly
tried to communicate the basic facts of economics to the public. Like Sisyphus, these
economic educators need not worry about running out of work.
About The Author
Bryan Caplan is Associate Professor of Economics at George Mason University and coeditor
of EconLog, an economics blog.
The Myth of the Rational Voter © Copyright 2007 getAbstract 5 of 5