Sunday, December 14, 2008

Does voter rationality have to be a myth?

I think it was probably the sheep on the cover of the book that caught Jim’s eye. When he saw my copy of Bryan Caplan’s book, “The Myth of the Rational Voter”, Jim picked it up and asked me what it was about.

I explained that Bryan Caplan considers that voters tend to have irrational views when it comes to issues like free trade. He argues that this irrationality is a predictable response to the incentives associated with voting. Since there is a miniscule probability that the vote of any individual will be decisive in changing the result of an election, people can vote according to their feelings about how the world works – however wrong those feelings might be – safe in the knowledge that their individual vote is not likely to determine the outcome. Caplan reckons that when people vote they don’t weigh up the options the way they do when they make decisions that they expect to affect outcomes. They talk about their voting options as if they were ordering dinner from a menu, but their actions suggest that they expect to be served the same meal no matter what they “order”.

Jim did not seem overly impressed with Caplan’s views. He said: “That is what I would expect from a typical economist. You blame voters for being irrational about issues like trade protectionism, but most of you do a lousy job of explaining the benefits of trade.'

So I asked Jim how he would explain the benefits of trade. Without even pausing to think, he said: “Well, I would tell them what my father told me. Dad was a successful wheat-sheep farmer, but he was also a really good mechanic and a great gardener as well. One day, when I was still a kid, I asked him why he paid the local garage to service the family car when he could do it himself and why he didn’t grow all the vegetables we needed at home. I mentioned that Jack Smith up the road serviced his car, grew his own vegetables, milked a cow and kept chooks. Dad asked me whether I thought the Smiths were prosperous and successful farmers. I had to admit that I thought they always seemed to be struggling to get by. Dad explained that when you try to be self-sufficient and spend a lot of your time doing things like servicing your car, gardening, milking cows and feeding chooks instead of focusing on your strengths, you inevitably end up just eking out a subsistence living.
The same is true for the whole country. We are better off if we specialize in producing the things we can produce at relatively low cost and trading with the rest of the world to get the things that are costly to produce domestically.”

I was quite impressed by Jim’s explanation. I suppose that is why I forgot that he wasn’t an economist. I said: “A lot of people seem to have a good intuitive grasp of opportunity cost and the benefits of specialization from their own personal experience. It shouldn’t be too hard to get them to understand the benefits of free trade.”

“What is opportunity cost?” Jim asked. But before I could explain, he said: “Don’t bother trying to explain. I’ve got better things to do with my time that to listen to you trying to explain esoteric economic concepts. You economists should learn to talk the same language as the rest of us.”

After I had written this I was wondering where Jim had picked up his views about the benefits of international trade. It is easy enough to grasp of the advantages of specialization in running a business, but it is not intuitively obvious that this reasoning is relevant at an economy-wide level. When I rang him to inquire, Jim told me that he had learnt all he knew about economics from Bert Kelly. He said: “Bert Kelly was a great economist because he knew how to explain things so that they made sense.”
I didn’t bother telling Jim that C. R. (Bert) Kelly did not have any formal economics training. Bert was a politician and newspaper columnist who made a huge contribution to economic reform in Australia by explaining economic issues in a way that could readily be understood by people without formal training in economics. Bert died in 1997 and is still sadly missed.


Proud to Be an... said...

It has become my position, which is absolutely not original, that voters are more reasoning than scholars like to lead on. It is most likely true that the average person does not read politico or fact-check what they read online or see on TV but that does not mean they are not reasoning. Can a religious view or job position be a reason to vote for some one? Who is to say voting based on sexual orientation is not just as reasoning as knowing the complex nature of our economy? Yes it is true, in my opinion, that just because you reason to vote one way based on issue A does not mean you know what the outcome of issue A might be. But then again, if those we elected understood it all we would be much better off. We all reason on what we know now, because to reason for what might happen in the future is hard when we are voting on a Hallmark card idea of our candidates. Just a thought. Great Post!

Winton Bates said...

Yes, if those we elected understood more we would be better off.
I also think voters are willing to elect politicians who say that before we vote on complex issues we want to be better informed and we want the media and public to be better informed. So we will set up a processes to give us independent professional advice about how we can best achieve our objectives.
I will write more about this in a later post.

Me-Me King said...

Great post, Winton. I have noticed the election process has become more social - lacking thought. Personalities and popularity, seemingly, have determined the "big picture". Yes, there are far too many sheep.

Winton Bates said...

Thanks Me-Me.
Some people (particularly Geoffrey Brennan and Loren Lomasky)argue that voters have become like fans at a football game, cheering for their team to win rather than supporting a particular team because of its policies. This amounts to the same thing as brand name loyalty - support does not depend on the quality of the product.
I don't think we should be too pessimistic about this kind of thing. First, I suspect that it occurs to the largest extent when there is least difference between the policies of the major parties. So, it may not make much difference - even though it would be good if voters were presented with a real choice. Second, brand loyalty can give governments scope to introduce unpopular reforms (as occurred with labour governments in NZ and Australia in the 1980s and early 90's). Third, brand loyalty has its limits. People don't like having the wool pulled over their eyes. (I don't imagine sheep like that much either!)

Proud to Be an... said...

I find the whole football team argument to be a bit ridiculous. I am not going to argue that people do not jump on a band-wagon because they do, but voters would easily change who they were to vote for if a policy issue mandated it. For instance, in the United States, I believe a voter would have changed their position in the election if President-elect Obama policy was to let the economy take care of itself. Just because individuals may seem like "sheep," because they may be voting on the same issue, does not mean their vote is not rational. I could just have a little more faith in humanity than I should.

I just started a blog, I would like you to check it out if you have time. Thanks! and once again Great Post, I could go on for hours with this topic.

Jim Belshaw said...

Happy Christmas, Winton. Ian Wearing and I had lunch with Bert Kelly and Don Chip at Parliament House all those years ago. I had wanted to meet the modest member, and Ian set it up.

I look forward to seeing you write more over 2009. For my part, I have just started a weekly column in the Express (their invitation), so that's another outlet if not on-line.

This blogging is a marvelous thing because of the way it provides a vehicle for the thoughtful as well as the trivial.

Winton Bates said...

Proud to Be an said: "I find the whole football team argument to be a bit ridiculous ...". Perhaps it is more like support for pop stars?
Whatever the most appropriate analogy, it seems to me that personalities play a huge part in politics these days. But I don't think this matters as much as some other factors e.g. the difficulty that many voters have in making choices where complex issues are involved.

Winton Bates said...

Jim Belshaw:
Season's greetings to you too! (I'm sorry for the delay in responding. We have had family visiting over Christmas - so I have had a few "blogging-free days". Now I feel as though I need a few food-free days!)

It was interesting to hear how you met Bert Kelly. I'm not quite sure when I first met Bert, but I remember one conversation after he had left parliament. I was attending a conference (probably the agricultural economics conference) and was sitting in a lecture theatre with one or two other staff members of the Industies Assistance Commission. Bert came and sat next to us and asked how things were at the IAC. We took the opportunity to tell him we were not happy about the way the government was treating the organisation at that time. Rather than responding sypathetically, as we had expected, Bert gave us a little pep talk about how grateful we should be to have jobs that enabled us to do such important work in exposing the costs of protectionism - and on top of that to have taxpayers pick up the tab for the cost of sending us to the conference. Thinking back now, it was probably a point worth making.

Best wishes for your column with "The Express" - and for everything else in 2009.