Bryan Caplan’s The Myth of the Rational Voter – A Quick Guide for Libertarians

I was recently asked by the convener of this blog, Sukrit Sabhlok, to write a piece on a 2007 book by George Mason University economist, Bryan Caplan, entitled The Myth of the Rational Voter: Why Democracies Choose Bad Policies (MRV). This book has been discussed at length amongst the economics profession (including on my own blogsite), and it is my great pleasure to revisit my thoughts on this landmark book – including, on this occasion, to explore some implications for libertarian thinkers and activists.

A summary of Caplan’s arguments

Many readers of this blog will be aware of a standard proposition of public choice theory known as voter ‘rational ignorance’. According to this concept, when the cost, to a voter, of acquiring information about political issues is greater than the benefits to be derived from the information, and where the impact of an individual vote on a general election outcome is infinitesimal, it is rational for that voter to remain ignorant of the election issues at stake.

This assumption of voter behaviour, in effect, drives many of the key messages of public choice theory that libertarians largely accept today. For example, as Caplan describes it, ‘while voters sleep, special interests fine-tune their lobbying strategy’ (MRV, p. 97) to obtain subsidies (and other benefits) at the expense of the ‘sleeping’, rationally ignorant voting community.

Bryan Caplan challenges this rational ignorance hypothesis by arguing that voters tend to hold systematically biased, irrational beliefs about economic phenomena. In general, these beliefs are of low information content and tend to be defended in a dogmatic fashion when challenged (… go on, try and challenge the views of Average Joe/Joan on free trade and labour market deregulation, for starters, and see how they react!). In Caplan’s view, ‘democracy fails because it does what voters want. … An irrational voter does not hurt only himself. He also hurts everyone who is, as a result of his irrationality, more likely to live under misguided policies’ (MRV, p. 3).

Based on his reading of the historical and contemporary literature on economic beliefs, Caplan derives four general categories of biased economic sentiments held by the general population:

  • Antimarket bias: The tendency to underestimate the benefits of the market mechanism. Where an economic luminary such as F. A. Hayek would see the marvels of the extended order of the market everywhere, the typical voter sees such marvels nowhere – and, in many cases, equates market phenomena such as profitability and interest as examples of unbridled monetary confiscations by ‘greedy’ businesses.
  • Antiforeign bias: The tendency to underestimate the economic benefits of interaction with foreigners. Communal antagonism towards such trends as outsourcing certain employment functions overseas, or selling raw materials to faraway traders, is reminiscent of the eighteenth-century doctrine of mercantilism that Adam Smith so brilliantly demolished in an intellectual sense, but still lives on today in the hearts of the citizenry.
  • Make work bias: The tendency to underestimate the economic benefits from conserving labour. Those who look to the visible face of job losses resulting from structural change today often overlook the job gains (often by those who lost their jobs) to be made tomorrow in emerging industries.
  • Pessimistic bias: The tendency to overestimate the severity of economic problems, and to underestimate the recent past, present and future performance of the economy. Despite the good news spread by Julian Simon and, more recently, Johan Norberg, many average voters seem to feel that Malthus was correct in diagnosing the allegedly poor prospects for the market economy.

Caplan then reveals the results of interesting empirical work that tests the extent to which the general public (in the United States) subscribe to these economic biases. Drawing upon a 1996 survey of ‘Americans and Economists on the Economy’, he finds that economists and the general populace hold radically different beliefs about the economy. As stated in a summary paper on the Cato Unbound blog, ‘compared to the experts, laymen are much more sceptical of markets, especially international and labor markets, and much more pessimistic about the past, present, and future of the economy. When laymen see business conspiracies, economists see supply-and-demand. When laymen see ruinous competition from foreigners, economists see the wonder of comparative advantage. When laymen see dangerous downsizing, economists see wealth-enhancing reallocation of labor. When laymen see decline, economists see progress’ (Cato Unbound blog, November 2006).

Caplan argues that the key to ameliorating the effects of economic biases on the body politic is to increase the costs of subscribing to irrational beliefs. A number of suggestions are put forward in MRV:

  • Restrict the franchise to, in effect, raise the competence threshold associated with voting. This would, in turn, increase the level of economic intelligence attributable to the median voter. An alternative reform would be to adopt a form of ‘plural voting’, whereby extra votes are accorded to those individuals with greater economic literacy (such as people with tertiary qualifications).
  • Reduce, or eliminate, efforts to increase voter turnout at elections. It is expected that such a strategy would discourage economically damaging vote-buying conduct by politicians that seek the electoral affections of the economically biased. This proposal is largely inapplicable to Australia’s system of compulsory voting, however I do note that changes to electoral laws that, say, limit the ‘window’ of time available for voters to register (or register a change of address) on the electoral roll might have (at least vaguely) similar effects.
  • Increase the amount of economic education received by the voting population, as a means of rooting out the biases that voters arrive with at the ballot box on election day.
  • Allowing economically literate individuals with policy leverage (for example, bureaucrats) to exercise opportunities to improve policy. Caplan quotes Ronald Coase, who once stated that ‘An economist who, by his efforts, is able to postpone by a week a government program which wastes $100 million a year … has, by his action, earned his salary for the whole of his life’ (MRV, p. 199).

Libertarians would all tend to approve of Caplan’s additional idea that ‘it is a good idea to rely more on private choice and the free market’ (MRV, p. 197). To put it in another way, a reduction in the size and scope of government economic intervention should, other things being equal, ensure that voters have fewer issues to be biased about when registering their democratic choice on election day. While it often feels that we classical liberals and libertarians are swimming against the tide of ever-increasing government activity, I am sure that we can at least agree with the sentiment enunciated by Caplan about the capacity of the market as a substitute for collective action.

Some questions and queries from the blogosphere

As would be expected for a work that conveys a host of fresh ideas on public choice theory, MRV has led to numerous debates across economics and political science blogsites (as well as in newspapers, magazines and journals). Whilst I don’t intend to provide an exhaustive summary of these debates, it is appropriate to draw attention to a sample of interesting comments and perspectives drawn from the blog debates.

MRV was the subject of a month-long debate on the Cato Unbound website in late 2006. In addition to a nice summary of the work by Caplan himself, the blog drew in some ‘heavy hitters’ from political science and philosophy such as David Estlund, Loren Lomasky and Jeffrey Friedman.

Lomasky, for example, suggests that Caplan effectively invokes the age-old Platonic concept of the ‘philosopher king’ (which, as an aside, was critiqued by Karl Popper some six decades ago) in the suggestion to transfer economic policy determinations away from voters and towards bureaucracies. According to Lomasky, ‘It is not obvious … that the resultant efflorescence of regulatory commissions and bureaucratic technocracies constitutes a triumph of political wisdom or liberty. Plato, I think, was too enamored of philosophers. Because he was one, he should have known better. Caplan is partial to the policy judgments of economists. Because he himself is one, he should know better’. Friedman and Estlund express similar points of view.

Jeffrey Friedman goes on the offensive regarding the source of voters’ economic irrationality, by asking if it would be ‘more plausible to allow that most people have never even heard the economists’ arguments; and that these arguments are, in any event, counterintuitive – which is why we need Adam Smith, and Peter Bauer, and so forth, to produce them in the first place? … Voters who don’t understand economics because they haven’t been exposed to it, or because they’ve been exposed to it but have found it tough going, aren’t irrational, they’re just ignorant‘.

Over at Volokh Conspiracy, Ilya Somin commends MRV as ‘the most important work on political ignorance in at least a decade, and possibly longer’. However, like Lomasky, Friedman and Estlund, Somin is sceptical of Caplan’s proposition that ‘transferring more political power to knowledgeable experts is a good solution to the ignorance of the rational voter. … I have serious doubts about Bryan’s … paean to expertise’ of so-called apolitical expert bureaucrats.

At Marginal Revolution, a debate over MRV centred on a fourteen-page critical review manuscript written by George Mason University economist, Daniel B. Klein. The Klein manuscript provided various suggestions for improvement of any future edition of MRV, including the need to clarify some terms (such as beliefs and biases), acknowledging the existence of cultural norms that might contribute to reflexive demands for economic interventions by government, and to ‘place the work within liberalism through the ages, including especially Hayek and Public Choice’.

Closer to home, Carlton’s sole classical liberal, Andrew Norton expressed a view that, in practice, Australian democracy has a reasonable record in managing the potential policy consequences of voter economic bias. On the other hand, there are occasions when desirable policy outcomes may be hampered by ‘elite failures’ – such as those currently evident at the State government level.

On my own blogsite, I raise two separate issues concerning MRV. First, I take up Klein’s suggestion that MRV pick up on some of Hayek’s work on misguided economic beliefs by the general population. Second, I give a critical assessment of the key measures advocated by Caplan to reduce the influence of economic irrationality on collective decision-making.

MRV might be regarded as an instant classic in public choice theory, but is there anything more that libertarians can take out of it?

It is clear that most public choice theorists agree that Caplan’s work holds a rightful place in the genealogy of the ‘economics of voting’ literature – alongside Duncan Black, Anthony Downs, James M. Buchanan and Gordon Tullock, Geoffrey Brennan and Loren Lomasky, and Donald Wittman. I concur with this assessment. In essence, Caplan transcends the rational ignorance proposition of standard public choice theory by introducing an alternative voter behavioural foundation of outright irrationality. This intellectual innovation promises to spawn a new generation of work in the field, and it is also likely that the ideas expressed within the blog debates will lead to useful extensions of MRV (including in my pet area of the history of thought on voter irrationality).

I can go even further by suggesting that Caplan’s ideas have potentially significant implications for the ongoing endeavours of classical liberals and libertarians to expound the virtues of free markets and limited government to the general public.

First, given the persistence of economic sophistry amongst the population, it is necessary for free marketeers to continue to explain – in a patient manner – the basics of economic phenomena (as Hayek described it, at the level of ‘explanations of the principle’ or ‘pattern predictions’), and the economic risks posed by government interventionism, to the average person.

As noted by some expert commentators, there is certainly a long way to go in terms of convincing the populace of the merits of some potential economic reform measures. By the same token, I would think that the dedication and persistence shown by bodies such as The Centre for Independent Studies and Institute for Public Affairs, and individuals such as Bert Kelly, John Hyde, Wolfgang Kasper, Des Moore, and so many others, must have had some positive effect in fostering an environment conducive to economic reforms in Australia during the 1980s and 1990s.

Consistent with this, I think that there is a very good argument for classical liberals and libertarians involved in political debates to skilfully use the tools of rhetorical language as a means of persuading the ‘everyman’ to accept the basis for economic reform.

In my view, nobody has expressed this argument better in recent times than the Grand Master of Public Choice Theory, James M. Buchanan. In a classic paper, ‘The Soul of Classical Liberalism’, he called upon the classical liberal/libertarian community to invoke what he variously described as the language of the ‘animating principle’, the ‘vision thing’, the ‘moving spirit’, the ‘soul’ that can make the foundations of free markets and limited government an attractive proposition for the public at large. Buchanan glowingly referred to the rhetoric of Ronald Reagan, with his imagery of the ‘shining city [of liberty] on a hill’, as a good example of the political rhetoric of freedom at its best.

In MRV, Caplan similarly calls for a certain degree of creativity to be used when making arguments in favour of economic liberty. Caplan nominates the Libertarian Great Claude Frederic Bastiat as the prime example of a freedom-fighter who combined a rigorous account of economic liberalism with humour and panache (think of his candlemaker’s petition, for example). Indeed, Bastiat continues to be read and admired to this day, so there must be something of value in Caplan’s suggested strategy, too.

So, in closing, I think Caplan’s book will be regarded as a public choice classic that will be on university course reading lists for decades to come. Caplan provides the ground for a research agenda that can build on his particular conceptualisation of voter behaviour, and his suggestions for institutional improvement in mature democracies. I think there a lot in this book that classical liberals and libertarians would like, and be able to reflect upon. By all means, do yourself a favour and get it!

Finally, I once again thank Sukrit for giving me some ‘forum space’ on the Thoughts on Freedom blog, and I look forward to your comments and feedback. For example, what do you think of Caplan’s notion of voter irrationality and his ideas for improving our democratic system? Is Caplan on the mark with his identification of the four economic biases (are there any that he missed, or other relevant biases from other social sciences, that you are aware of)? What are your suggested remedies for ameliorating economic bias amongst our fellow citizens; is Caplan off the mark with his ideas? Finally, do you think that, with a greater emphasis on rhetoric and communicative flair, we can make greater strides for the cause of freedom?

Over to you…

15 thoughts on “Bryan Caplan’s The Myth of the Rational Voter – A Quick Guide for Libertarians

  1. Thanks for the comprehensive review! I agree this book is an “instant classic” in the field of public choice theory -– it will be placed on the pedestal as required reading, right next to James Buchanan and Gordon Tullock’s seminal work “The Calculus of Consent”.

    I couldn’t work up the patience to read the whole book, but from the few chapters I’ve looked at, it seems to confirm a lot of common-sense intuitions people have about voter ignorance/irrationality in democracies. Anyone who accepts the arguments made in this book will never again think of “democratic choice” (i.e., tyranny of the majority) as being an automatically good thing. Democracy is good. But markets, where possible, are better.

    I strongly disagree with Caplan’s idea of restricting the franchise however. Trusting the government to restrict voting rights to “smart” or “economically informed” people is not the way to go about building a free society.

  2. Voters who don’t understand economics because they haven’t been exposed to it, or because they’ve been exposed to it but have found it tough going, aren’t irrational, they’re just ignorant.

    Ignorance explains the failings of most people. Few of us set out with the intention of getting things wrong or making the wrong choices. Where people have a bias in any matter it is almost always simply the case that they have not yet encountered (and internalised) a critical mass of evidence that might tilt their worldview pass the point of automatic return. Most of us are instinctively conservative with regards to our beliefs, prefering evidence that supports our existing beliefs rather than evidence that supports a rival belief and we tend to sift out the latter on first encounter. In the extreme some people will even die rather than let go of existing beliefs.

    To be sure I think we should take our message to the people. However just as relevant is the need to take the message to the career politicians, the beuracrats and the lobbiests. These groups of elites do have interests misaligned with those of the general public but that does not mean that they can’t be convinced to frame their interests in a more constructive way. And these groups are not engaged in a unified battle against the public interest but rather they are pushing in various different directions. As such the aggregate effect may often be negative but it need not always be negative.

  3. “Voters who don’t understand economics because they haven’t been exposed to it, or because they’ve been exposed to it but have found it tough going, aren’t irrational, they’re just ignorant.”

    This puts me in mind of an essay I had to write for English Rhetoric on the subject of outsourcing for a professor who was borderline socialist (by which I mean that she was almost not a socialist). Upon handing it back, she said that she could not argue with the logic but she refused to believe it.

    So while ignorance may account for some voter behaviour, do not underestimate the power of people, even otherwise clever people, to chose to remain irrational if it is in line with their core beliefs.

    The need for the “vision thing” is the tonic for the irrational. I am not convinced that logical argument and sound economic principle are any match for the ingrained biases against free market truisms.

  4. Core beliefs or global beliefs are key linchpins in human behaviour. Changing them can cause a whole avalanche of changes in behaviour and outlook. Beliefs are the rudder that guides all human action.

  5. p.s. If you ever have trouble understanding the basis for somebodies behaviour spend some time examining their beliefs. Especially their general beliefs about other people and about human nature.

  6. Caplan similarly calls for a certain degree of creativity to be used when making arguments in favour of economic liberty

    This idea, while not new, holds the key to the solution. I’m not an economist but I am an experienced marketer. In many respects marketing is the art of showing people they need something when they didn’t realise it.

    It happens all the time in goods and services, but it’s also applicable to political and economic ideas. Indeed, it’s the reason the government employs so many press secretaries as spin-doctors. Their task is to make political ideas and decisions appear palatable (and of course make the opposition’s ideas sound unpalatable).

    There are examples that illustrate the point: the National Farmers Federation and its member bodies were persuaded to embrace free trade on the grounds that they were internationally competitive and didn’t need protection. The only condition was that the government pursue free trade internationally.

    New Zealand farmers embraced the removal of subsidies on lamb on the same basis.

    Not many people see these things in abstract economic terms though. Most look at them through the prism of self-interest. That’s exactly how marketing operates.

    I have been present in meetings with farmers where the entire mood changed when it was pointed out that we couldn’t expect foreigners to buy our goods if we refused to buy theirs.

    I am seeing opposition to foreign guest workers disappear in the face of stories about unharvested fruit and vegetable crops. Those stories have not appeared by accident.

    I know people who have dropped their opposition to electricity privatisation when it is pointed out that government ownership of businesses is socialism, and that’s the last thing they want to associate with.

    There is no magic bullet or one size fits all solution. A lot of marketing fails because it does not use the right language or focus on the right need. But the principles are just as applicable to economic and political ideas as they are to anything else.

    It might be difficult to accept, but libertarians are just slow learners. The socialists have known all this for a long time.

  7. I don’t like much the idea of limiting the right to vote to those who can display some minimum level of economic intelligence. It’s sometimes tempting to think that way, especially when we wonder at our collective stupidity for continually re-electing some inept state labor government, like the one here in Vic.

    However, while it may be tempting, it’s rather anti-democratic, and not a very libertarian idea to ban stupid or ignorant people from voting. It has shades of socialist “we know what’s best for the masses” arrogance, and would be open to incredible abuse and manipulation – who determines the criteria for being smart enough to vote?

    Somewhere in that really long post Plato is mentioned – wasn’t one of his things to have a ruling elite of philosophers running the place? That would have worked wonders – imagine how long it would have taken to get a practical decision made…

    p.s. – David – I agree about marketing, libertarians need to get with the program. Your average person on the street doesn’t know what a libertarian is.

    Here the socialists have it over us in spades. Ironic, as marketing is generally regarded as a tool of capitalism, it’s rather hypocritical of them to use it so well. Just look at their strong branding (Greens logo, Che, red flags, GetUp ads etc) They really know how to play to people’s ignorance about free markets, and fear of market competition.

    Probably their best marketing coup is removing the word ‘socialism’ from their lexicon, and renaming it to more palatable terms – ‘social justice’, ‘equality’ ‘compassion’, ‘sustainable future’ etc

  8. Hey, I’ve been trying to tell my fellow libertarians the same thing, papa!
    The IPA REVIEW, thankfully, is looking more market-savvy these days, but ‘Policy’ could still do with a make-over. Where is the sex-appeal in a red volkswagen? Perhaps a picture of a sad, but pretty!, model could have been used to add life to the ‘Depressed or just sad?’ article.

  9. The irony is that the reason why markets work better than centralized planning is because those planners are ignorant of consumer preferences, since such preferences are difficult to predict. Some people suggest that because such preferences are hard to predict from the conscious values that an individual may mentions, then the behaviour of that individual is ‘irrational’ and therefore it would be more efficient for central planners (including economists etc) should plan for them. It is ironic then that this ‘irrationality’ is the reason why markets are more efficient in many cases.

    But are they more efficient in all cases? This is the question that Plato should have made clear. Plato stated that individuals make efficient decisions based on self interest on issues that they are directly experienced with. This introduced a logical contradiction when he expects the guardians to make efficient decisions in areas which they do not have direct experience.

    So how do you determine who has the requisite experience to make a particular decision?

    Is it possible that on the whole, individuals may self select if given the option of voluntary voting on particular policy issues which are posed rationally (eg the downsides are fully explained)?
    Is it possible that people may be able to vote more efficiently by choosing their base values, rather than choosing representatives that might only share a majority (but not all) of their values?
    (and how does this relate to the issue I posed in my first paragraph?)
    If you make too many restrictions on policical freedom, you get the same problems, since you’ll have too much centralized planning.

  10. Thank you all for your thought-provoking comments thus far… keep ’em coming!
    I intend to follow up with some detailed responses at a (not-too-distant) later date. However, I’d like to comment again briefly on the idea that selling libertarian propositions with flair and communicative skill is a good way to go.
    To be sure, I’m certainly not suggesting that we should junk the arguments we already express regarding the marvellous properties of the extended order of free markets. They’re great as they stand. I am in favour, though, of complementing these with rhetoric that exposes the ‘animating principles’ (as James Buchanan put it) of libertarian thought – i.e., liberty and freedom. To put it more simply, find language that tugs at the heartstrings, and see what comes of it!
    Anyhow, Buchanan puts this in a much better way than I ever could, so I do commend his ‘The Soul of Classical Liberalism’ paper and also his latest book ‘Why I, Too, Am Not A Conservative’ if you get hold of it.
    As a parting note (for now!), I’ll leave you with a very interesting quote by Daniel Pellerin, who wrote a paper that won 2nd prize at the 2004 Mont Pelerin Society meeting. He refers to one very prominent example of a person whose exposure to economic education (which Caplan approvingly refers to) made a huge difference:
    “we might remember that the views Hayek opposes so effectively are ones to which he himself had once been enthralled and from which even he could extricate himself only gradually and with difficulty.” (Daniel Pellerin, “The Great Society and Its Discontents”, p. 14).
    So, I think, with persistence and skill, we stand a good chance of getting through to the next generation of Hayek’s out there!

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