The Myth of the Rational Voter: Why Democracies Choose Bad Policies by Bryan Caplan

Jul 31, 2007 Courtney rated it liked it

Since I probably won't finish this book before school starts, I figure I'd put in my review now based on the first few chapters. While I was really excited to see this book come out and feel it's a topic long overdue for a good discussion, I believe Caplan is too smart for his own good.

The premise of the book is that if the average person knows more about economics, our democracy would function better. Caplan contends that systematic anti-foreign, anti-market, pessimistic and make-work biases c ...more

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Nov 18, 2011 Mike Edwards rated it it was ok

Shelves: pop-social-science, current-events

Caplan is half right. He explores in some detail why irrationality is inherent to the human condition, and how this necessarily leads voters to make bad decisions. But I have two major problems with the book:

1) Caplan's prime example of how stupid voters are is that voters want to regulate international trade. Certainly free trade is powerful and good, and while I agree with him that protectionist isolation would be very bad, there are reasonable, nuanced, and intelligent reasons that one might ...more

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Dec 05, 2010 Mike rated it really liked it

This book is all about economics and the amazing differences in beliefs of trained economists and the voting public. The author posits and offers proof that this is why democracies choose bad policies. The book is not about anything other than economics. If you are interested in other, non-economic, irrational beliefs and how they tie in to politics, you won't find it in this book.

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Jan 08, 2011 catharine rated it it was amazing

Shelves: non-fiction, own-a-copy, nick

I read this book because ever since Prop 8 passed in California, I have completely lost faith in direct democracy, and started feeling like voting was just opting into a corrupt system of the majority suppressing whatever minority they didn't like. The "We are the 99%" protests rubbed me the same way.

This book confirmed some of my mood, but left me a bit more hopeful.

The author offers an erudite, economist viewpoint that the perception that voting is just like the free market is wrong because I read this book because ever since Prop 8 passed in California, I have completely lost faith in direct democracy, and started feeling like voting was just opting into a corrupt system of the majority suppressing whatever minority they didn't like. The "We are the 99%" protests rubbed me the same way.

This book confirmed some of my mood, but left me a bit more hopeful.

The author offers an erudite, economist viewpoint that the perception that voting is just like the free market is wrong because the incentives and risks are nothing like market forces. The individual cost of voting is very low, and the individual impact of bad policy is even lower. However the aggregate or community impact of bad policy is terrible.

I found the analysis of the "average voter" versus an "educated voter" versus an "economist" on a number of issues from taxes to education to immigration to be very telling, and offer the following summary of my conclusions from this data:

1) People act less selfishly with their votes than a market model predicts. Across all income and education and political affiliations, people vote for policies that they think will make the country better, even when it might not be in their own best interest.

2) People think everyone else is acting more selfishly with their voting then they actually are. This adds a lot of FUD and fear based rhetoric to the political climate that is unjustified. Examples include polls showing that the elderly are less supportive of Medicare than average and men are more pro-choice than women (which I could not corroborate, but I believe the second stat to be one that fluctuates a great deal).

3) If someone bothers to put in a huge investment in researching and voting rationally, it is probably not worth their time. However, if you assume the uneducated voters are voting essentially at random, this means that educated voters have MORE of an impact, especially if they mobilize. At the same time, our best course of action for more rational economic policies is (his conclusion, I'm not sure I agree) is to stop all attempts to "get out the vote" since this results in more uneducated and uniformed people voting.

4) People would rather vote for feel good policies than policies that work because the individual cost of voting their conscience and having a bad policy is less for them than the value of the warm fuzzy (whether that is the good feeling of political affiliation/identity, or the idea that things like protectionism and tariffs "protect american jobs").

5) The author concludes that democracy is flawed, and that its flaws are overlooked and discounted instead of being mitigated. He believes most people in this country also have an anti-market bias, while criticizing democracy is verboten. He doesn't conclude that democracy should be rejected, but that the flaws in the system need to be acknowledged and mitigated. One of the ways to do this is to increase the average person's understanding of economic theory, preferably at the grade and high school level.

It certainly left me thirsty for more economics knowledge. I didn't take ANY economics in any of my educational travelings.

Next I want to read his book on child rearing: "Selfish Reasons for Having More Kids"

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Oct 10, 2016 Alexander Velasquez rated it it was amazing · review of another edition

Shelves: political-science, economics

This book will probably haunt me until the day I die. It will haunt me before I sleep, and it will haunt me when I wake. It is a chilling analysis of why democracy, as we know it in America, does not work. It doesn't work because most people are irrational voters. People are irrational voters because they vote on their preconceived biases about the economy, foreign policy, etc. And their biases are mostly wrong because they're uneducated about these matters, and the educated elites that are educ This book will probably haunt me until the day I die. It will haunt me before I sleep, and it will haunt me when I wake. It is a chilling analysis of why democracy, as we know it in America, does not work. It doesn't work because most people are irrational voters. People are irrational voters because they vote on their preconceived biases about the economy, foreign policy, etc. And their biases are mostly wrong because they're uneducated about these matters, and the educated elites that are educated about these matters almost always disagree with the uneducated majority on these matters. But since it's the uneducated majority who wield most of the power... well you get the idea.

Chapter 1 discusses why biased beliefs about economics make democracy worse at what it does.

Chapter 2 discusses the four major biases irrational voters fall prey to: antimarket bias (a tendency to underestimate the economic benefits of the market mechanism), antiforeign bias (the tendency to underestimate the economic benefits of interaction with foreigners), make-work bias (the tendency to underestimate the economic benefits of conserving labor), and pessimistic bias (the tendency to overestimate the severity of economic problems and underestimate the (recent) past, present, and future performance of the economy).

Chapter 3 goes over the SAEE and the empirical evidence for the claims made in chapter 2. Chapter 4 talks about what is wrong about rational ignorance, and chapter 5 discusses rational irrationality, that is - the rationality behind being irrational about voting (if the information required to be a rational voter takes time to understand, but the outcome for the individual is near nonexistent, why bother with being a rational voter in the first place?).

Chapters 6 & 7 discuss how we get to policy and politicians from irrationality. (Hint: The politician must succumb to the masses and what they want - they demand and the politicians supply). Chapter 8 discusses market fundamentalism & democratic fundamentalism.

And then the final chapter discusses: now what? If the system is broken, what do we do to fix it? Caplan calls for a further inquiry into the matter, as well as some tips for reform (such as making a law that would require passing a test in order to vote, much like passing a test in order to get a drivers license).

A really fun and captivating read. I would highly recommend it to those who wonder why stupid people like Trump can get elected as the Republican nominee. (Hint: It's not Trump who's stupid He's simply the demand ;)). ...more

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Jan 07, 2014 Mike (the Paladin) rated it liked it

Shelves: history, political

Alexis de Tocqueville told us in 1835 that “The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.” That's not an exact quote as I've had pointed out to me but it's what the man wrote almost 200 years ago. Or there's: It can only exist until the majority discovers it can vote itself largess out of the public funds (treasury).

Actually to be precise America is not a democracy. We are a Democratic, Constitutional Republic. That said ...more

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Jul 30, 2007 Carl rated it it was amazing

Requiring my concentration throughout, this book packs a big payoff in every section. The author presents the economic biases shared by a frighteningly large majority of voters and follows by clearly (although with a lot of empirical evidence) demystifying these biases in a way that makes your brain feel good. Caplan, a Princeton economist, cleaves the difference between the rational way we conduct business in our economic lives and the irrational way we hold political positions on economic issu ...more

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Dec 05, 2014 Chris Lund rated it really liked it

Shelves: economics, politics

I definitely wasn't convinced of the strength of all the arguments in the book, and by the time I got to the end I felt a bit unsatisfied and unresolved, but it was worth the read if for no other reason than it forces you to confront the issue of bad policy decisions in ways that are rarely talked about, and from an angle that is quite different from the typical discussions of these issues. The writing is a level or two above "casual non-fiction reader", and it probably helps to have a bit of an ...more

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Jun 04, 2010 Howard Olsen rated it really liked it

A good look at the harsh reality of political discourse in a democracy. Not only do people lack the time and information to make truly informed decisions, they also suffer from basic analytical fallacies that are readily exploited by politicians on the make. Don't start feeling smug, though. Caplan takes on sacred cows on the Left (protectionism works! globalization = evil!) and on the Right (immigration is bad! deficits = evil) with equal aplomb. As Caplan notes throughout, many economic fallac ...more

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Jul 07, 2008 Skylar Burris rated it liked it

Shelves: politics, economics-finance

The Myth of the Rational voter attempts to explain how democracies continue to enact stupid economic policies that are not in the best economic interests of a majority of people. There are two primary reasons: (1) Most voters are ignorant of economics and (2) Even if they are not ignorant of economics, people sometimes value their ideology more than they value prosperity. (Caplan calls this “quasi religion.”)

The book is called The MYTH of the Rational Voter because many have argued that voters The Myth of the Rational voter attempts to explain how democracies continue to enact stupid economic policies that are not in the best economic interests of a majority of people. There are two primary reasons: (1) Most voters are ignorant of economics and (2) Even if they are not ignorant of economics, people sometimes value their ideology more than they value prosperity. (Caplan calls this “quasi religion.”)

The book is called The MYTH of the Rational Voter because many have argued that voters cannot possibly be irrational; after all, people do what’s in their best interest, right? Caplan dispels the myth that voters “vote their pocketbooks.” In fact, there is little correlation between party affiliation and income; the elderly are actually slightly less likely to support Social Security and Medicare than the general population, and men are more pro-choice than women. (Although, with this last example he gives, it could easily be argued that men ARE voting their pocketbooks; an abortion costs a lot less than 18 years of child support.) Most voters vote for what they believe is in the best interest of the nation. Whether liberal or conservative, Democratic or Republican, most people sincerely want what is best for their country.

Why then do we have competing parties and competing economic policies? One reason, again, is ignorance. A voter may want result X and yet vote AGAINST a policy that is more likely to give him result X and FOR a policy that is less likely to give him result X simply because he doesn’t understand how economics work. It’s difficult enough for economic teachers to persuade even economic students to abandon their misassumptions and incorrect biases, and most voters have never so much as taken a single economics course. Another reason is that voters may value different things and therefore have different ideas about what is in the best interest of the nation. For instance, they may value income equality more than they value greater prosperity for all. (i.e. better person A make $50,000 and person B make $45,000 than person A make $100,000 and person B make $49,000, because then there wouldn’t be so much income disparity.)

Even if they do value greater prosperity for the majority, voters may not vote for policies that affect it, simply because they are ignorant of the actual effects of policies. Caplan identifies the primary biases that lead to stupid economic decisions as antimarket bias, antiforiegn bias, make-work bias (i.e. valuing employment more than productivity), and pessimism (i.e. the popular tendency to think the economy is worse than it actually is.) These biases, for instance, lead people to support protectionist policies even when they result in less prosperity for them as individuals and for the nation as a whole.

Put like this, it all sounds very simple, straightforward, and dull. Yes, the theory is simple (if not placed in complicated economist-speak), but the details are interesting. It’s fun to learn how politically and economically ignorant the average voter (including, alas, me) is. And it’s also fun to speculate on what U.S. policy WOULD look like if the average voter was better informed. To do this, you use a political IQ tests (with questions like – Who are your senators? Is Russia a part of NATO?) and policy opinion polls and establish controls to see how the most informed voters vote. You can also compare economists’ average answers to economic questions with the general public’s average answers and the “enlightened” (politically informed) public’s answers. Using these models, it can be concluded that a more politically informed electorate would be, with regard to foreign policy, less isolationist (but also “slightly more dovish when it comes to use and maintenance of military power”). With regard to social policy, it would be more “liberal” (more pro-choice, pro-gay rights, anti-prayer in school, etc.). With regard to economic policy, it would be more “conservative” (more pro-free market, less inclined to impose environmental regulations, and more in favor of restraining government spending). In other words, if the electorate were more politically informed, the nation would be more libertarian than it is currently.

One objection that might be raised to Caplan’s argument is that not even economists agree on how particular policies affect the economy. The old quip is: “If you laid all the economist in the nation end to end, they still would not reach a conclusion.” But Caplan shows that, for the most part, economists do agree, certainly far more than the general public, and they agree at least on whether a policy is generally beneficial or generally harmful for the economy, with few exceptions. Even the economists for liberal administrations generally advised against liberal fiscal policies, but politicians have incentives to do what is politically popular (for liberals, this might mean immense spending on healthcare, for conservatives, limiting immigration), not necessarily what is economically efficient.

Caplan explains how people can be irrational voters and yet be rational consumers. The reason is simple: the cost of irrationality is higher when it comes to consumption than when it comes to voting, because the choices in voting are narrower and the probability of effecting an election with a single vote is virtually nonexistent. “Democracy asks voters to make choices, but gives each only and infinitesimal influence…Shoppers have incentives to be rational. Voters do not.” And, of course, the personal price of altruism is much higher than the political price. Thus, by voting for greater spending, for instance, a person can feel good about his or her generosity, without directly or immediately paying the price, even if such policies will hurt the economy in the end. Thus, his choice is "rationally irrational."

As someone with an interest in economics, I found the book interesting, but I’m not sure I’d recommend it to a non-economics major, and that’s unfortunate, because it’s the non-economics major who really needs to be informed on these matters. However, the book is so dry, and so full of charts and tables and graphs, that it’s hard to imagine someone without a great deal of interest in economics wading through it. Instead, I would recommend to the non-economics major Thomas Sowell’s Basic Economics.
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May 26, 2017 Jurij Fedorov rated it it was amazing

Very enjoyable and recommendable.

Pro:

About trade between borders and how voters will want to stop this trade because they don't understand basic economics. Also, he answers the question of the rational consumer. If economics assume that the consumer is rational. Then how come the voter is irrational? Doesn't he pay for a product with his vote? Not really. He pays for the bragging rights and the right to belong to his ingroup. His vote by itself won't make him pay less tax. But telling all his fr ...more

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Aug 30, 2012 Sergei Moska rated it liked it

There's too much here for me to give it less than 3 stars, but Caplan seems to willfully ignore two (related) retorts to this thesis. Two caveats, though. First, I'm not summarizing the (interesting!) argument, so if you haven't read a synopsis of the book, it's possible that none of this will make sense. Second, I'm not writing this with the thought that it "disproves" Caplan. It's just a couple of things that were bugging me.

The first retort is that when he characterizes adherence to politica There's too much here for me to give it less than 3 stars, but Caplan seems to willfully ignore two (related) retorts to this thesis. Two caveats, though. First, I'm not summarizing the (interesting!) argument, so if you haven't read a synopsis of the book, it's possible that none of this will make sense. Second, I'm not writing this with the thought that it "disproves" Caplan. It's just a couple of things that were bugging me.

The first retort is that when he characterizes adherence to political points of view as similar in kind to adherence to religion, he confounds religion as (1) an explanation for empirical phenomena and religion as (2) a source of morality. Note that there isn't a necessary connection between the two; there is nothing about believing that the world is 6000 years old that necessitates believing that Jesus Christ is the son of God, for instance. The upshot is that yes, if my political identity is important to me qua (1), Caplan's analysis works. But if it's important to me because of (2), then the analysis needs more nuance. My political ideology may lead me to a (1) that is silly, but it may also be a source of a (2) that is no less sound than competing (2)s. For instance, take the following hypothetical discussion:

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LAYMAN: I support drastically cutting foreign aid. Doing so would balance the budget and show the rest of the world that there's no such thing as a free lunch!

ECONOMIST: Actually, you're wrong. Foreign aid is a tiny fraction of the budget. It would make no difference, and might even be counterproductive

LAYMAN: Well, I don't care. No one should expect handouts, even if it's to our benefit to give those bums free money
------

Caplan's argument crucially depends on the notion that systematic bias occurs due us non-economists' lack of incentives to take the costs of our ideology seriously, given our knowledge that our vote will not be decisive. If we knew that our vote *were* decisive, we'd pay attention. But he just seems to ignore the possibility that people's commitment to certain values are such that they're willing to take the hit in terms of material benefit, even if they knew that their vote were decisive.

This leads into the second retort: there is no concern whatsoever with distributive justice in this book. I'm not saying that Caplan should defend a model - I'm saying that he ignores the possibility that laypeople are motivated by such concerns. But if you keep the possibility that they *are* so motivated in mind, some of his inferences just seem odd. To take one example: laypeople think that executives' salaries are too high. Caplan thinks that it's because they think that more money to the CEO means less money to the rank-and-file. But surely many people object to CEO salaries because they signal an economic disparity which people find morally repugnant. People may be aware that additional restrictions "shrink the pie", but maybe they're willing to forgo an increased pie if it means that there is more equality.

Maybe it's an artifact of economics, but Caplan's proposed preference functions don't seem to take seriously the possibility that the position of others may have a fundamental impact on *my* preference function. Maybe you are so rich that it becomes an affront to my sense of dignity. Maybe I have a communitarian belief that a good polity resembles a "family", and that gross inequality upsets that belief. Call it a religion if you want, but even if an economist convinced such a communitarian of the raw facts, the communitarian may still choose increased democracy and decreased markets.

Lastly, it's pretty bizarre that Caplan doesn't seem to deal with these questions, given that in laboratory conditions, most people who play simple economics games like "Divide the dollar" seem to exhibit traits that indicate that self-respect and relative status are important to them.

In any event, a fun book, and good enough to prompt me to write a (too) lengthy review :-) ...more

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Jul 30, 2008 Nate rated it liked it

Shelves: economics-politics-law

Caplan's general argument is that a majority of voters in democracies (or representative republics) are rationally irrational when it comes to politics. Since the likelihood of one voter's vote being decisive in an election is practically nil, the costs for being wrong (i.e., choosing a candidate whose policies are bad for the nation) are practically nil to the individual voter. This being the case, voters have little incentive to take the time to become informed on political/economic matters. O Caplan's general argument is that a majority of voters in democracies (or representative republics) are rationally irrational when it comes to politics. Since the likelihood of one voter's vote being decisive in an election is practically nil, the costs for being wrong (i.e., choosing a candidate whose policies are bad for the nation) are practically nil to the individual voter. This being the case, voters have little incentive to take the time to become informed on political/economic matters. On the contrary, there is a disincentive to becoming informed: it costs (e.g., time). Furthermore, there are certain psychological benefits (e.g., feeling like one is acting altruistically) that come from supporting certain policies because supporting them seems like the "fair" and "moral" thing to do. However, psychological benefits and social benefits are not the same thing: Lenin likely thought he was doing the "moral" thing by instituting a Communist government in Russia in 1917-18, but the effects of that form of governance on the people/nation were extremely bad and immoral. An example might help illustrate the argument. It is pretty much undisputed in the economics profession (at least the author states) that free trade among nations is beneficial for both nations: it raises productivity and standards of living in both nations. However, many feel the U.S. should have policies limiting free trade in order to protect American workers in certain industries from the competition of cheaper foreign labor and products. Holding such a position is fine, but the point is that by doing so a voter is effectively lowering his standard of living because he is paying more for goods in protected industries that he would pay if there were no limitations on trade, and the labor in such industries is not being put to its most efficient use possible. But since the individual voter's vote most likely won't decide the election, and since he knows this, he doesn't really see the costs of his voting for policies that would lower his standard of living because he assumes that whatever is going to happen will happen no matter how he votes. Voting to lower one's standard of living seems irrational. But since one's vote has very little impact on an election it is rational to be irrational. Whether you agree with the author or not, he makes some good points throughout the book that anyone interested in the functioning of democracies would do well to consider.

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May 10, 2016 Alex Zakharov rated it it was amazing

Let’s start with the bad news - democracy works! The good news is that luckily for the populace it is marginally subverted by the interest groups and politicians. That’s right kids - the brilliant cover with mesmerized sheep is more charitable to the voters than the brief volume that follows it – at least sheep can accidently stumble upon a good idea... The famous miracle of aggregation that is supposed to cancel out random errors of judgment and thus save democracy from stupid decisions of unin ...more

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Oct 29, 2016 Trey Malone rated it it was amazing

This is one of the best popular press economics books I've ever read. More importantly, though, this is hands down the best public choice economics book I've ever read. All too often, some economists will invoke public choice theory without actually describing what they mean. In Myth of the Rational Voter, Caplan unpacks the theory and then contributes to the literature.

This book should be required reading for every class on behavioral economics. It does a fantastic job of describing the cogniti ...more

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Dec 07, 2014 James rated it it was ok

What's the Churchill line about talking to a voter for 5 minutes and hating democracy? Yeah basically that. But I mean voters are only ever voting. Once elected, MPs can really do whatever they want in congress or parliament. The person who the Dumbies voted in over Smarties does not necessary have to be themselves a Dumbie. More often it means the winning candidate was simply better at pandering to a larger (dumber) audience - which is what liberalised democratic politics has always been about. ...more

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Feb 09, 2017 Anton Iokov rated it it was amazing

Shelves: audiobooks

I started this book to find a solid explanation of Trump and Brexit and I've found not one but several (and yes, book was published in 2007).

A thoughtful explanation of incentives and biases that direct how people vote. And the way politicians utilize these incentives and biases to win the race. And why breaking promises is often a good strategy not only for them but also for us.

The book is sometimes repetitious but not in a catastrophical way.

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Nov 19, 2009 Eduardo Santiago rated it it was amazing · review of another edition

Recommended to Eduardo by: Dana, 2008-11-13

It's not just ignorance. Not even deliberate (rational) ignorance, or for that matter voter self-interest. It's outright irrationality. Shocked? Me either. But what did surprise me is the resistance that Caplan seems to find to this: it seems economists model people as "rational actors" and are reluctant to change that perception -- or at least to discuss it in mixed company. Elitism is a 4-letter word.

Caplan describes potential fixes, fascinating ones involving markets and education, but that's ...more

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Feb 19, 2011 Jack Davis rated it really liked it

A intellectual book that isn't boring is a rare treat, and Caplan comes through with that in The Myth. Caplan is more than an economist--he discusses psychology, political science, and philosophy in this critique of democracy. His central argument is that voters both lack information (e.g. think foreign aid is a huge part of the budget), and often act irrationally. This combination leads to bad policy outcomes. You don't have to agree with everything he says --(I have a few minor disagreements w ...more

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Jan 24, 2015 Jeff Rudisel rated it it was amazing · review of another edition

Shelves: science, economics, psychology, 2015

Fantastic.
Chock full of relevant and obscure and illuminating insights that will knock your socks off!

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Jan 23, 2017 Rayna Wang rated it it was amazing

A fantastic read especially given what is happening in global politics

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May 03, 2017 Sergey Steblyov rated it really liked it

Everybody knows the expression "unpopular decision" or "unpopular policy", often used when talking of a generally good measure that's unfortunately difficult to implement due to political reasons. Everybody takes it as given actually, as if it's a natural thing that some good policies are hard to push in a democratic society. Why though? We love democracy: here in Russia some of us love the idea of it, elsewhere they love the fact of it. Why do we love it? Because people are in the best position Everybody knows the expression "unpopular decision" or "unpopular policy", often used when talking of a generally good measure that's unfortunately difficult to implement due to political reasons. Everybody takes it as given actually, as if it's a natural thing that some good policies are hard to push in a democratic society. Why though? We love democracy: here in Russia some of us love the idea of it, elsewhere they love the fact of it. Why do we love it? Because people are in the best position possible to choose what's best for themselves. Then what's the matter with anything beneficial being unpopular?

It is super satisfying to read a book whose author asked himself the same question you were asking yourself before even hearing about the book. Admittedly, Bryan Caplan's point could be made much more succinctly. Proof: 1) people are not indifferent between various worldviews; 2) probability of casting a decisive vote is infinitely small; 3) people hold drastically and systematically biased beliefs about market outcomes in general; 4) 1) & 2) & 3) => people vote for the worldview they like the most which results in suboptimal policy - and, importantly, it's a fully rational choice individually.

This is all very simple, yet political economy for many decades was developing in a very different direction, erroneously equating consumer behavior in "normal" markets with it in political markets.
There's more in the book of course: Caplan studies the supply side and shows how democracy's usually-thought-to-be flaws actually might mitigate demand-side problems.
He also has a piece of advice for economists that kinda contradicts the way I personally feel about economics: Caplan urges economists to be less unambiguous. Well, within the research agenda we should still be as self-critical and scientific as it gets but the message sent out should better be simpler and clearer. The public, already biased, will make all the necessary qualifications itself. Otherwise, and it seems plausible, the public continues to strongly overestimate the amount of disagreement between, say, Paul Krugman and John Cochrane.

In no way is Caplan's theory explaining the whole political economy, of course. First, in particular, 2) might be not a necessary requirement: in experiments, groups of just about 4 people make systematically biased choices that hurt themselves. E.g. http://faculty.haas.berkeley.edu/Dalb... and https://epub.ub.uni-muenchen.de/18188...
Second, of all ways to help the problem, limiting democracy is probably the worst: based, for instance, on early history of modern Russia and on that last paper for instance, I believe that there are social benefits from democratically elected policies and institutions, controlling for these policies and institutions.
All the more important seems this book to be for me before the grad school start. (Yes, I know my important books before the grad school start are Simon&Blume and Mas-Collel).
Not a brilliant one (lots of space wasted on repeating the main point), but still highly recommend. ...more

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May 11, 2017 O. rated it really liked it · review of another edition

Solid

An essential for those who are learning behavioral economics. Must be read in line with Dan Ariely, Steven Pinker and Robert Edgerton. Altoufh the wording was a little hard and the author struggled to give the main ideas its still a solid book. Read this and it will help you get red pilled

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Dec 11, 2016 Alvaro Sánchez rated it really liked it · review of another edition

Creo que este libro ilustra acertadamente cómo es que la gente es más irracional a la hora de votar de lo que se piensa y por qué los excesos de democracia, llámense referendums, no siempre se traduce en mayor beneficio para la población.

El único pero es que el autor, siendo economista, a veces creo termina siendo un poco arrogante.

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Jul 27, 2017 Fahran Kamili rated it really liked it

Surprisingly I kind of enjoyed this book. Unsurprisingly, the sense of libertarian elitism is very prevalent.

I might write my commentary on this book in a medium post (if time permits) as I leave notes here and there in the book.

I guess the main takeaway from this book is to listen more to your economist.

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Feb 06, 2013 Billie Pritchett rated it really liked it

Shelves: politics, democracy

Bryan Caplan's Myth of the Rational Voter argues that democracies choose bad policies because democracies' citizens have systematic biases related to economics. The four main biases he identifies are anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. Here is Caplan in his own words:

[1] anti-market bias [is] a tendency to underestimate the economic benefits of the market mechanism...

[2] anti-foreign bias [is] a tendency to underestimate the economic benefits of interaction

Bryan Caplan's Myth of the Rational Voter argues that democracies choose bad policies because democracies' citizens have systematic biases related to economics. The four main biases he identifies are anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. Here is Caplan in his own words:

[1] anti-market bias [is] a tendency to underestimate the economic benefits of the market mechanism...

[2] anti-foreign bias [is] a tendency to underestimate the economic benefits of interaction with foreigners...

[3] make-work bias [is] a tendency to underestimate the economic benefits of conserving labor...

[4] pessimistic bias [is] a tendency to overestimate the severity of economic problems and underestimate the (recent) past, present, and future performance of the economy.

(view spoiler)[Here are Caplan's counterarguments. Regarding [1], he writes,

The public has severe doubts about how much it can count on profit-seeking business to produce socially beneficial outcomes. It focuses on the motives of business, and neglects the discipline imposed by competition. While economists admit that profit-maximization plus market imperfection can yield bad results, non-economists tend to view successful greed as socially harmful per se.

He suspects that there are at least two reasons for the anti-market bias: people interpret the size of payment to employers and employees as a mere transfer or money to the rich or the poor, when what is really occurring is people are receiving payments for compensation of having done one's work, and also to encourage future progress: "Profits give incentives to reduce production costs, move resources from less-valued to more-valued industries, and dream up new products." And Caplan suspects another manifestation of an anti-market bias is in assuming that companies control prices in their capacity as monopolies when really prices are just a matter of fluctuation related to supply and demand.

Regarding [2], Caplan gives a simple and convincing argument for international trade and against an anti-foreign bias. He writes of the law of comparative advantage, which states that international trade is mutually beneficial for the countries doing the trading "even if one nation is less productive in every way." Here is the demonstration. He writes,

Suppose an American can make 10 cars or 5 bushels of wheat, and a Mexan can make 1 car or 2 bushels of wheat. Though the Americans are better at both tasks, specialization and trade increase production. If one American switches from wheat to cars, and three Mexicans switch from cars to wheat, world output goes up by two cars plus one bushel of wheat.

It's a simple example, to be sure, but it shows the power of international trade.

Regarding [3], Caplan writes, "For an individual to prosper, he only needs to have a job. But society can prosper only if individuals do a job, if they create goods and services that someone wants." And later: "Every time we figure out how to accomplish a goal using fewer workers, it enriches society, because labor is a valuable resource." Of course this will mean that for workers who have been laid off, they must find new work. But on average, society benefits from reducing labor.

Regarding [3], Caplan's rebuttal can be stated fairly briefly. Over the long haul, economies get better and better, so no need to be pessimistic about the upsets.

The last part of Caplan's book concerns creating more of a balance between democracy and economics. He states,

The optimal mix between markets and government depends not on the virtue of markets, but on their virtues compared to those of government." And later, a kind of scary comment. "What economics currently see as the optimal balance between markets and governments rests upon an overestimate of the virtues of democracy. In many cases, economics should embrace the free market in spite of its defects, because it still outshines the democratic alternative."

(hide spoiler)]In my view, Caplan's arguments are convincing with regard his support for the comparative advantages of markets, trade with foreign countries and employment of foreign workers, the production of goods and services with fewer laborers, and his optimism about the positive economic benefits that accrue with market systems. And I think it's correct that democratic biases to the contrary, especially when they became public policy, make the United States comparatively worse off.

I still hold this view with a tempered view about market systems in general. Optimally, it seems, there needs to be a regulated or mixed economy, where people are willing to trade some measures of cost-effectiveness for reasonable regulations that protect workers' health and safety, guarantee decent wages, protect workers and the general public against fraud, and a whole host of other measures that are rather commonsensical and which ultimately have to do with moral considerations. Unfortunately, Caplan doesn't talk about these issues. Nevertheless, a person can still believe that smart government regulation is needed and a market system. ...more

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Jun 12, 2017 Jerusalem Demsas rated it liked it

Good but u can't just say that contracts exist outside of the state Bc drug dealers and fail to mention VIOLENCE

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Sep 17, 2016 Mark Geise rated it it was amazing

Shelves: favorites

"The Myth of the Rational Voter: Why Democracies Choose Bad Policies" is a fantastic book. Caplan evaluates the common misconception that voters in democracies are analogous to consumers in economies. This misconception states that voters exhibit the same rationality that consumers exhibit when buying goods and services. Caplan does a great job to challenge this falsehood and thus show that democracies are inherently flawed.

When thinking back through "The Myth of the Rational Voter", a few thing "The Myth of the Rational Voter: Why Democracies Choose Bad Policies" is a fantastic book. Caplan evaluates the common misconception that voters in democracies are analogous to consumers in economies. This misconception states that voters exhibit the same rationality that consumers exhibit when buying goods and services. Caplan does a great job to challenge this falsehood and thus show that democracies are inherently flawed.

When thinking back through "The Myth of the Rational Voter", a few things stand out to me. First, Caplan's discussion of the many economic fallacies that the public holds at far higher rates than do economists is memorable. Democracies that are perfectly responsive to the will of the majority will tend to be very protectionist and more likely to widely use price controls than those that are less responsive. Democracies work better than they otherwise would because the average voter is more educated and is less likely to believe in economic fallacies than the average non-voter. Also, the politicians are able to insulate themselves by blaming a faceless bureaucracy for not carrying out their wishes. In reality, politicians say what the voters want to hear while ensuring that, in general, their underlings do not implement policies that cater to more dangerous public opinions.

He also explains why people exhibit such irrationality as voters while they exhibit far more rationality as consumers. People understand that, as a voter, their chances of influencing an election are virtually zero. Thus, the price of irrationality as a voter (chance of influencing the election times the negative personal impact of a particular set of policies voted for) is extremely small. If the psychological benefit of voting one's own biases is more valuable than the infinitesimal price of irrationality as a voter, a voter is far more likely to exhibit irrationality. Caplan also disproves the self-interested voter hypothesis; people tend to vote for what they believe would be best for the populace as a whole. The issue is that most voters are mistaken as to what policies are actually best for society.

These points are just a tiny sampling of the many ideas that Caplan discusses. He believes that we should not just accept the stated benefits of democracy as real. He makes it clear that there are many flaws associated with democracy, and the solution for these flaws is not simply more democracy, as so many seem to believe. People exhibit far more rationality as consumers than as voters, so it makes sense to err on the side of markets rather than on the side of democracy. Caplan shows that much of the research on these issues is biased because people cannot accept that democratic government may be inherently flawed. Even when the research proves Caplan's points, the researchers write that there must be another variable or another cause of the issues that they note. "The Myth of the Rational Voter" should be required reading in a political climate that continually pushes the "will of the people" as valid reasoning for why a particular policy would be beneficial. ...more

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Jul 23, 2012 Marshall rated it liked it

Shelves: non-fiction, politics, economics

Really interesting book on the economics of voting. It makes the case that there are systematically biased beliefs among voters who are uneducated about economics, but voting on economic issues: anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. These biases aren't found among economists and voters who are educated about economics, irrespective of social status. But the interesting, main argument of this book takes this as a premise, and says that it's not just a case of Really interesting book on the economics of voting. It makes the case that there are systematically biased beliefs among voters who are uneducated about economics, but voting on economic issues: anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias. These biases aren't found among economists and voters who are educated about economics, irrespective of social status. But the interesting, main argument of this book takes this as a premise, and says that it's not just a case of ignorance, but of irrationality. The voters are incentivized to stay ignorant. It sets up this argument slowly and carefully, but basically, he argues that it's a case of externalized costs. Since it's so unlikely that our one vote will determine the outcome, the cost of ignorance for each of us is very low, but high for the rest of society. It feels good to stay ignorant (hence the high ratings of Fox News), so we stay ignorant. End result: we vote for policies that are against our own best interests. Proposed solution: minimize government, and rely on free markets, where our votes only affect us.

This book makes the best case I've seen for laizze-faire capitalism. He was kind of sneaky about it, though. His arguments were very reasonable and logical, not extreme. He frequently acknowledges the problems with free markets, and only suggests that the public's understanding of these problems are blown out of proportion, which I agree they are. By the end of the book, he dealt his final blow: The problems with democracy are much worse than the problems with free markets. He did such a careful job of outlining the problems with democracy, and the benefits of free markets, so it was surprising that he didn't support his claim that democracy is worse than free markets by comparing the benefits and costs of each side-by-side. This felt like a sucker-punch, sneaking in an unsupported claim, after gaining my trust by being so careful and logical in his arguments up to that point.

So I remain unconvinced that the problems with free markets are worse than the problems with democracy. It's untrue that our votes only affect us in free markets. If I vote for an SUV, that has definite costs for society that I don't have to bear. This, along with all the other millions of externalized costs the government is tasked with forcing us to internalize, has the very real and urgent ability to choke us all to death with pollution, and wreak havoc on the climate. It's already happening, due to these blessed free market players corrupting the government with its influence. And this is just the issue of externalized costs. What about monopolies, which alone has the ability to replace our beloved capitalist economy with an oligarchy? Another problem with his (lack of) comparison is that it's impossible to completely replace democracy with free markets. Only economic decisions can be handed over to the markets. What about all the other roles government plays? Not everything can be privatized.

I believe the best solution is indeed more democracy, which this book writes off as absurd. I don't mean more of what we already have. I mean a more direct democracy, which is quickly becoming technologically feasible for the first time in history. We should set aside this half-assed attempt at democracy, and truly realize the promise of democracy: the wisdom of crowds, which was formerly only possible with free markets.

However, this book deserves three-stars, because it's extremely interesting, impressively argued for the most part, introduces concepts like the Self-Interested Voter Hypothesis and the miracle of aggregation, and best of all, helped me overcome my own systematic biases about economics, and better appreciate the benefits of free markets. ...more

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Jan 07, 2014 Nemo rated it it was amazing

A lot of people either love or hate this book, I try to take a less biased approach.
First of all, prepare to drop a lot of your preconceptions from the start, if you do that this will be a much more enjoyable read.
Second, try and check out the writings of the various economists that Caplan references, The Wealth of Nations, Bastiat's various essays and David Ricardo's works can be found online for free.
I will confess, I have always liked statistics, despite all the misuses and abuses they might A lot of people either love or hate this book, I try to take a less biased approach.
First of all, prepare to drop a lot of your preconceptions from the start, if you do that this will be a much more enjoyable read.
Second, try and check out the writings of the various economists that Caplan references, The Wealth of Nations, Bastiat's various essays and David Ricardo's works can be found online for free.
I will confess, I have always liked statistics, despite all the misuses and abuses they might suffer, I am also something of a mild libertarian, and as a sysadmin I can tell you enough more stories about the sheepish behavior of users, really Caplan's "if they would only understand economics...", sounds so much like an average sysadmin's "if they would only learn about security policies hardware, basic (to the sysadmin) OS features, and basic (again to the sysadmin) networking and web related stuff."
In short I am perfectly set up to be in the "Love it" camp, however there are a few things that really annoyed me about the book, first of all Caplan loves economics too much and obviously views negatively those that can't understand it, it feels like he places it above all other areas of study and believes it should be mandatory in school despite his explanations in previous chapters about comparative advantage and the reasons behind the electorate's lack of a truly informed, unbiased opinion.
While I would agree with his belief that the basics economics and the enormous positive impact on the free market should be mandatory subjects in schools Caplan can sometimes sound a bit too confident, overly-sure of himself and elitist, something that would annoy the average non-economist or non-free market enthusiast away.
The book also felt repetitive in many ways, it would have benefited more of a few historic examples of the positive impacts on markets, for example a China vs. India on economic liberalization and its benefits to society at large.The Stalin example was good, but it could have been expanded with a somewhat broader analysis on the Soviet centralized economy and its negatives for the man in the street.
Similarly anti-foreign bias, anti-make work bias, and anti-free marked bias should have received some more attention and more real world examples as to why they have a major negative impact on those holding them.
Since he is an American, and this book is primarily targets American voters I think that Caplan could also explain the numerous economic reasons for the American Revolution as described in 1775: A Good Year for Revolution by Kevin Phillips.
All in all this is a good book, but it would need expansion and Caplan should definitely tone down what can be perceived as elitism if he wants it to have any major impact and to be finished by anyone other than an economics enthusiast or a libertarian. ...more

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