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

by Bryan Caplan

Consider a professor of economics and the dullest student in his class. Let us assume that . . . the dull student becomes a king, and . . . the professor of economics becomes his principal advisor. . . . Such a minister has open to him three courses of action: he may resign; he can stop trying to improve the economic conditions of the kingdom and simply implement the king’s stupid ideas on economic matters; or he can try to deceive the king into carrying out the policies that he, the minister, thinks wise while agreeing with the king in council.

False beliefs about who is responsible for what are particularly potent if voters care about both policies and results. Then a leader could win on both metrics. He publicly backs the popular view to show his laudable intentions. Meanwhile, he nudges his underlings to ignore public opinion and shoot for prosperity, proving his competence.

Biased beliefs about political responsibility have arguably greased much of the progress toward free trade. Congress and the president have full authority over trade policy. They can leave the World Trade Organization any time they want. When the WTO overrules protectionist moves by the United States, however, our leaders blame the WTO, conveniently forgetting that it has only the power they gave it.35 Has democracy been undermined by bureaucratic sleight of hand? Yes—and the electorate is better off as a result.

What if public opinion deserves to be disparaged?

Leaders often feel public pressure to “do something” about a problem, but the world finds fault with every concrete solution. A way out is to pass legislation that is loudly well intentioned, but vague.37 Practically speaking, this leaves the hard decisions to so-called independent agencies or judges.

tough questions are a weak obstacle.

Assuming the public falls for their semantic trickery, politicians can rise in popular esteem for “doing something,” but deflect inevitable disappointment onto the shoulders of others.

U.S. antitrust laws are a beautiful example. Try to decipher the meaning of “attempted monopolization” or “restraint of trade” with the help of a dictionary. Am I “attempting to monopolize” the market for books about economics right now? No matter. Though the written law verges on meaningless, sponsors like Senator Sherman and Representative Clayton won credit for “fighting the trusts.” Only after judges and regulators “interpreted” the laws could their effects be seen. From the point of view of the Shermans and Claytons, this makes the deal sweeter still. Someone else makes the tough decisions and risks embarrassment. All it takes to see through this rus...

When a master does not know his own best interests, a disobedient servant can be a blessing. The more misguided the electorate is, the less desirable it is for politicians to unquestioningly grant its wishes. If voters want price controls, a politician with slack can ignore them for their own good. Or he might take money from Big Oil to oppose controls, proverbially turning a private vice into a public virtue. The lesson is that agency “problems” temper majoritarian extremes. Good outcomes become less good, because corrupt politicians stand in the way of the public’s grand design. Bad outcomes become less bad, because politicians have the wiggle room to tone them down.

when the electorate is irrational and unselfish, perhaps you should hope for agency “problems” to open up a livable gap between what voters want and what voters get. If politicians have no choice but to carry out constituents’ wishes, democracy loses one of its main safety valves.

The only likely explanation is that newspapers and television—the main source of notions about matters which people do not experience directly—are systematically misleading the public, even if unintentionally. There is also a vicious circle here: The media carry stories about environmental scares, people become frightened, polls then reveal their worry, and the worry is then cited as support for policies to initiate action about the supposed scares, which then raise the level of public concern. The media proudly say “We do not create the ‘news.’ We are merely messengers who deliver it.” The data show that the opposite is true in this case.

But the “blame the media” hypothesis has serious flaws.

People are plainly able to form foolish beliefs about economics without journalists’ assistance.

For pseudoinformation to work as intended, voters need to be not only irrational, but irrational in the right way. The simplest of these is overconfidence in the reliability of the media.

We will always find grounds for worry. Apparently it is a built-in property of our mental systems that no matter how good things become, our aspiration levels ratchet up so that our anxiety levels decline hardly at all, and we focus on ever smaller actual dangers.

If people are more susceptible to some messages than others, exposure to balanced media can bring out people’s “inner protectionist” or “inner pessimist.” Coverage consistent with our prejudices resonates, so even a neutral stream of messages propels us deeper into error. Left to their own devices, viewers overreact only to evidence that they personally stumble upon. If the media magically vanished, their former audience would have to search harder for reasons to fear foreigners, and might grow less antiforeign out of laziness. The news industry, no matter how balanced, stops this from happening. It ensures that the public gets a steady stream of antiforeign coverage to which it can overreact.50 People who lack the initiative or creativity to reach misconceptions under their own steam can relax and let the media tow them there.

Donald Wittman objects that a rational electorate would stop this perverse process cold.55 Rational voters would wonder how a politician raised the money to purchase airtime. If candidates get money solely by selling socially harmful favors to special interests, then advertising would backfire. The populace would reason: The more a politician spends on advertising, the more money he must have; the more money he has, the more illicit favors he must have sold. Lots of ads equal lots of corruption. If the public thought like this, no politician would advertise in the first place. Better not to advertise and be thought corrupt than to advertise and remove all doubt.

Faith in leaders is the clearest example. Its dangers are obvious—picture a charismatic sociopath, or a “rally round the flag” effect that reelects an incompetent incumbent. But political faith also allows leaders—if they are so inclined—to circumvent their supporters’ misconceptions. Faith creates slack, and slack in the right hands leads to better outcomes. All you need are leaders who are somewhat well intentioned and less irrational than their followers. Since leaders are well educated, and education dilutes sympathy for popular misconceptions, at least the second condition is not hard to satisfy.

Bureaucracy also has mixed effects. If the public lets them, politicians pass the buck, blaming their mistakes and misdeeds on subordinates. Before we condemn buck-passing, however, we should remember how many good ideas and socially beneficial actions the public classifies as “mistakes” and “misdeeds.”

The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. —Bertrand Russell

ECONOMISTS perennially debate each other about how well the free market works. They have to step outside their profession to remember how much—underneath it all—they agree.2 For economists, greedy intentions establish no presumption of social harm. Indeed, their rule of thumb is to figure out who could get rich by solving a problem—and start worrying if no one comes to mind.

When Friedman prefers laissez-faire, he often openly acknowledges its defects. He has no quasi-religious need to defend the impeccability of the free market. For example, his discussion of natural monopoly states: [T]here are only three alternatives that seem available: private monopoly, public monopoly, or public regulation. All three are bad so we must choose among evils. . . . I reluctantly conclude that, if tolerable, private monopoly may be the least of the evils.

Popular accusations of market fundamentalism are plain wrong. Yes, economists think that the market works better than other people admit. But they acknowledge exceptions to the rule. The range of these exceptions changes as new evidence comes in. And it is usually economists themselves who discover the exceptions in the first place.

Victor Kamber has a book called Giving Up on Democracy.

At the end of a book cataloging his decades of disappointment with American politics, William Greider still cheerfully writes: After thirty years of working as a reporter, I am steeped in disappointing facts about self-government. Having observed politics from the small-town courthouse to the loftiest reaches of the federal establishment, I know quite a lot about duplicitous politicians and feckless bureaucracies, about gullible voters and citizens who are mean-spirited cranks. These experiences, strangely enough, have not undermined my childhood faith in democratic possibilities, but rather tended to confirm it.

In certain (though not all) circumstances one can reasonably act on the advice of an airplane pilot, an auto mechanic, an architect, or a physician without understanding its rationale or even being interested in it. But the idea that there is an analogous political expertise reasonably prompts suspicion.26 Why? Most minimally, the suggestion that there is political expertise is suspect because there are few reasons to believe that there is in fact much of it. What is typically billed as knowledge about the world of politics seems so meager, and is so regularly undermined by events, that people who set themselves up as political experts often give off the whiff of snake oil.

By now, sweeping rejections of expert opinion should be painfully familiar, but it is still odd for a noted political expert to belittle the idea of political expertise. If Shapiro does not consider himself an expert, why does he bother writing books? Anyone who grades final exams in political science courses has seen for himself that disparities in political knowledge are real and large. If that is not good enough, there is plenty of empirical evidence about political knowledge, none of which Shapiro bothers to challenge.

In the end, apologists for democracy often fall back on Winston Churchill’s slogan, “Democracy is the worst form of government, except all those other forms that have been tried from time to time.”35 On the surface, this sounds like mature realism, not democratic fundamentalism. But Churchill’s maxim is an all-or-nothing rhetorical trick. Imagine if an economist dismissed complaints about the free market by snapping: “The free market is the worst form of economic organization, except all the others.” This is a fine objection to communism, but only a market fundamentalist would buy it as an argument against moderate government intervention. Churchill’s slogan is every bit as weak. Just because dictatorship is disastrous, it hardly follows that democracy must have free rein.

“Put your money where your mouth is” turns out to be a great way to get the well informed to reveal what they know, and the poorly informed to quiet down. No system is perfect, but betting markets outperform other methods of prediction in a wide variety of circumstances.

the amount of money on the PAM table was very small. Individual bets were limited to a few tens of dollars. The idea that these paltry sums would motivate additional terrorism is ludicrous. Terrorists who wanted to profit from their attacks could make a lot more money by manipulating normal financial markets—shorting airline stocks and such. Incidentally, the 9/11 Commission found that did not happen either.

Undemocratic politics is not the only alternative to democratic politics. Many areas of life stand outside the realm of politics, of “collective choice.” When the law is silent, decisions are “up to the individual” or “left to the market.”

The complaint that we are “losing democracy” is especially weak when we bear in mind that this is not a binary choice between unlimited democracy and pure laissez-faire. Just because some democracy is beneficial or necessary, it scarcely follows that we should not have less.

Contrary to naysayers, there is no conceptual flaw in prescriptions to rely more on private choice and less on collective choice. The proposal is quite intelligible. In fact, the counterarguments are so weak that their popularity seems to be another symptom of democratic fundamentalism. People want to rule alternatives to democracy out of court, to avoid putting their faith to the test.

Should my book push you toward democratic pessimism? Yes. Above all, I emphasize that voters are irrational. But I also accept two views common among democratic enthusiasts: That voters are largely unselfish, and politicians usually comply with public opinion. Counterintuitively, this threefold combination—irrational cognition, selfless motivation, and modest slack—is “as bad as it gets.”

If public opinion is sensible, selfishness and slack prevent democracy from fulfilling its full promise. But if public opinion is senseless, selfishness and slack prevent democracy from carrying out its full threat. Selfishness and slack are like water rather than poison. They are not intrinsically injurious; they dilute the properties of the systems they affect. Thus, when the public systematically misunderstands how to maximize social welfare—as it often does—it ignites a quick-burning fuse attached to correspondingly misguided policies. This should make almost anyone more pessimistic about democracy.

The striking implication is that even economists, widely charged with market fundamentalism, should be more promarket than they already are. What economists currently see as the optimal balance between markets and govern...

In the 1970s, the Chicago school became notorious for its “markets good, government bad” outlook. One could interpret my work as an attempt to revive that tradition.

The answer depends on how flexibly you define “democracy.” Would we still have a “democracy” if you needed to pass a test of economic literacy to vote? If you needed a college degree? Both of these measures raise the economic understanding of the median voter, leading to more sensible policies. Franchise restrictions were historically used for discriminatory ends, but that hardly implies that they should never be used again for any reason.

A test of voter competence is no more objectionable than a driving test. Both bad driving and bad voting are dangerous not merely to the individual who practices them, but to innocent bystanders. As Frédéric Bastiat argues, “The right to suffrage rests on the presumption of capacity”:

And why is incapacity a cause of exclusion? Because it is not the voter alone who must bear the consequences of his vote; because each vote involves and affects the whole community; because the community clearly has the right to require some gu...

If “get out the vote” campaigns led to 100% participation, politicians would have to compete for the affection of noticeably more biased voters than they do today.

Most worries about de jure or de facto changes in participation take the empirically discredited self-interested voter hypothesis for granted.59 If voters’ goal were to promote their individual interests, nonvoters would be sitting ducks. People entitled to vote would intelligently select policies to help themselves, ignoring the interests of everyone else. There is so much evidence against the SIVH, however, that these fears can be discounted. The voters who know the most do not want to expropriate their less clear-headed countrymen. Like other voters, their goal is, by and large, to maximize social welfare. They just happen to know more about how to do it.

There are only twenty-four hours in a day, and a decision to teach one subject is also a decision not to teach another one. The question is not whether trigonometry is important, but whether it is more important than statistics; not whether an educated person should know the classics, but whether it is more important for an educated person to know the classics than elementary economics.

Last but not least on the list of ways to make democracy work better is for economically literate individuals who enjoy some political slack to take advantage of it to improve policy.

If you work at a regulatory bureau, draft legislation, advise politicians, or hold office, figure out how much latitude you possess, and use it to make policy better. Subvert bad ideas, and lend a helping hand to good ones.

As Ronald Coase says, “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,...

At first, many feel uncomfortable being a one-handed economist. But anyone can do it. Spend less time qualifying general principles. Except at the best schools, introductory classes should be almost qualification free—there is too much nonsense to unlearn to waste time on rare conditions where standard conclusions fail.

If people’s views about economics are so irrational, how is persuasion possible? My answer is that irrationality is not a barrier to persuasion, but an invitation to alternative rhetorical techniques.

You might be afraid of alienating your audience, but it depends on how you frame it. “I’m right, you’re wrong,” falls flat, but “I’m right, the people outside this classroom are wrong, and you don’t want to be like them, do you?” is, in my experience, fairly effective.

Yes, these techniques can be used to inculcate fallacies as well as insight. But there is no intrinsic conflict with truth. You can actually get students excited about thinking for themselves on topics where society disapproves, as Ralph Waldo Emerson does in his essay “Self-Reliance.” He paints truth-seeking as not merely responsible, but heroic: