I finally read Bryan Caplan’s book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies, and I found it is very good. Caplan argues that Democracy has problems not because representatives fail to do what voters want or because, as much of Public Choice theory assumes, voters vote selfishly, but because voters have systemically biased conceptions about economics and other policy areas, and they fail to correct their views because they are “rationally irrational.”

Caplan’s argument relies on both extensive empirical evidence and appeal to an economic theory of voting distinct from classical Public Choice theories.

Here is the gist of Caplan’s argument for the rational irrationality of voters:

He begins by noting that, empirically, people do not vote selfishly, they vote for what they perceive as the public good, and that voting for good public policy is a public good. While the external, social benefits of voting for good policy may be large, the individual benefit for voting for good policy is very small, almost zero, because the probability that an individual’s vote is decisive in an election is miniscule.

Next, Bryan argues that people have preferences over beliefs, meaning that if the externally imposed costs of believing one thing over another are the same, people prefer to have beliefs that have psychological benefits. For example, it is more pleasant to believe that you are immortal than believe you are mortal, and if you are an American, it is more pleasant to believe that America can easily defeat all its enemies in war than to believe that going to war may be costly.

Because people have belief preferences and because the individual benefits of voting for good policy are negligible, when voting, people rationally choose to indulge their preferred beliefs to satisfaction. It is not that voters learn the truth and then choose a more convenient belief, but they rationally choose to resist ideas that conflict with their preferred beliefs when the potential individual costs of having erroneous beliefs are low. Voters fail to develop intelligent beliefs about economics and other policy areas because they do not have strong incentives to do so. He calls rationally favoring irrational beliefs “rational irrationality.”

Voting based on irrational beliefs about economics and other subjects leads to poor public policy because systemically biased voters will elect policy setters who share their biases. 

I am glad that Caplan does not offer many policy recommendations. He argues generally that we should leave more things up to markets and fewer things up to democratic processes, and he very briefly suggests ways in which democratic processes could be improved, but he does not argue strongly for any particular reforms. The only reform he spends significant time on is asking economists to qualify their public analyses and policy recommendations less than they do, to let people know that economists have very definite, consistent and counterintuitive ideas, and to use different strategies than pure formal reasoning when trying to convince a lay audience of some position of economics matters. In short, economists should try harder to and use different approaches to correct the irrational beliefs of voters.

I found The Myth of the Rational Voter very enlightening and a very pleasent read. Bryan is a clear writer. My initial feeling is that Caplan’s mechanism for voter irrationality has very large effects on democratic processes. I expect Caplan’s critique of Public Choice theory to have lasting impact and that future public policy discussions will have to consider his critiques of democratic processes. Anyone interested in public policy and economics should seriously consider reading this book.

Update: If you want a better idea of Caplan’s economic argument, this web paper has a good section (# 4) on rational irrationality.