The Myth of the Rational Voter ← We Can Solve This

Protectionist thinking is hard to uproot because it feels good. When people vote under the influence of false beliefs that feel good, democracy persistently delivers bad policies.

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. Since most of the cost of voter irrationality is external—paid for by other people, why not indulge? If enough voters think this way, socially injurious policies win by popular demand.

now that democracy is the typical form of government, there is little reason to dwell on the truisms that it is “better than Communism,” or “beats life during the Middle Ages.” Such comparisons set the bar too low. It is more worthwhile to figure out how and why democracy disappoints.

economists typically conclude that the man in the street—and the intellectual without economic training—underestimates how well markets work.12 I maintain that something quite different holds for democracy: it is widely over-rated not only by the public but by most economists too. Thus, while the general public underestimates how well markets work, even economists underestimate markets’ virtues relative to the democratic alternative.

there is another kind of empirical evidence that can discredit the Miracle of Aggregation. The Miracle only works if voters do not make systematic errors. This suggests that instead of rehashing the whole topic of voter error, we concentrate our fire on the critical and relatively unexplored question:21 Are voter errors systematic

But as far as economics is concerned, the jury is in. People do not understand the “invisible hand” of the market, its ability to harmonize private greed and the public interest.

People underestimate the benefits of interaction with foreigners.

People equate prosperity not with production, but with employment.

Lastly, people are overly prone to think that economic conditions are bad and getting worse.

Economic policy is the primary activity of the modern state, making voter beliefs about economics among the most—if not the most—politically relevant beliefs. If voters base their policy preferences on deeply mistaken models of the economy, government is likely to perform its bread-and-butter function poorly.

The median voter would be better off if he received less protection than he asked for. But competition impels politicians to heed what voters ask for, not what is best for them.

unemployment.27 The most credible explanation is that the

For example, supply-and-demand says that above-market prices create unsaleable surpluses, but that has not stopped most of Europe from regulating labor markets into decades of depression-level unemployment.27 The most credible explanation is that the average voter sees no link between artificially high wages and unemployment.

When he affirms that “science is the great antidote to the poison of enthusiasm and superstition,”33 Smith is not thinking about errors that harmlessly balance out.

Bastiat attacks dozens of popular protectionist sophisms, for example, but does not bother to criticize any popular free trade sophisms. The reason is not that bad arguments for free trade do not exist, but that—unlike bad arguments for protection—virtually none are popular!

Most voters never take a single course in economics. If it is disturbing to imagine the bottom half of the class voting on economic policy, it is frightening to realize that the general population already does.

Sensible public opinion is a public good.40 When a consumer has mistaken beliefs about what to buy, he foots the bill. When a voter has mistaken beliefs about government policy, the whole population picks up the tab.

Instead of fairly weighing all claims, we can show nepotism toward our favorite beliefs. Ayn Rand calls it “blanking out”: “the willful suspension of one’s consciousness, the refusal to think—not blindness, but the refusal to see; not ignorance, but the refusal to know.”

As Nietzsche uncharitably puts it, “ ‘Faith’ means not wanting to know what is true.”

Human beings want their religion’s answers to be true. They often want it so badly that they avoid counterevidence, and refuse to think about whatever evidence falls in their laps.

Eric Hoffer famously expands on this point in his short classic The True Believer, declaring that “all mass movements are interchangeable”: “A religious movement may develop into a social revolution or a nationalist movement; a social revolution, into militant nationalism or a religious movement; a nationalist movement into a social revolution or a religious movement.”

As with religion, extreme ideologies lie at the end of a continuum. One’s political worldview might compare favorably with the outlook of the sole member of a Maoist splinter faction, but remain less than rational.55 To many people, for example, blaming foreigners for domestic woes is a source of comfort or pride.

The more incorrect your beliefs, the more poorly tailored your actions are to actual conditions.58 What is the full price of ideological loyalty? It is the material wealth you forego in order to believe.

Suppose that Robinson Crusoe’s ideology teaches that native islanders like Friday are unable to farm. It flatters his pride to believe that only Europeans can understand agriculture. If Crusoe’s belief is in fact correct, he wisely specializes in agriculture and has Friday do other kinds of work. But if Crusoe’s belief is blind prejudice, keeping Friday out of agriculture reduces total production and makes both men poorer. The difference between Crusoe’s potential living standard and his actual living standard is the full price of his ideological stance.

What is the expected loss of material wealth for a Crusoe who indulges this preference? He forfeits not the per capita reduction in wealth, but the per capita reduction discounted by the probability that he flips the outcome of the election. If the per capita cost of keeping Fridays out of agriculture is $1,000, and the probability of being a tiebreaker is 0.1%, then a Crusoe who votes to keep them out pays $1 to adhere to his cherished fallacy.

In real-world political settings, the price of ideological loyalty is close to zero.59 So we should expect people to “satiate” their demand for political delusion, to believe whatever makes them feel best. After all, it’s free. The fanatical protectionist who votes to close the borders risks virtually nothing, because the same policy wins no matter how he votes. Either the borders remain open, and the protectionist has the satisfaction of saying, “I told you so”; or the borders close, and the protectionist has the satisfaction of saying, “Imagine how bad things would have been if we hadn’t closed the borders!”

Recall that the expected material cost of error for one Crusoe was only $1. If a majority of the individual Crusoes find this price attractive, though, each and every Crusoe loses $1,000. Voting to keep the Fridays out of agriculture sacrifices $1,000,000 in social wealth in order to placate ideological scruples worth as little as $501.

A recurring rejoinder to these alarmist observations is that precisely because confused political ideas are dangerous, voters have a strong incentive to wise up. This makes as much sense as the argument that people have a strong incentive to drive less because auto emissions are unpleasant to breathe. No one faces the choice, “Drive a lot less, or get lung cancer,” or “Rethink your economic views, or spiral down to poverty.” In both driving and democracy, negative externalities irrelevant to individual behavior add up to a large collective misfortune.

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

Contrary to popular stereotypes of the rich Republican and the poor Democrat, income and party identity are only loosely related. The elderly are if anything slightly less supportive of Social Security and Medicare than the rest of the population. Men are more pro-choice than women.

If self-interest does not explain political opinion, what does? Voters typically favor the policies they perceive to be in the general interest of their nation. This is, however, no cause for democratic optimism. The key word is perceive. Voters almost never take the next step by critically asking themselves: “Are my favorite policies effective means to promote the general interest?” In politics as in religion, faith is a shortcut to belief.

What are the implications for democracy? Standard rational choice theory rightly emphasizes that politicians woo voters by catering to their preferences. But this means one thing if voters are shrewd policy consumers, and almost the opposite if, as I maintain, voters are like religious devotees. In the latter case, politicians have a strong incentive to do what is popular, but little to competently deliver results.

The conventional complaint about politicians is “shirking”—their failure to do what voters want.64 I maintain that “shirking” should be dethroned in favor of “demagoguery.” Merriam-Webster’s Collegiate Dictionary defines a demagogue as “a leader who makes use of popular prejudices and false claims and promises in order to gain power.”65 Put bluntly, rule by demagogues is not an aberration. It is the natural condition of democracy. Demagoguery is the winning strategy as long as the electorate is prejudiced and credulous.

Some deviation from voter wishes is bound to occur. But how much? How strictly do elections constrain politicians? My view is that it depends on voters themselves. If they care deeply about an issue—like public use of racial slurs—politicians have almost no slack. One wrong word costs them the election. In contrast, if voters find a subject boring—like banking regulation—if emotion and ideology provide little guidance, their so-called representatives have “wiggle room” to maneuver.

Politicians’ wiggle room creates opportunities for special interest groups—private and public, lobbyists and bureaucrats—to get their way. On my account, though, interest groups are unlikely to directly “subvert” the democratic process. Politicians rarely stick their necks out for unpopular policies because an interest group begs them—or pays them—to do so. Their careers are on the line; it is not worth the risk. Instead, interest groups push along the margins of public indifference.68 If the public has no strong feelings about how to reduce dependence on foreign oil, ethanol producers might finagle a tax credit for themselves. No matter how hard they lobbied, though, they would fail to ban gasoline.

Voters have beliefs—defensible or not—about how the world works. They tend to support politicians who favor policies that, in the voters’ own minds, will be socially beneficial. Politicians, in turn, need voter support to gain and retain office. While few are above faking support for popular views, this is rarely necessary: Successful candidates usually sincerely share voters’ worldview. When special interests woo politicians, they tailor their demands accordingly. They ask for concessions along policy margins where the voice of public opinion is silent anyway. The media, finally, do their best to entertain the public. Since scandalous behavior by politicians and interest groups is entertaining, the media are watchdogs. Like all watchdogs, though, the media have a subordinate role. If their coverage, however sound, conflicts with viewers’ core beliefs, they change the channel.

I see neither well-functioning democracies nor democracies highjacked by special interests. Instead, I see democracies that fall short because voters get the foolish policies they ask for.

Logical minds, accustomed to being convinced by a chain of somewhat close reasoning, cannot avoid having recourse to this mode of persuasion when addressing crowds, and the inability of their arguments always surprises them.

A mechanic who fails to notice correlations in a laboratory experiment may ably diagnose your car trouble. Voters might have sensible views about the issues of the day even though the clunkiest computer on the market beats them in chess. It is hard to remain cavalier, however, if your mechanic affirms that cars run on sand instead of gasoline. How could anyone who holds this belief be trusted with a car? The error is directly relevant to practical decisions, and points its adherent in a dangerous direction. Roughly the same is true if voters think that the biggest item in the federal budget is foreign aid. With such a distorted picture of where their tax dollars go, they are likely to spurn responsible politicians with realistic proposals in favor of demagogues who promise to painlessly balance the budget.

the public systematically overestimates the share of government spending on welfare and foreign aid, and underestimates the share devoted to national defense and especially Social Security.

“The second pattern among policy questions is for fully informed opinion to hold more progressive attitudes on a wide variety of social policy topics, particularly on those framed as legal issues.”18 Most notably, a more knowledgeable public would be more pro-choice, more supportive of gay rights, and more opposed to prayer in school.

“The third pattern in policy questions is for simulated opinions to be more ideologically conservative on the scope and applications of government power. In particular, fully informed opinion tends to be fiscally conservative when it comes to expanding domestic programs, to prefer free market solutions over government intervention to solve policy problems, to be less supportive of additional government intervention to protect the environment, and to prefer a smaller and less powerful federal government.”

While political knowledge increases support for equal opportunity, it decreases support for equal results.

It is hard to swallow the idea that if people knew more, they would agree with you less.

Why not conclude that more informed people favor free-market policies because the rich correctly identify their own interests? This objection misses the whole point. The distribution of enlightened preferences is more promarket than the actual distribution of preferences primarily because people of all income levels become more promarket as their political knowledge increases. In fact, Althaus shows that as knowledge rises, promarket views increase disproportionately in the bottom half of the income distribution.

Charles Schultze, head of Jimmy Carter’s Council of Economic Advisors, proclaims, “Harnessing the ‘base’ motive of material self-interest to promote the common good is perhaps the most important social invention mankind has yet achieved.” But politicians and voters fail to appreciate this invention.

“The virtually universal characteristic of [environmental] policy . . . is to start from the conclusion that regulation is the obvious answer; the pricing alternative is never considered.”

It would be hard to find an economist more in favor of free markets than Ludwig von Mises. Yet does he argue that unresponsive elites force big government on an unwilling majority? No, he freely grants that the policies he opposes reflect the will of the people: “There is no use in deceiving ourselves. American public opinion rejects the market economy.”

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily leads him to prefer that employment which is most advantageous to the society.

Analogies between individual and social behavior are at times misleading, but this is not one of those times.

policy changes are often sold as ways to “create jobs.” . . . Jobs can be created in two ways. The socially beneficial way is to enlarge GNP, so that there will be more useful work to be done. But we can also create jobs by seeing to it that each worker is less productive. Then more labor will be required to produce the same bill of goods.

For an individual to prosper, he only needs to have a job. But society can only prosper if individuals do a job, if they create goods and services that someone wants.

exchange hampers our view of so simple a truth. In society, with the division of labor that it entails, the production and the consumption of an object are not performed by the same individual. Each person comes to regard his own labor no longer as a means, but as an end.

Arthur Herman’s The Idea of Decline in Western History asserts that “Virtually every culture past or present has believed that men and women are not up to the standards of their parents and forebears,” and asks, “Why is this sense of decline common to all cultures?”

When problems—from mistreatment of women to illiteracy to poverty—are serious, people take them for granted. As conditions improve, the public believes ever more strongly that things have never been worse.

Even leading optimists grant that pessimistic bias has grown worse in the modern era.

Our forebears, who worked and sacrificed tirelessly in their hopes their descendants would someday be free, comfortable, healthy, and educated, might be dismayed to observe how acidly we deny we now are these things.

Economists have a love/hate relationship with systematic bias. As theorists, they deny its existence. As empiricists, they increasingly import it from other fields. But when they teach, address the public, or wonder what is wrong with the world, they dip into their own “private stash.”

Kelman bemoans the fact that even economists in the Carter administration were economists first and liberals second: At the government agency where I have worked and where agency lawyers and agency microeconomists interact with each other . . . the lawyers are often exasperated, not only by the frequency with which agency economists attack their proposals but also by the unanimity among the agency economists in their opposition. The lawyers tend to (incorrectly) attribute this opposition to failure to hire “a broad enough spectrum” of economists, and to beg the economists, if they can’t support the lawyers’ proposals, at least to give them “the best economic arguments” in favor of them. . . . The economists’ answer is typically something like, “There are no good economic arguments for your proposal.”

As usual, it is a rare person who seriously considers, “Maybe others disagree with me because they know more than me.”

If the two main efforts to undermine economists’ objectivity fail, this shifts the burden of proof back onto their critics. After adding all these controls, belief differences that remain are best interpreted as biases of the public.

Empirical economists also know that there is weak evidence that immigrants depress wages, and considerable evidence that immigrants consume less in public services than they pay in taxes.

relatively speaking, stereotypes work. It is economists’ fifth largest problem, versus third smallest for the public. Economists frequently hold that many perceived problems are all in the public’s head, but overregulation is not one of them. Does this not cut against the thesis of antimarket bias? To a degree, but evidence outside the SAEE helps triangulate the public’s position. The public frets about regulation in the abstract, but favors it the particular, from minimum wages to farm subsidies to drug testing

Economists and noneconomists both see increased female labor force participation as a good thing (fig. 3.20), but—ever the pessimists—the latter are less unanimous. It is striking that the public is so upbeat about increased female labor supply but so downbeat about increased immigrant labor supply. Presumably their economic effects are similar. One explanation for the inconsistency is that political correctness makes people too nervous to lament that women are “stealing jobs” from men.

The real problem is not that economists are out of touch, but that the public’s story makes no sense. If gas prices rise because “oil companies are trying to increase their profits,” why do gas prices ever fall? Do oil companies feel generous and decide to cut their profits?

The question asks about median income (“family incomes for average Americans”), not mean income (“average American family incomes”).

Surprisingly, the Enlightened Public is more optimistic than either. The reason: high-income males are uncharacteristically pessimistic on this topic. Since economists tend to be high-income males, their demographics dilute their optimism

My findings may not be watertight, but they are more than seaworthy

the SAEE strongly confirms the reality of large and systematic belief differences between economists and the public. In fact, there are almost no areas where large, systematic belief differences do not exist. The Miracle of Aggregation is not merely false every now and then. At least in economics, it barely works more often than most “miracles” do.

An amusing book by Cerf and Navasky, The Experts Speak: The Definitive Compendium of Authoritative Misinformation,59 provides hundreds of embarrassing examples. Notice, however, that they did not write a companion volume entitled The Public Speaks: The Definitive Compendium of Amateur Misinformation. It would be too easy. How startling would it be to read hundreds of inane comments by the unqualified?

If you want to criticize the experts, the burden is on you to overcome the standard presumption.

Controlling for individuals’ party identification and ideology makes the lay-expert belief gap a little larger. Ideologically moderate, politically independent economists are totally at odds with ideologically moderate, politically independent noneconomists. How can this be? Economics only looks conservative compared to other social sciences, like sociology, where leftism reigns supreme. Compared to the general public, the typical economist is left of center.

an impressive empirical regularity points in the same direction: Education makes people think like economists. Out of the SAEE’s 37 questions, there are 19 where economic training and education move together, and only two where they move apart.

This pattern is all the more compelling because it has parallels in other fields. Take political knowledge. Delli Carpini and Keeter report that education substantially improves performance on objective tests about government structure, leaders, and current events.63 Kraus, Malmfors, and Slovic similarly find that education makes members of the general public “think more like toxicologists.”64 Perhaps education just increases exposure to brainwashing. But it is more likely that educated people think clearer and know more.

The regression equations were then used to predict the beliefs of the Enlightened Public, who by definition are average members of the general public in every way except in education and economic training.

Downs’s one-sentence explanation remains definitive: “it is irrational to be politically well-informed because the low returns from data simply do not justify their cost in time and other resources.”

Classical Public Choice’s stories about rational ignorance prove too much. But not much too much.

It would be astonishing if democracy worked in this story, because neither candidate can improve his chance of winning. The voter inside the cell neither sees politicians’ actions nor hears their words. So the winner can do whatever he likes without the slightest fear of losing office as a result of his decisions. This does not mean the officeholder has no worries. He can be voted out of office in the next election. The point is that he is equally likely to be thrown out of office if he follows the voter’s intercom instructions to the letter, or does the opposite. Little changes if there are millions of voters in isolation chambers. As long as none know what goes on outside his cell, leaders can ignore the expressed wishes of the majority—even though the majority has complete control over electoral outcomes. If candidate behavior is unobservable, voters cannot condition their votes on candidate behavior. If voters cannot condition their votes on candidate behavior, candidates have no incentive to heed them.

Voters do not live in physical isolation chambers, but they could be comparably ignorant by choice. If they were, the perceived failings of democracy seem easy to explain. Why can special interest groups turn legislatures against majority interests? Voters’ rational ignorance: many fail to realize that tobacco farmers get subsidies, and few know where their representative stands. Why can politicians defy public opinion? Voters’ rational ignorance: few pay attention to politicians’ position on unpopular programs like foreign aid, and fewer remember at the next election. Why are inefficient policies like the minimum wage popular? Voters’ rational ignorance: few bother to learn enough economics to understand the policies’ drawbacks.

When economists stopped theorizing long enough to peruse the political landscape, special interests seemed to lurk behind practically every government policy.

The flip side of public ignorance is insider expertise. While the voters sleep, special interests fine-tune their lobbying strategy. Just as voters know little because it doesn’t pay, interest groups know a lot because—for them—it does;

Voter ignorance opens the door to severe government failure. Interest groups—not to mention bureaucrats and politicians themselves—walk straight in.

The problem, one might say, is not that the ignorant vote randomly, but that the ignorant are easily misled by propaganda. The trouble is not the shortage of information, but its bias, which fills the heads of the ignorant with lies.

While this story sounds good, it is theoretically wobbly. Ignorant does not mean impressionable. When you walk onto a used car lot, you may be highly ignorant, but you can still discount or ignore the words of the salesmen who shout, “You won’t get a better deal anywhere else!”

Such metaphors gloss over the distinction between being ignorant and being receptive to new ideas. One does not follow from the other.

there is less to this problem than meets the eye.

the idea is “to keep police and other expenditures relatively low and to compensate by meting out strong punishments to those convicted.”40 An ignorant electorate can use the same strategy to control politicians. Voters do not need to pay much attention to politics; they only need to vow revenge if they catch their leaders misbehaving.

Harsh punishment is the simplest way for the ignorant to protect their interests. But what if the harshest available punishment is too mild to keep politicians in line? A used-car dealer who gets caught lying to his customers might lose more than their goodwill; he risks a fraud conviction as well. In contrast, after he irreversibly ruins his public reputation, a politician can earn a comfortable living in a law firm. A democratically elected leader can break all his campaign promises without risking a day in jail or a one-dollar lawsuit. Heads he wins, tails he breaks even: a recipe for constant abuse.

This story is plausible but incomplete and easy to misinterpret. To see why, return to the used-car market. Due to their informational disadvantage, as Akerlof explained,43 prospective purchasers of used cars are wary. Salesmen must demonstrate the quality of their product to consumers’ satisfaction. If the demonstration is unconvincing, buyers slash their bids to reflect uncertainty. If their doubts are strong enough, they walk away. Thus, the greater sellers’ informational advantage, the smaller the demand for their product. Asymmetric information is bad for sellers as well as buyers.

The same principle applies to politics. You do not need to follow politics closely in order to realize that insiders know more than you do. Armed with this epiphany, you have a straightforward countermove: When in doubt, say no.44 Voters can assign fewer responsibilities and surrender less money to a government they do not trust by voting for politicians who share their doubts. So contrary to popular stories, asymmetric information leads to less government.

Government transparency is bad for insiders with something to hide, but good for government overall.

Irrational voters’ punishment strategies may be equally inept. Just because they possess the right tools for keeping politicians honest does not mean they will deploy them.

Rationally ignorant voters employ a “When in doubt, say no” strategy, giving politicians and activists with good ideas a strong incentive to prove their case. But irrational voters might take the naive stance, “If they say we need a program, we must!”—tempting insiders to concoct one scary story after another.

If people are rational on Monday and irrational on Tuesday, it is a good idea to shift decision-making to Monday. But if people are irrational twenty-four seven, you just have to live with the fact that all decisions will be worse. By the same reasoning, if people are rational as consumers but irrational as voters, it is a good idea to rely more on markets and less on politics. But if people are irrational across the board, we should expect less of every form of human organization. The relative merits of alternative systems stay roughly the same.

Social pressure for conformity is another force that conflicts with truth-seeking.6 Espousing unpopular views often transforms you into an unpopular person. Few want to be pariahs, so they self-censor. If pariahs are less likely to be hired, conformity blends into conflict of interest. However, even bereft of financial consequences, who wants to be hated? The temptation is to balance being right and being liked.

Worldviews are more a mental security blanket than a serious effort to understand the world: “Illusions endure because illusion is a need for almost all men, a need they feel no less strongly than their material needs.”

How do I know preferences over beliefs exist? Some eminent economists imply that this is impossible to know because preferences are unobservable.14 They are mistaken.

I observe one person’s preferences every day—mine. Within its sphere I trust my introspection more than I could ever trust the work of another economist.15 Introspection tells me that I am getting hungry, and would be happy to pay a dollar for an ice cream bar. If anything qualifies as “raw data,” this does. Indeed, it is harder to doubt than “raw data” that economists routinely accept—like self-reported earnings

His position, roughly, was, “You can’t believe what people say,” though he still paid attention when the waiter named the house specialties. Yes, there is a sound core to Becker’s position. People fail to reflect carefully. People deceive.16 But contrary to Becker, these are not reasons to ignore their words. We should put less weight on testimony when people speak in haste, or have an incentive to lie. But listening remains more informative than plugging your ears.

But false beliefs do not have to be deadly to be costly. If the price of oranges is 50 cents each, but you mistakenly believe it is a dollar, you buy too few oranges. If bottled water is, contrary to your impression, neither healthier nor better-tasting than tap water, you may throw hundreds of dollars down the drain. If your chance of getting an academic job is lower than you guess, you could waste your twenties in a dead-end Ph.D. program.

Normally, however, a firewall stands between this mistake and “real life.” Historical errors are rarely an obstacle to wealth, happiness, descendants, or any standard metric of success. The same goes for philosophy, religion, astronomy, geology, and other “impractical” subjects. The point is not that there is no objectively true answer in these fields. The Revolution really did precede the Civil War. But your optimal course of action if the Revolution came first is identical to your optimal course if the Revolution came second.

More interestingly, errors with drastic real-world repercussions can be cheap for the individual who makes them. How? When most or all of the cost of the mistake falls upon strangers. One person messes up, but other people live with the aftermath.

the typical citizen drops down to a lower level of mental performance as soon as he enters the political field. He argues and analyzes in a way which he would readily recognize as infantile within the sphere of his real interests. He becomes a primitive again. —Joseph Schumpeter, Capitalism, Socialism, and Democracy

most people reject the view that pushing up wages increases unemployment. When I teach intro econ, linking unemployment and excessive wages frequently elicits not only students’ disbelief, but anger: How could I be so callous? But irrationality about labor demand is selective. What happens when my outraged students reach the “Salary Requirements” line on job applications? They could ask for a million dollars a year, but they don’t. When their future rides on it, students honor the economic truism that labor demand slopes down.

The bulk of available evidence suggests that people in all societies tend to be relatively rational when it comes to the beliefs and practices that directly involve their subsistence. . . . The more remote these beliefs and practices are from subsistence activities, the more likely they are to involve nonrational characteristics. —Robert Edgerton, Sick Societies

Above all, the steps should be conceived as tacit. To get in your car and drive away entails a long series of steps—take out your keys, unlock and open the door, sit down, put the key in the ignition, and so on. The thought processes behind these steps are rarely explicit. Yet we know the steps on some level, because when we observe a would-be driver who fails to take one—by, say, trying to open a locked door without using his key—it is easy to state which step he skipped.

A few Muslims sacrifice their lives for their faith, but a billion do not.

Stalin was not so concerned about the condition of agriculture—he tolerated, after all, a desperate famine in the Ukraine in 1947—and so it may not have mattered very much to him whether Lysenko was a charlatan or not. The nuclear project was more important, however, than the lives of Soviet citizens, so it was crucial to be sure that the scientists in the nuclear project were not frauds.

Similarly, in many other areas of the Soviet economy, Marxism fostered reluctance to motivate workers with material rewards for success. In the atomic project, however, Stalin dumped Marxist dogma in favor of bourgeois horse sense: Stalin said also that he was anxious to improve the scientists’ living conditions, and to provide prizes for major achievements—“for example, for the solution of our problem,” Kurchatov wrote. Stalin “said that our scientists were very modest and they sometimes did not notice that they live poorly . . . our state has suffered very much, yet it is surely possible to ensure that several thousand people can live very well, and several thousand people better than very well, with their own dachas, so that they can relax, and with their own cars.”

Maybe Stalin covertly scoffed at the inanities of Marxism, but a more plausible interpretation is that he was rationally irrational. Marxism-Leninism was important to his sense of identity, but his preference was not absolute. As the price of illusion went up, he chose to be less fanatical and more objective.

Want to bet? We encounter the price-sensitivity of irrationality whenever someone unexpectedly offers us a bet based on our professed beliefs.59 Suppose you insist that poverty in the Third World is sure to get worse in the next decade. A challenger immediately retorts, “Want to bet? If you’re really ‘sure,’ you won’t mind giving me ten-to-one odds.” Why are you are unlikely to accept this wager? Perhaps you never believed your own words; your statements were poetry—or lies. But it is implausible to tar all reluctance to bet with insincerity. People often believe that their assertions are true until you make them “put up or shut up.” A bet moderates their views—that is, changes their minds—whether or not they retract their words.

How does this process work? Your default is to believe what makes you feel best. But an offer to bet triggers standby rationality. Two facts then come into focus. First, being wrong endangers your net worth. Second, your belief received little scrutiny before it was adopted. Now you have to ask yourself which is worse: Financial loss in a bet, or psychological loss of self-worth? A few prefer financial loss, but most covertly rethink their views. Almost no one “bets the farm” even if—pre-wager—he felt sure.

If you listen to your fellow citizens, you get the impression that they disagree. How many times have you heard, “Every vote matters”? But people are less credulous than they sound. The infamous poll tax—which restricted the vote to those willing to pay for it—provides a clean illustration. If individuals acted on the belief that one vote makes a big difference, they would be willing to pay a lot to participate. Few are. Historically, poll taxes significantly reduced turnout.65 There is little reason to think that matters are different today. Imagine setting a poll tax to reduce presidential turnout from 50% to 5%. How high would it have to be? A couple hundred dollars? What makes the poll tax alarming is that most of us subconsciously know that most of us subconsciously know that one vote does not count.

For practical questions, standard procedure is to acquire evidence before you form a strong opinion, match your confidence to the quality and quantity of your evidence, and remain open to criticism. For political questions, we routinely override these procedural safeguards.

Incentives often improve performance on tasks of judgment and decision. People “spend” hypothetical money more freely than actual money; they are much more likely to say they will buy something than to actually do so.

Incentives also lead subjects away from “favorable self-presentation behavior toward more realistic choices.”80 Furthermore, a recent paper finds that people get less overconfident when they have to bet real money on their beliefs.

“Useful cognitive capital probably builds up slowly, over days of mental fermentation or years of education rather than in the short-run of an experiment (1–3 hours) . . . [I]ncentives surely do play an important role in inducing long-run capital formation.”83 This claim is consistent with the growing literature on field experiments: Economic actors in their “natural habitat” look considerably more rational than they do in the lab.

Camerer and Hogarth also admit that experiments slight the power of incentives by relying on volunteers, whose “intrinsic motivation”—desire to do well for its own sake—is unusually high.85 Money cannot spur greater effort in those who are already trying their best.

A common summary of the experimental literature is that incentives improve performance on easy problems but hurt performance on hard problems.86 As Einhorn and Hogarth argue: Performance . . . depends on both cognition and motivation. Thus, if incentive size can be thought of as analogous to the speed with which one travels in a given direction, cognition determines the direction. Therefore, if incentives are high but cognition is faulty, one gets to the wrong place faster.87 What Camerer and Hogarth highlight, however, is that the difficulty of a problem falls if you have more time and flexibility to solve it. Hard problems naturally decay into easier problems. Once they are easy enough, incentives work like they are “supposed to.”

Even if we trust only experimental evidence, rational irrationality is a credible explanation for the public’s biased beliefs about economics. Experimentalists admit that incentives help for relatively easy questions. Antimarket, antiforeign, make-work, and pessimistic bias all qualify. These are not subtle errors, but knee-jerk reactions. In non-political contexts, people routinely overcome them. How many refrain from buying appliances because it “destroys jobs”?

Experimentalists also emphasize that incentives help less when there is intrinsic motivation to get things right. In economics, there is intrinsic motivation to get things wrong. If you think the right answer, you feel insensitive and unpatriotic; if you say the right answer, you feel like a pariah. There is about as much intrinsic motivation to understand economics as there is to take out the garbage.

Nearly all economists assume that people vote instrumentally; that is, they vote to get the policies they prefer. What else would they do? Brennan and Lomasky point to the expressive function of voting. Fans at a football game cheer not to help the home team win, but to express their loyalty. Similarly, citizens might vote not to help policies win, but to express their patriotism, their compassion, or their devotion to the environment. This is not hair-splitting. One implication is that inefficient policies like tariffs or the minimum wage might win because expressing support for them makes people feel good about themselves.

The bigot who refuses to serve blacks in his shop foregoes the profit he might have made from their custom; the anti-Semite who will not work with Jews is constrained in his choice of jobs and may well have to knock back one she would otherwise have accepted. To express such antipathy at the ballot box involves neither threat of retaliation nor any significant personal cost.

Brennan and Lomasky do not merely draw the moderate conclusion that political decisions, like market decisions, depend on expressive as well as instrumental concerns. Their conclusion is instead the radical one that—unlike market decisions—political decisions depend primarily on expressive concerns:

The key difference is the mechanism. In expressive voting theory, voters know that feel-good policies are ineffective. Expressive voters do not embrace dubious or absurd beliefs about the world. They simply care more about how policies sound than how they work. The expressive protectionist thinks: “Sure, protectionism makes Americans poorer. But who cares, as long as I can wave the flag and chant ‘U.S.A.! U.S.A.!’ ” In contrast, rationally irrational voters believe that feel-good policies work. The rationally irrational protectionist genuinely holds that protectionism makes Americans richer. If he must deny comparative advantage, so be it.

“Individual voters may, each of them, be entirely rational in voting for war—even where no one of them would, if decisive, take that course.”

Political behavior seems weird because the incentives that voters face are weird. Economists have often been criticized for evading the differences between political and market behavior.98 But this is a failure of economists rather than a failure of economics.

A jaded old statehouse reporter noticed my astonishment and offered some perspective on the unruly behavior of the elected representatives. “If you think these guys are bad,” he said, “you should see their constituents.”

You can’t do serious economics unless you are willing to be playful.

Democracy aggregates preferences. Members of a group want things done. Democracy combines their wants and stirs to get a group decision. This process is terribly confusing because humans almost never completely agree. So what happens? On every issue, democracy must either impose a compromise, or favor one side over its rivals—which is another way of answering, “Who knows?”

Irrationality makes society as a whole better off as long as the psychological benefits minus the material costs are positive: Psychological Benefits – Material Costs > 0. Irrationality makes the individual better off under far less stringent conditions: Psychological Benefits – p * Material Costs > 0. where p is the probability of casting the decisive vote. If p = 0, irrationality is utility-maximizing as long as there are any psychological benefits: Psychological Benefits > 0

With identical voters, most of the biases from the SAEE readily map into foolish policies. Antimarket bias boosts price controls and shortsighted redistribution. Antiforeign bias pushes for protectionism and immigration restrictions, and against trade agreements. Make-work bias recommends labor market regulation to “save jobs.”

When you dislike someone, you tend to see all his actions through a negative filter. When you dislike imports, similarly, it is only natural to overestimate the economic harm of imports, their quantity, the number of jobs they destroy, and the “unfairness” of other countries’ trade policies.

If voters have different endowments, then many may objectively benefit from socially harmful policies. Inequality of wealth is the simplest reason: Even if redistribution is an awfully leaky bucket, it might still enrich the majority.19 But inequality is only the beginning. The owner of a textile mill may be just as rich as the owner of a clothing store, but tariffs affect their interests oppositely.

The sign fits the stereotype: As your income rises, you are more likely to be conservative and Republican. But the effect is small, and shrinks further after controlling for race. A black millionaire is more likely to be a Democrat than a white janitor.25 The Republicans might be the party for the rich, but they are not the party of the rich.

The broken clock of the SIVH is right twice a day. It fails for party identification, Social Security, Medicare, abortion, job programs, national health insurance, Vietnam, and the draft. But it works tolerably well for a few scattered issues.32 You might expect to see the exceptions on big questions with a lot of money at stake, but the truth is almost the reverse. The SIVH shines brightest on the banal issue of smoking. Donald Green and Ann Gerken find that smokers and nonsmokers are ideologically and demographically similar, but smokers are a lot more opposed to restrictions and taxes on their favorite vice.33 Belief in “smokers’ rights” cleanly rises with daily cigarette consumption: fully 61.5% of “heavy” smokers want laxer antismoking policies, but only 13.9% of people who “never smoked” agree. If the SIVH were true, comparable patterns of belief would be everywhere. They are not.

Most voters disown selfish motives. They personally back the policies that are best for the country, ethically right, and consistent with social justice. At the same time, they see other voters—not just their opponents, but often their allies too—as deeply selfish.

When individuals contrast their own faultless motives to the selfishness of others, our natural impulse is to interpret it as self-serving bias. But the empirical evidence suggests that self-descriptions are accurate. People err not in overestimating their own altruism, but in underestimating the altruism of others. Indeed, “underestimate” is an understatement. Individuals are not just less politically selfish than usually thought. As voters, they scarcely appear selfish at all.

If people buy more altruism when the price is low, and altruistic voting is basically free, we should expect voters to consume a lot more altruism. It would cut against basic economics if the SIVH did work.

But unselfishness also lets democratic performance fall from bad to worse. Irrational unselfish voters are probably more dangerous than irrational selfish ones. If unselfish voters misunderstand the world, they can easily reach a misguided consensus. Their irrationality points them in the wrong direction; their unselfishness keeps them in marching formation, enabling them to rapidly approach their destination.

The upshot is that the failure of the SIVH makes democracy look worse. Voter irrationality is not tempered by the petty squabbling ordinarily guaranteed by human selfishness. Precisely because people put personal interests aside when they enter the political arena, intellectual errors readily blossom into foolish policies.

Strange as it sounds, a “winning platform”—a platform able to defeat any other—may not exist. Theorists often expect democratic policies to “cycle,” and wonder why real-world policies are so stable.

In formal statistical terms, political opinions look one-dimensional. They boil down roughly to one big opinion, plus random noise. Numerical ratings of “how liberal” or “how conservative” a congressman is often accurately predict his votes.

The same is true for the general public. Partisan voting is prevalent, suggesting that the public and elites use a similar ideological framework.

Overall, though, one overriding fact about public opinion is that it is far less multi-dimensional than you might guess.

All else equal, the following predict greater agreement with economists: • Education • Income growth • Job security • Male gender

Consistent with the failure of self-serving bias and ideological bias to account for the lay-expert belief gap, income level

Consistent with the failure of self-serving bias and ideological bias to account for the lay-expert belief gap, income level and ideological conservatism do not make the list.

Failure to vote is a major leak in the pipeline between public opinion and public policy. Politicians only need the support of a majority of people who exercise their right to vote. If they can win the affection of one voter by alienating a thousand nonvoters, competition spurs them to do so.

This would not affect policy if voters and nonvoters had the same distribution of preferences and beliefs, but voters are not a random sample. The most visible difference is that voters are richer than nonvoters. On closer examination, income is largely a proxy for education; education increases both income and the probability of voting. The other big predictor of turnout is age; the old vote more than the young.

Good intentions are ubiquitous in politics; what is scarce is accurate beliefs.

The pertinent question about selective participation is whether voters are more biased than nonvoters, not whether voters take advantage of nonvoters.59 Empirically, the opposite holds: The median voter is less biased than the median nonvoter.

Though it sounds naive to count on the affluent to look out for the interests of the needy, that is roughly what the data advise.

All kinds of voters hope to make society better off, but the well educated are more likely to get the job done.

Selective turnout widens the gap between what the public gets and what it wants. But it narrows the gap between what the public gets and what it needs.

In financial and betting markets, there are intrinsic reasons why clearer heads wield disproportionate influence.61 People who know more can expect to earn higher profits, giving them a stronger to incentive to participate. Furthermore, past winners have more assets to influence the market price.

To be blunt, the problem with democracy is not that clearer heads have surplus influence. The problem is that, compared to financial and betting markets, the surplus is small.

If education causes better economic understanding, there is an argument for education subsidies—albeit not necessarily higher subsidies than we have now.62 If the connection is not causal, however, throwing money at education treats a symptom of economic illiteracy, not the disease. You would get more bang for your buck by defunding efforts to “get out the vote.”

One intriguing piece of evidence against the causal theory is that educational attainment rose substantially in the postwar era, but political knowledge stayed about the same.

suppose income growth and job security cause higher economic literacy. Then given a negative economic shock, income growth and job security would decline, reducing the median voter’s economic literacy, increasing the demand for foolish economic policies, which in turn hurts economic performance further. I refer to this downward spiral as “the idea trap.”65 Perhaps it can help solve the central puzzle of development economics: Why poor countries stay poor.

Before studying public opinion, many wonder why democracy does not work better. After one becomes familiar with the public’s systematic biases, however, one is struck by the opposite question: Why does democracy work as well as it does?

How do the unpopular policies that sustain the prosperity of the West survive? Selective participation is probably one significant part of the answer. It is easy to criticize the beliefs of the median voter, but at least he is less deluded than the median nonvoter.

What happens if they hold politicians accountable for both their policy decisions and the state of the economy?67 With these incentives, politicians who want to retain power need to keep their eyes on two balls, not one. If voters’ beliefs about effective policy were correct, this would be easy, because the two balls would be fused together. But in the real world, politicians face a visual challenge: keeping their eyes on two balls flying in different directions. If leaders ignore the public’s policy preferences, they will be thrown out of office no matter how good economic conditions are. If they fully implement those preferences, though, leaders become scapegoats for poor economic performance.

This mechanism resembles what political scientists call “retrospective voting.”68 Its novel feature is the perverse trade-off between policies and outcomes. In most retrospective voting models, voters are agnostic about policy, and judge politicians purely for their observable success. Leaders’ dominant strategy is therefore to implement the most effective policies.69 This is no longer true, however, if voters “know what ain’t so”—if they want specific policies but resent their predictable consequences.

If voters are systematically mistaken about what policies work, there is a striking implication: They will not be satisfied by the politicians they elect. A politician who ignores the public’s policy preferences looks like a corrupt tool of special interests. A politician who implements the public’s policy preferences looks incompetent because of the bad consequences. Empirically, the shoe fits: In the GSS, only 25% agree that “people we elect to Congress try to keep the promises they have made during the election,” and only 20% agree that “most government administrators can be trusted to do what is best for the country.”71 Why does democratic competition yield so few satisfied customers? Because politicians are damned if they do and damned if they don’t. The public calls them venal for failing to deliver the impossible.

If jobs have been lost in a recession, something is wrong, but is that the president’s fault? If it is not, then voting on the basis of economic results may be no more rational than killing the pharaoh when the Nile does not flood.

This is especially troublesome under divided government. If the public holds the president accountable for economic turmoil, then Congressmen from the other party might prevent his reelection by doing a bad job.

Alternately, Congress might push popular but counterproductive policies, forcing the president to either veto them (and lose votes for being out of sync with public opinion) or sign them (and lose votes for bad economic performance). Costly but popular social legislation sponsored by the Democrats during the 1988–92 Bush presidency has been interpreted this way.

Despite these caveats, mixed policy/outcome preferences remain a plausible explanation for why democracy is not worse. Respondents in the SAEE have biased beliefs about outcomes, not just policies. Yet their outcome judgments are less biased, and their perceptions about the current state of the economy are fairly accurate.77 Unless the costs of economic policy are well in the future, politicians have to think twice before caving in to popular misconceptions.

Toxicologists are far more likely to emphasize dosage. Nontoxicologists “tend to view chemicals as either safe or dangerous and they appear to equate even small exposures to toxic or carcinogenic chemicals with almost certain harm.”

As in economics, laymen reject the basics, not merely details. Toxicologists are vastly more likely than the public to affirm that “use of chemicals has improved our health more than it has harmed it,” to deny that natural chemicals are less harmful than man-made chemicals, and to reject the view that “it can never be too expensive to reduce the risks associated with chemicals

This puts a democratic leader in a tight spot. If he embraces the public’s doseless worldview and legislates accordingly, it would spark economic disaster. Over 60% of the public agrees that “it can never be too expensive to reduce the risks associated with chemicals,”85 but the leader who complied would be a hated scapegoat once the economy fell to pieces. On the other hand, a leader who dismisses every low-dose scare as “unscientific” and “paranoid” would soon be a reviled symbol of pedantic insensitivity. Given their incentives, politicians cannot disregard the public’s misconceptions, but they often drag their feet.

The proposition that irrational beliefs lead to foolish policies is largely correct.

The main caveat is that if the public got exactly what it asked for, policy would be a lot worse. The United States is more market-oriented and open to international competition than you would expect after studying the economic beliefs of its inhabitants, whose aspirations seem more in tune with those of Latin American populists like Perón.

Selective participation, so often maligned as a source of class bias, leaves the median voter more economically literate than the median citizen. More importantly, the public’s ungracious tendency to scapegoat its most faithful agents encourages felicitous hypocrisy. Politicians face an uneasy predicament: “Unabashed populism plays well at first, but once the negative consequences hit, voters will blame me, not themselves.” This hardly implies that it never pays to take the populist route. But leaders have to strike a balance between doing what the public thinks works, and what actually does.

The successful politician instinctively feels what the voters feel, regardless of what facts and logic say. His guiding principle is neither efficiency nor equity but electability— about which he knows a good deal.

What happens if fully rational politicians compete for the support of irrational voters—specifically, voters with irrational beliefs about the effects of various policies? It is a recipe for mendacity. If politicians understand the benefits of free trade, but the public is dogmatically protectionist, honest politicians do not get far.

Every serious contender must not only keep his economic understanding to himself, but “pander”—zealously advocate the protectionist views he knows to be false.

Sometimes politicians—unlike ordinary voters—have strong incentives for rationality. Above all, it pays a politician to understand how his policy positions and other actions change his electoral prospects. Politicians have as strong an incentive to think rationally about their popularity as capitalists have to think rationally about their profits.

consider incentives to think rationally about the media. Politicians often have skeletons in their closet, and face daily temptations to add to their collection. Unbiased beliefs about the probability of getting caught and the severity of the backlash are useful tools of political survival. This does not mean that politicians put zero value on illicit fun, but we should expect them to make intelligent trade-offs. Clinton’s relations with “that woman, Miss Lewinsky” ultimately drew massive media attention, but he took many measures along the way to protect himself.

In sum, politicians, unlike average voters, make some political choices where their cost of systematic error is high. In these cases, we should expect leaders to be shrewd and clear-eyed. Selection pressure reinforces this point. Politicians who alienate voters soon cease to be politicians at all.

However, there is one important area where matters are less clear: Beliefs about policy effectiveness. Does it pay politicians to correctly diagnose how well policies work? If all that voters care about is adherence to their policy preferences, the answer is no. For the vote-maximizing politician, the majority is always right.

If voters are committed protectionists, politicians do not win their friendship with patient lectures on comparative advantage. Instead of trying to correct popular errors, they indulge them. As Alexander Hamilton put it in The Federalist Papers, they “flatter their prejudices to betray their interests.”

Unusually talented politicians do more than cater to current misconceptions. They steer the grateful public toward the “new and improved” misconceptions of tomorrow. A good politician tells the public what it wants to hear; a better one tells the public what it is going to want to hear.

After a sudden rise in oil prices, the public would probably blame the greed of the oil companies on its own initiative, but lack the imagination to propose price controls. A skillful politician capitalizes on the crisis by alerting his constituents to an attractive solution: “Price controls! Why didn’t we think of that?”

Leaders’ incentive to rationally assess the effects of policy might be perverse, not just weak.

The honestly mistaken politician appears more genuine because he is more genuine. This gives leaders who sincerely share their constituents’ policy views a competitive advantage over Machiavellian rivals.

To get ahead in politics, leaders need a blend of naive populism and realistic cynicism. No wonder the modal politician has a law degree. Dye and Zeigler report that “70 percent of the presidents, vice presidents, and cabinet officers of the United States and more than 50 percent of the U.S. senators and House members” have been lawyers.14 The economic role of government has greatly expanded since the New Deal, but the percentage of congressmen with economic training remains negligible.15 Economic issues are important to voters, but they do not want politicians with economic expertise—especially not ones who lecture them and point out their confusions.

Instead, the electoral process selects people who are professionally trained to plead cases persuasively and sincerely regardless of their merits.16 Many politicians keep economists around to advise them. But the masters of rhetoric call the shots because they possess the most valuable political skill: Knowing how to strike the optimal balance between being right and being popular.

Many totalitarian movements insist upon their leaders’ infallibility. “The Duce is always right,” was a popular Fascist slogan.18 Rudolf Hess waxed poetic about the perfection of Hitler’s judgment: With pride we see that one man remains beyond all criticism, that is the Führer. This is because everyone feels and knows: he is always right, and he will always be right. The National Socialism of all of us is anchored in uncritical loyalty, in the surrender to the Führer that does not ask for the why in individual cases, in the silent execution of his orders. We believe that the Führer is obeying a higher call to fashion German history. There can be no criticism of this belief.

Mr. Bush has made an important political discovery. Really big misstatements, it turns out, cannot be effectively challenged, because voters can’t believe that a man who seems so likable would do that sort of thing.

Even a colorless politician might find that his title makes his words credible. It works for the pope. Why not the president?

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