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Voter

Voter ignorance and special interests often result to bad policy-choices and erroneous policy making processes. In a democracy, where people’s votes are important, policy-choices are largely affected by whatever wrong or right information people may have as regards issues. Unfortunately, biases and misinformation are rampant among people, especially among voters.

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The problem is that, instead of correcting these biases, politicians tend to play them up to acquire votes. Many of these biases come from the field of economics, a field which is very important to voters because of its effect in the quality of people’s lives. Four of these biases are discussed by Bryan Caplan in his article, The Myth of the Rational Voter. They are the anti-market bias, anti-foreign bias, make-work and the pessimistic bias.

The Anti-Market Bias may be characterized as a bias against capitalism and free-market itself, or at least most of their features. The explained cause of this bias is usually the fact that actors in a free-market model of economy are all profit-seekers. This attribution of self-interest gives birth to a prejudice that no socially-beneficial outcome may possibly result from a free market (See Caplan, 2007, p.7). The result is “a tendency to underestimate the economic benefits of market mechanism (Caplan, 2007, p.7), such as the effect of competition in lowering prices, savings and maximization of resources or efficiency.

There are many variations of the anti-market bias. One of them is “to equate market payments with transfers, [while] ignoring their incentive properties (Caplan, 2007, p.8). Under this, a profit is seen to be earned by the rich, at the expense of the poor, as if there is no exchange of value that happened. It ignores the fact that profits are not acquired without doing something, and that an increase in profits is often a result of increasing efficiency in the use of resources. The second is the monopoly theories of price. Under this variation, price is seen as a function of the decision, mood and agreement among CEO’s and other similar persons, without giving due regard to the interaction between supply and demand. (Caplan, 2007, p. 9)

The Anti-Foreign Bias is an argument towards protectionism. Under this, foreigners are often seen as a source of economic downfall. “Whatever the reason, [foreigners] supposedly have a special power to exploit [locals] (Caplan, 2007, p. 11). They are often used as scapegoats for all economic problems that may exist such as lack of jobs, high price of goods and others. This bias may have brought about by a similar theory between a profit-seeker individual and a poor buyer from the point of view of the anti-market bias.

“A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver in any country is supposed to be the best way to enrich it” (Caplan, 2007, p. 12). The assumption is that no country may be better off without making another country less off. The problem with this belief is that it ignores the benefit of an open market from the point of view of comparative advantage. Under the theory comparative advantage, all countries will be better off if they all specialize. Even a country that is less productive compared to other countries in all products may benefit from specializing. It is more expensive to try producing all products for consumption rather than in specializing in some and trading for the others (Caplan, 2007, p. 11-12).

The Make-Work Bias refers to the conflict between the businesses’ and economists’ desire to minimize waste of resources caused by paying for unneeded or inefficient labor and the belief that, to achieve economic growth, people need to be employed. The general tendency is to underestimate the benefits of conserving labor (Caplan, 2007, p. 13). Often, the rate of unemployment is seen as an indicator of economic growth. The policy is often to give jobs to more people.

This is despite the fact that the same amount of jobs are required to be done. Employment is increased at the expense of efficiency (Caplan, 2007, p. 13). Instead of trying to increase employment by increasing the GNP through efficient use of resources, the work of one is divided between two or three people, making each of them less productive (Caplan, 2007, p. 13). The result is a prospect for prosperity for the individuals who are able to obtain the jobs and a decrease in efficiency and growth for the whole economy.

Pessimistic Bias refers to the people’s negative, or even cynical beliefs, about economic conditions or growth. The general rule, as observed by Caplan (2007), is that “the public believes economic conditions are not as good as they really are” (p. 16). There may be advances in the economy, but they are taken for granted by people. In times of minimal economic growth, the perception is not of growth, but of stagnation. The problem with this is that, in terms of over-all economic growth, “progress is so gradual that a few pockets of decay hide it from the public view” (Caplan, 2007, p. 17).

To measure whether an economy has actually achieved growth, it is best to compare the present condition to that of a distant past (Caplan, 2007, p. 16). Moreover, over-all success is not often observable across the whole country. There are some areas where economic conditions may not be good. However, these isolated instances of economic regression give rise to “a suspicion that the riches and industry of the whole are decaying” (Caplan, 2007, p. 17), when the reality is that the country is experiencing economic growth as a whole. It is also common for the pessimistic rhetoric “to idealize conditions in the more distant past in order to put recent conditions in a negative light” (Caplan, 2007, p. 16).

This is a good way to emphasize economic decline. This is a nostalgic way of viewing things wherein the lament is always that things are better in the past, prices are cheaper, living is simpler, but better and others. Increase in prices and living standards are emphasized, while the values exchanged for such increases are ignored such as improvements in goods and services (See Caplan, 2007, p. 17).

As Caplan has stated in this article, these biases show that “[p]eople do not grasp the invisible hand of the market, with its ability to harmonize private greed and the public interest” (See Caplan, 2007, p. 1). For the uninformed public, free market is the enemy. This belief translates into the policies that are adopted in a democracy. Since the power is now given to the people, policy choices by candidates are geared towards pleasing them. The best way to acquire votes is not to go against the wrong beliefs of people and to correct them, but to play up the same beliefs and use them to one’s own advantage.

Reference

Caplan, Bryan. “The Myth of the Rational Voter: Why Democracies Choose Bad Policies.”

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