Review of “The Myth of the Rational Voter” by Bryan Caplan

I’m a slut for books critical of democracy. Perhaps then, I should be more hesitant to criticize this book, but I’m not going to be.

The overall argument of the book is great. Professor Caplan believes that voters are ignorant in a biased way. Many social scientists believe that voter ignorance cancels out. The pinnacle of this argument can be read here.

It’s true that asking everyone’s opinion and weighting those opinion’s equally is a good way to solve certain problems. However, the masses must not be systematically biased in any way for this problem-solving mechanism to work. Professor Caplan makes the case that the masses are biased in several ways. He believes that people suffer from: antimarket bias; antiforeign bias; make-work bias; and pessimistic bias. I completely agree that the masses a fundamentally biased, but not in the same ways that Professor Caplan thinks they’re biased.

The books suffers from two significant flaws.

The first flaw is that Professor Caplan believes that good governance is identical to good economics. It’s possible that this is the case, but I doubt it and Professor Caplan doesn’t even try to make the case. In other words, Professor Caplan believes that the best government is the one that maximizes economic efficiency.

Here is Moldbug discussing the same problem with a better grasp of the limitations of economics. He’s discussing how a good ruler – a King in this example – would deal with the problem of employing less-productive citizens. I have italicized passages that Professor Caplan explicitly disagrees with:

First, the King has no compunction whatsoever in creating economic distortions that produce employment for low-skilled humans. A good example of such a distortion in the modern world are laws prohibiting self-service gas stations, as in New Jersey or Oregon. These distortions have gotten a bad name among today’s thinkers, because makework is typically the symptom of some corrupt political combination. As the King’s will, it will have a different flavor.

As both a good Carlylean and a good Misesian, the King condemns economism – the theory that any economic indicator can measure human happiness. His goal is a fulfilled and dignified society, not maximum production of widgets. Is it better that teenagers get work experience during the summer, or that gas costs five cents a gallon less? The question is not a function of any mathematical formula. It is a question of judgment and taste. All that free-market economics will tell you is that, if you prohibit self service, there will be more jobs for gas-station attendants, and gas will cost more. It cannot tell you whether this is a good thing or a bad thing. . . .

The full-service gas tax is a tax. . . . Work is not so ennobling that it can convert a low-browed cretin into the Marquis de Lafayette, but it can convert him into a man decent enough to walk the King’s streets.

To put this argument in economic language, you’d say that unemployment has significant negative externalities. This article is a more mainstream discussion of such externalities (here’s another from this week). Professor Caplan would call Moldbug’s approach – which accounts for negative externalities associated with unemployment – "make-work bias."

The Professor’s focus on economics makes some of his points sound ridiculous. In the book, he is discussing some survey results. The survey asked the general population, the enlightened public, and economists some questions and the Professor devotes a good deal of space to comparing their answers. We’re supposed to see that the general public is "wrong" while the economists are "right." Here is the Professor discussing the survey question on increased female labor force participation:

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.

I found this brief discussion hilarious. The economists answer the question through the economic lens: does female labor participation increase GDP? Yes, therefore it’s good. The average citizen considers other things. Does increased female labor participation mean that more children will go to daycare, more women will feel like they have to work, more people will delay or avoid marriage, house prices in good neighborhoods will rise, etc.? It’s not surprising that the answers from non-economists are more varied. I don’t see a reason to attribute this reaction to "pessimistic bias." Again, separating the creation of "a fulfilled and dignified society" from the "maximum production of widgets" opens up lots of doors.

Before I move on, here’s one more example. Professor Caplan is wildly pro-free trade. For example, he specifically states that if people knew what was good for them, 100% of them would vote for zero protectionism. This statement seems absurd. For example, I have an uncle who was a cabinet-maker. This job was long ago sent overseas. He spent more than three years on various types of public assistance while he was being "re-trained." He’s working again, but his job isn’t as good as his old one. Should he really have voted for zero protectionism?

Professor Caplan is also wildly pro-foreigner. Statistics like these would seem to not register:

Robbery:
New York: 265
London: 610
Sydney (2006): 159
Tokyo: 4.7
Toronto: 133

Burglary:
New York: 254
London: 1290
Sydney (2006): 1008
Tokyo: 137
Toronto: 362

Rape:
New York: 10.6
London: 30.7
Sydney (2006): 51.4
Tokyo: 1.8
Toronto: N.A.

London’s lack of "anti-foreign bias" means that it has cheaper street food than Tokyo, unfortunately it also means that it has more than 15 times the number of rapes than Tokyo has. Of course, if you notice this, you’re "anti-foreign."

The second flaw in the book is that Caplan assumes we are in fact living in a democracy.

If you read all of the survey results that I discussed earlier, you’ll notice something interesting. First, the masses don’t seem to get their way on most of the issues (Professor Caplan notes this, "The main caveat is that if the public got exactly what it asked for, policy would be a lot worse."). People would like more protectionism, yet we get more free trade. We don’t have as much as economists would like, but if we live in a democracy, why don’t we follow the policies of the demos?

This other group, "the enlightened public," is always somewhere between the economists and the masses . . . and so are our policies. Might one conclude that the enlightened public is actually in charge?

The voters are clearly not in charge when it comes to setting policy. Professor Caplan briefly considers other explanations but concludes that voters are still in charge. He also considers my favorite alternative explanation:

The real power, supposedly, is the "faceless bureaucracy." The economics of principal-agent relations cuts against this inversion. When a principal delegates a task to a subordinate, his tacit instruction is, "Do what I myself would have done if I had the time," not, "Do as you please." The former does not have to evolve into the latter. Common sense tells a principal to occasionally audit his subordinates to see how well they mimic the decisions he would have made himself."

It makes little difference if there is one principal and one agent, or one principal at the top of a tall bureaucratic pyramid. The preferences of the apex trickle down to the base. Imagine the pyramid has 26 layers, from A at the top to Z at the bottom. If the Z’s ask, "What is expected of me?" the answer is, "To do what the Y above you would have done." If the Y’s in turn ask, "What is expected of me?" the answer is, "To do what the X above you would have done." For any given Z, serving the wishes of the Y above him is equivalent to serving the wishes of the X two levels up. This principle lets us ascend the entire pyramid. . .

This argument remains relevant for tenured professors, Supreme Court justices, and others who cannot be fired. When you cannot punish insubordination, rely on reputation instead. Choose candidates with a long history of support for your approach. If a justice undercuts the president who appointed him, a rational electorate can and should blame the president for being a poor judge of character.

I’ve a lot about how the bureaucracy works. It does not work like Professor Caplan believes it does, but I won’t re-hash all those arguments here.

Unfortunately, the earlier part of Professor Caplan’s book undercuts his own argument. If voters aren’t good at holding a President responsible, then the system breaks down. You can’t get back from Z to A.

How does relying on reputation work in order to punish the "faceless bureaucracy?" You can’t ruin the reputation of a faceless mass.

Finally, Professor Caplan also assume that the principal wants to lead. This may be the case in the private sector, but it is simply untrue in the public sector. Leadership means taking responsibility and the whole purpose of the modern bureaucratic system is to ensure that no one ever has to take any responsibility.

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18 Responses to Review of “The Myth of the Rational Voter” by Bryan Caplan

  1. sconzey says:

    Thanks for this.

    Being a slut for critiques of democracy you may enjoy this (heavily moderated) injection of reactionary thought into British think tank the Freedom Association in parts one, two and three.

    I have to say I do very much prefer TFA to the Libertarian Alliance. Quite Tory-establishment. Full of Optimates. But in a good way. 😛 Certainly none of this.

  2. Tschafer says:

    It’s odd – Caplan can see what chaos the worship of economic statistics wrought in Communist countries, but he’s just blind to his own faults along this line, which are almost as grotesque as those of the Communists he so (rightly) hates. Just as Mao and Stalin worshipped tons of steel produced, at any cost to human dignity or social stability, so does Caplan worship GDP, and the human cost be damned. I’m sure that Caplan would not stoop to mass murder, but he’s willing to overlook things like crime, which do in fact cost lives. Those who worship at the alter of Economics The Redeemer, Communist or Capitalist, would have more in common than they think…

    • Steve Johnson says:

      “Just as Mao and Stalin worshipped tons of steel produced, at any cost to human dignity or social stability, so does Caplan worship GDP, and the human cost be damned.”

      But Caplan thinks he’s got it figured out: those stupid communists were actually decreasing GDP with their silly steel policies. He doesn’t even conceive of the idea that they were targeting a different metric (tons of steel produced) than he does (GDP) – he thinks they were actually misguided about the “economics”, i.e. what policies would increase their well-being as measured by GDP.

      The idea that a metric can be a good measure (after all the better places to live do produce more steel and have higher GDPs) without its maximization being a good goal is so far from his mind that he doesn’t realize the fundamental sameness of his approach to that of the communists.

  3. Isegoria says:

    I don’t remember Caplan arguing that GDP statistics are the end-all be-all of well-being and good governance.

    I do remember him saying that many policy decisions are largely economic, and that economists from across the political spectrum agree on many, many things. Thus, where the public disagrees with the economics profession, it’s a matter of public ignorance (and bias), not ideological disagreement. (Economists are typically center-left, he points out, not right-wing, by the way.)

    • Foseti says:

      He doesn’t make the GDP argument explicitly, but it’s implicit in everything he writes.

      • Isegoria says:

        It’s fair to say that Caplan sees many things through the lens of economics, but it’s not at all accurate to say that he’s some kind of GDP-reductionist. His latest book, Selfish Reasons to Have More Children, should make that clear.

      • Foseti says:

        I don’t understand how to otherwise interpret what he’s saying.

        He specifically says that free trade, for example, is better for everyone at all times. The only way to reconcile this with reality is through the lens of maximization of current levels of GDP. If you take other metric, you can easily find someone who is worse off.

      • Isegoria says:

        When Caplan says that free trade is better for everyone, he does not mean that no one gains or loses from any particular trade restriction; he means that free trade is better for society overall. The sum of the gains to the winners is greater than the sum of the losses to the losers.

        A Detroit auto worker or GM shareholder wants protectionist tariffs on cars — but not steel, rubber, etc. — but the benefits from those tariffs are outweighed by the costs to consumers and foreign producers.

        If you want to help Detroit auto workers and GM shareholders, he would say, help them directly — simply give them the cash. (This, by the way, makes the whole thing much more transparent and reveals that we’re helping people we probably don’t feel the need to help at the expense of everyone else.)

        Also, this isn’t about maximizing GDP. First, someone like Caplan isn’t too concerned with domestic product, but, second, he isn’t too concerned with maximizing the measurable subset of well-being; it’s just that we can’t quantify the rest.

        As I already noted, he clearly cares about revealed preferences and well-being outside of market transactions, since he has written an entire book on the (non-pecuniary) economics of having more children.

      • Foseti says:

        He specifically says in the book that – if rational – everyone would vote for a 0% tariff. He does not make the greater good argument. He might believe as you suggest, but it’s not what he says in the book.

        The GDP fixation is the only way that I can understand the arguments about make-work bias and anti-foreign bias. Clearly there are positive side effects to working – he doesn’t discuss them. Clearly there are negative side effects to diversity – he doesn’t discuss them. If he’s willing to consider non-monetary things, why didn’t he consider them?

      • Steve Johnson says:

        “When Caplan says that free trade is better for everyone, he does not mean that no one gains or loses from any particular trade restriction; he means that free trade is better for society overall. The sum of the gains to the winners is greater than the sum of the losses to the losers.”

        You’re doing it yourself right there.

        In order to compare the gains of winners to the losses of losers you (and Caplan) need to put them on a single scale. What’s that scale? Money. What’s the measure of the total monetary gain and loss to a particular country? GDP.

        GDP is the economists’ solution to the utilitarian problem of comparing interpersonal utility.

      • sconzey says:

        I think All Things can be sorted into sets: Things Bryan Caplan Believes, Things Bryan Caplan is Willing To Discuss In Private Off The Record, and Things Bryan Caplan Will Publish Books About.

        You have to remember that — unlike you — he publishes under his own (real) name 😉

      • Isegoria says:

        Caplan’s book is not a call for free trade or open borders, even though he supports those things.

        He is comparing how voters view economic issues versus the consensus amongst economists from across the political spectrum — so he can point to where the voters are more-or-less objectively wrong (biased).

        Where there is no consensus amongst economists, he has no argument for voter bias.

      • sconzey says:

        @Steve: GDP is a failed measure on so many levels. It’s entirely plausible that Caplan could have an internally consistent worldview where GDP is bunk, but money can be used for inter-individual utility comparisons.

  4. Tschafer says:

    I agree, Bryan Caplan is only in thrall to economism on some issues, not all. And those issues in which he is in thrall to economism (free trade, war, etc.) also happen to be those issues where he is most utterly wrong. On those issues, Caplan’s thinking is as ideological and opposed to right reason as those of the Communists he so hates. Caplan is not a stupid man, and the fact that he can’t see this demonstrates the blinding power of economist ideology, whether of the left or right. And I must confess, I would far rather live in a country run by “irrational voters” than in one run by intellectuals like Bryan “I’d love to clone myself” Caplan. As for Caplan not being a GDP fetishist, that may be true, but he certainly writes like one more often than not, especially when he’s writing about public policy. It’s only in those areas in which he has personal experience, such as being a father, that his ideology breaks down. Whittaker Chambers had a similar experience, I believe…

    • Isegoria says:

      I would actually say that Bryan Caplan is in thrall to economism on almost all issues, including parenting, but being in thrall to economism does not mean believing that GDP is a (nearly) flawless measure of economic well-being.

      • Tschafer says:

        I think that we may be talking past each other here, by focusing on GDP specifically. I don’t know what Caplan’s views on GDP as an indicator of well-being are exactly, but it does seem that in almost all of his arguments, an enhanced GDP, or some other numerical standard of growth, trumps almost every other consideration. Whether its GDP in particular, or some other numerical measure of economic well-being, that does seem to be the trend in almost all of his arguments. Yes, voters may seem to be “irrational” to Caplan when it comes to economics, and they may well be, but at least some of those voters know that there is more to public policy that economics. Which, apparently, is more than Caplan knows.

      • Foseti says:

        I agree completely and I don’t understand how you can read this book and obtain any alternative understanding of his thought.

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