Do Voters' Biases Bias Policy?
Daniel Casse’s review of my book in today’s Wall Street Journal raises an important objection:
As an analysis of how far voters are out of step with settled economic thinking, Mr. Caplan’s argument seems irrefutable. Yet as a work of political theory it is pretty dismal. Survey data do indeed show that Americans hold some irrational views. But nowhere in “The Myth of the Rational Voter” does Mr. Caplan demonstrate that dumb voter bias triggers bad public policy.
In a sense, Casse is right; I don’t empirically explore the connection between public opinion and policy. My main reason: This has already been done to death. Empirically, status quo policies are almost always popular.
In fairness to Casse, though, he offers specific counter-examples:
Take free trade. Mr. Caplan reports that support for free trade hit bottom in 1977, when only 18% of Americans favored eliminating tariffs. Yet three years later, Ronald Reagan campaigned on a platform of free trade and proceeded to sign historic free-trade agreements with Canada and laid the groundwork for free trade with Mexico. Later administrations have fought to grant China most-favored nation trading status. True, there has been a lot of populist noise against free trade, but for decades not a single presidential nominee from either party has run for office while waving the protectionist flag.
My question: If protectionist beliefs don’t get enacted into policies, why have thirty years of movement to free trade failed to actually yield full-blown free trade? It’s one thing to argue – as I do in my book – that the public gets somewhat better policies than it deserves. It’s another to argue that the public’s biases have done no damage, when a mighty edifice of trade barriers remains despite thirty years of erosion.
Mr. Caplan also claims that voters revile a corporation that downsizes at home and sends jobs abroad, a business decision that most economists view as socially productive. Yet to the chagrin of Lou Dobbs, CNN’s ultra-populist, there has been no serious proposal to stop such downsizing or to punish the companies who outsource their labor.
I’d say we’ve gotten very lucky. If you want to see the havoc populism wrecks on the labor market, check out the U.S. during the Great Depression, or most of Europe today.
For Casse, “Voter bias has fueled some foolish national debate in recent years but imposed very little foolish national policy.” This is misleading in two ways. First, very little new national economic policy of any kind has been imposed in recent years. Gridlock keeps the status quo in place. Second, and more importantly, Casse focuses on changes when he should focus on levels. Yes, status quo policies haven’t changed much. But the status quo has been foolish all along.
Jul 10 2007 at 1:21pm
Casses’s arguments are quite weak – I don’t at all see why he thinks Bryan’s proposals would not “let one faction counter the other” or discourage “citizens’ greater interest in community and local associations.”
Jul 10 2007 at 1:21pm
Mr. Casse should also think about how politicians speak about free trade agreements. Most of those who support FTA’s always seem to emphasize the benefits to American exports and almost never talk about the benefits we will gain through more imports. This is because most Americans still think in terms of exports good, imports bad.
By the way, I just opened up the box containing my very own copy of “The Myth of the Rational Voter.” I am on page 11 and I suspect I will abandon everything else I had planned for today.
Jul 10 2007 at 2:37pm
I like Bryan’s thesis a lot but I think that the policies we adopt are not all that bad. Sure they fall short of the libertarian ideal but overwhelmingly I think the policies we have are good in light of what I believe the populace would be willing to support.
My policy experience is mainly with state government here in North Carolina. Here at least policy is made by the nerds, not made by the politicians.
The politicians basically decide which group of nerds they believe most. For the most part the role of the politician is to make values decisions on the behalf of voters. The actual policy choice set is pre-defined.
So what often happens is that a new politician will come in with some crazy idea. Then the nerds will sit him down and say, “look that’s insane, but its close to this other sane policy. Why don’t you back this one”
Most politicians, at least here, want to do whats best for the public rather than just the public’s bidding. When they dispute a nerd consensus it usually over achieving political cover. That is, how can we better design the policy so that it doesn’t show up in an attack ad against them.
I guess what I am saying is that political slack, at least in NC, is a powerful factor that keeps policy fairly reasonable.
Jul 10 2007 at 2:59pm
Status quo policies are popular, but might they be popular because they are the status quo and voters are largely contented?
Jul 10 2007 at 3:07pm
We all operate on biases in everything we do, why pick on our voting habits?
Biases, or what might be mathematically defined as price fixing attempts occur at all levels of the economy. What about union biases, corporate biases?
The answer, according to some confused economists, is that these biases are corrected in the market place. But these economists have been trained to distinguish between the constrained market of government and the constrained market for enterprises.
The only difference between the large organizations is the correction cycle, eight to sixteen years for the federal legislature. Corporations do better, with a correction cycle closer to three to five years, but the process is the same.
There is one overall bias, among economists. They cannot understand long correction cycles in the federal legislature, so they wish away government so that their theories make sense.
What economists need is a concept of a time constant, or the update rate for economic functions. If they had this math down, then they could incorporate a theory that encompasses governent as just the largest of the cumbersome economic units. This would lead to the idea that government cylces are just very long and destructive because of the failure to update more often and use smoother yield curves in their pricing.
Remember, the federal reserve was defined as an arm of the federal legislature, now it is semi-indpendent and somewhat functional. Although the federal reserve has more voter costraints than the social security administration, voters voluntarily gave up direct control over it.
Jul 10 2007 at 10:20pm
Speaking of Bryan’s book, I thought of it when I read the following article
Drew Westen describes his research this way:
“The political brain is an emotional brain,” he said. “It prefers conclusions that are emotionally satisfying rather than conclusions that match the data.”
When Westen and his Emory colleagues conducted brain scans during the 2004 presidential campaign, they found that partisans of either side, when presented with contradictory statements by their preferred candidates, would struggle for some seconds with feelings of discomfort, then resolve the matter in their candidates’ favor.
The scans showed that to do this, they used the part of their brain that controls emotion and conflict. The area that controls reasoning was inactive — “the dead zone,” Westen said.
Jul 11 2007 at 5:49am
I confess to not reading Caplan’s book. But I’ve read some of the reviews, and think I get the gist. Granted, economists favor unfettered trade, while the citizenry does not, which supposedly makes them collectively irrational.
BUT WHY IS IT IRRATIONAL FOR SOMEONE WHO HAS SEEN HIS MFG JOB OUTSOURCED TO CHINA (OR THE JOB OF HIS SPOUSE OR FAMILY MEMBER) TO BE OPPOSED TO OUTSOURCING? Opposition to trade would seem preeminently rational for those people.
Jul 11 2007 at 10:15am
“BUT WHY IS IT IRRATIONAL FOR SOMEONE WHO HAS SEEN HIS MFG JOB OUTSOURCED TO CHINA (OR THE JOB OF HIS SPOUSE OR FAMILY MEMBER) TO BE OPPOSED TO OUTSOURCING? Opposition to trade would seem preeminently rational for those people.”
Because the job has *already* been lost, and his or her individual opposition won’t change the policy anyway?
Jul 11 2007 at 11:03am
Jim, Bryan tested the hypothesis that the difference is self-interest, and it doesn’t check out. You should read more of his old posts.
Jul 11 2007 at 2:46pm
Did you notice the paragraph where he referred to you as Ms. Caplan?
Jul 12 2007 at 12:16am
According to Tim Harford’s book, the average tariff is 2.9% — i.e., practically nothing. So, what’s the big deal?
guy in the veal calf office
Jul 12 2007 at 12:53pm
Can someone let me know if the following questions are addressed in the Prof. Caplan’s book?
1. Would the Council of Responsible Economist Prophets (CREP) have jurisdiction over just Federal legislation, or state and local legislation? Would the CREP self-select its jurisdiction (e.g., able to select any case it wants to adjudicate), or only rule on legislation designated as “economic” by the enactor or promulgator?
2. Does CREP only have veto power, or can they craft new rules by interpretation, substitution and other means like the OG Supremes?
3. Who has standing to bring a case? Is there a statute of limitations for legislation, or can CREP overrule the NLRB?
4. Who has superior jurisdiction: CREP or OG Supremes?
5. What principles must CREP adhere to? The U.S. Constitution? U.S. treaties (e.g., can it veto the carve-outs to NAFTA)? Must we enact an Economic Constitution (and how)? Is Stare Decisis a governing principal (e.g., do prior rulings bind future CREPpers in some foggy way?)
6. Do CREPers get appointed the same way the OG SC is appointed (by the executive with the advice and consent of the Senate) and serve lifetime tenures? Democrats can appoint David Card, Robert Reich, & Frederic Lee and the GOP appoint Phillip Reny & Gordon Tullock to lifetime tenure? Or does Chicago and each Ivy League get to appoint a single CREPper? SSRN or Blog hits?
The second hand reports I’ve read of Prof Caplan’s recommended CREP lack details. Their representation of his idea reminds me of brainy High Schooler’s confident support for enlightened despotism, without proper appreciation for how the logistics of such a regime must negotiate the Symplegades of totalitarianism and excess democracy: if CREP is all powerful, it can’t be good in the long run and if subject to democratic controls it can’t make much of a difference from our current situation.
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