The Backward State of Behavioral Political Economy
By Bryan Caplan
I came away horribly disappointed. Not with the paper, but with the state of the literature that the authors ably summarize.
I notice a lot of theory rather than fact. Stigler and company were
deeply empirical. That theory seems focused almost entirely on
individual perceptual and decision-making biases, rather than how people
in groups produce bad decisions.
Again, and again, things we ought to listen to in order to construct new theories. Please could we try to study a single fact?
I always try to begin my teaching and research in behavioral political economy with fact, not literature-driven theory. But my default model is to simply insert the weird empirics of public opinion into the standard Median Voter Model. This almost instantly implies that people in groups produce bad decisions, but I suspect Cochrane wants a richer model. John, does any of this suit you better?
Cochrane’s review ends insightfully:
[T]o indulge in a little behavioral ex-post story telling of my own, a
behavioral Stigler would be hated equally by the public choice school,
which uses rational-actor economics, and by behavioral economists, who
seem, in this wide-ranging review, to remain overwhelmed by
This is exactly the situation I saw when I started my research on voter irrationality. Since I wrote The Myth of the Rational Voter, however, at least Virginia School public choicers have become more open-minded.* So I think the remaining barrier to progress is the mismatched marriage of behavioral economics and academic leftism. Alas, this long-standing marriage continues to have much higher academic status than the public choice tradition of Buchanan and Tullock.
* This could have something to do with the fact that I’ve been teaching graduate public choice at the leading bastion of Virginia School public choice for over a decade. As Kuhn taught us, get ’em young.