Irrational voters and the alleged wisdom of market forces

This morning I had higher expectations than usual when listening to the Brian Lehrer Show on WNYC public radio in New York. Brian's show is one of the best talk shows in the nation, but today he had as one of his guests Bryan Caplan, associate professor of economics at George Mason University, and author of “The Myth of the Rational Voter: Why Democracies Choose Bad Policies.” My expectations were high because I wholly agree with a major thesis of the book (that voters tend to vote irrationally, and often not in their own self-interest), and because one of my favorite New York Times op-ed columnists, Nicholas Kristof (though we disagree from time to time) has called “The Myth of the Rational Voter” the “best political book this year.”

I was sorely disappointed. It turns out that Caplan is just another rabid libertarian who thinks that the markets' “invisible hand” has god-like wisdom, and that all our problems would be solved if only we agreed to stop thinking and let capitalism do its job (he was aggressively questioned on this by Brian Lehrer, thankfully).

First, credit where it's due. Caplan's contention that people often behave irrationally is in fact correct, and it is by now supported by plenty of psychological research. We tend to be affected by several biases in the way we evaluate information and situations (e.g., we overestimate the risk of catastrophic events like terrorism and earthquakes, while we grossly underestimate the chances of getting hurt by more mundane things, like smoking or driving a car). We are notoriously bad at assessing probabilities (which is why lotteries and casinos thrive more than ever), and most of us wouldn't recognize a logical fallacy if it smacked us straight between the eyes.

However, I'm not sure where Caplan gets the idea that there is in circulation a myth of the rational voter. Au contraire, Monsieur Caplan. It is painfully obvious that political ads and campaign strategies are constructed to mimic the modus operandi of the general advertising industry: if I want to sell you a car (or whatever), I'm not going to waste time by listing its superior technical characteristics; instead, I simply put a scantly dressed young woman (preferably blond, or at least blue-eyed) next to the car and voila`, you are duped!

Indeed, it is ironic that Caplan is an economist, as it is precisely in the field of economics that specialists have for decades been making the mistake of assuming that people are “rational [economic] agents” while, plainly, they are not. Economics is not quite a pseudoscience, but its ability to make reliable predictions is so abysmal that one wonders why we bother seeking the advice of economists over that of astrologers.

Moreover, and I have said this many times, so-called “free markets” (which don't actually exist, and never will) are not a panacea for society's problems. Caplan said on the Brian Lehrer show that he would abolish Medicare because, you know, the markets “know best.” Bullshit. Market economy works in a fashion similar to natural selection, i.e. with a lot of mayhem occurring before the “best” (economically, of course, not in terms of any other human value) emerges. Now, natural evolution has resulted in the extinction of 99.99% of species that ever existed. Are we sure that we want to leave our societies to the invisible hand of an equally wasteful process, blind to human needs and values? I don't know about you, but I'd rather go with some good old fashioned human irrationality.