Caplan’s Myth of the Rational Voter

Bryan Caplan’s book, The Myth of the Rational Voter, is the most important book written in public choice this decade. It is a well-rounded argument that nicely blends elements of the Chicago and Virginia schools of public choice. The logic rests on a set of human biases that play against free markets in the policy arena (anti-foreign bias, make-work bias, anti-market bias, and pessimistic bias). In addition to further empirical testing for the presence of these biases, I believe the idea still needs a source or a reason for existence. For the anti-foreign bias, Caplan has an explanation already, that it may be a leftover evolutionary survival gene that was important in the cave-man days of hunter-gather groups.

Unless I missed it someplace else in the book, the other biases need a starting point as well. The existence of anti-market and make-work bias are the most perplexing to me, but I can think of a few possible explanations:

1. As economists, we pay attention only to the systematic bias when it is against the correct outcome and not when it is in favor. I’ve never seen a politician who made his way raging against the division of labor. Thus in survey’s we don’t think to ask questions about whether the economy is suffering from people developing skills in too few tasks.

2. The "informed" are endogenously determined by their bias. Beliefs are initially not systematically biased, but the mechanisms that cause those on the “wrong side” to avoid displeasing information also drives those who happen to be “in the right” to seek information pleasing to their bias and seek it out more often, making them also “in the know.”

3. People rationally ignore effects beyond the initial phase because of the lack of incentive, and much of economic intuition is appealing because the full chain of effects reverses the initial outcome. Minimum wage goes up is the initial effect and looks good so far, but with further cognitive effort we realize lower employment will also result. The lack of reward to thinking this far yields the systematically bad choices.