I finally picked up Bryan Caplan’s The Myth of the Rational Voter. Caplan has a crisp writing style, and as I expected, the book was a quick, pleasant read.
Caplan’s basic thesis is that standard economic assumptions lead to a pessimistic view of democracy. Because elections are rarely determined by a single vote, the cost to a voter of his own “incorrect” opinions approaches nil. Introspection and empirical evidence tells us that people naturally prefer some opinions to others. In other words, people have a natural demand for irrational – as opposed to unbiased – opinions. Voters costlessly cater to their appetite for irrational opinions at the ballot box, but society pays for it in the aggregate.
Voters are not merely irrational; they are systematically irrational. If the demand for opinions were distributed randomly, then irrationality might cancel out. Then, elections would be decided by residual “rational” voters, the small number of voters who had formed opinions for reasons other than their natural appetite for those opinions. But Caplan argues that evidence shows voters to be systematically biased. In particular, he argues that voters suffer from anti-market bias, anti-foreign bias, make-work bias, and pessimistic bias.
The argument that I most wanted Caplan to make, was that society creates incentives for individual voters to adopt specific types of irrational opinions, such as incentives to adopt seemingly altruistic opinions. Caplan touches on this point, but it is mostly beyond the scope of the book.
Caplan views the market, or individual decision-making, as the natural alternative to democracy, or collective decision-making. He suggests that most people are comfortable with theories of market failure, but that they assume that democracy works well. His libertarian punch-line is that, confronted with his argument that democracy should work poorly, people should be incrementally more likely to prefer decisions made by market processes.