Archive | Political Ignorance

How Markets Make Us More Rational

Advocates of “libertarian paternalism” cite experimental evidence showing that people often make irrational decisions, and argue that we need government regulation to guard against such problems. Economist Richard McKenzie challenges part of this rationale by citing experimental evidence showing that markets actually give people incentives to act more rationally than they would otherwise, thus undercutting claims of irrational behavior based primarily on surveys or experiments that don’t mimic the incentives and other conditions of real-world markets:

People, including economists, are imperfect decision makers because of their mental limitations. But this fact does not mean that markets fail. Indeed, markets do far more than induce improved allocation of resources, given wants and resources. Markets induce market participants to be more rational than they otherwise would be because they must pay a price for being irrational. Thus, markets allow—no, require—economists to assume that people are more rational than they are likely to be found to be in laboratory settings, absent meaningful information and incentives and absent market pressures.

One underappreciated fact about the experimental and survey evidence relied on by advocates of the new paternalism is that it models voter decision-making far more closely than market decisions. Unlike market participants, voters have little or no incentive to either acquire information about the issues they decide, or to analyze the information they do have in an unbiased fashion. The same is true, to a lesser extent, of libertarian paternalist policies established by expert regulators insulated from democratic control (the “rule of experts” is often proposed as a means by which paternalist regulation can be enacted without being influenced by voter ignorance and irrationality). Such regulators may be more knowledgeable than voters. But unlike consumers, they do not have their own money at stake, and therefore don’t suffer any penalty if they [...]

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Do Politicians Have Good Incentives to Promote Airport Security?

In a response to my post arguing that politicians have strong incentives to not enact good security measures before terrorist attacks and engage in “security theater” afterwards, Orin argues that politicians actually do have good incentives:

In my experience, politicians have the right incentives in this area. The American public consistently cares very passionately about these questions, and a very broad range of politicians want to “do the right thing” in this area. Different politicians strike the balance in different places, of course, owing to their different assessments of the threats both to safety and civil liberties — as well as the different assessments of their constituents. But I think the incentives are the right ones.

The core problem is not incentives but rather the extraordinary difficulty of threat assessment. Assessing the terrorist threat requires us to figure out what an undetermined group of people with cultures and life experience totally different from our own might do in response to various policies enacted around the world using constantly changing technologies we barely understand enforced by a sprawling global bureacracy we can’t fully comprehend. That’s really really hard to do.

I agree that many politicians want to “do the right thing.” And they would certainly try to do so if it were costless for them. The problem is that successful politicians are unlikely to prioritize “doing the right thing” above staying in power. And, for the reasons I indicated in my previous post, politicians who want to stay in power have incentives to adopt perverse policies both before and after attacks.

Orin also claims that politicians have good incentives because the “public cares very passionately about these questions.” I doubt that was true before 9/11 (when polls consistently showed that terrorism was not high on voters’ list of priorities), [...]

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Public Ignorance and the Political Economy of Airport Security: Why Governments Don’t Take Enough Precautions Before Attacks and Engage in “Security Theater” Afterwards

Co-blogger Orin Kerr points out that some people claim that governments fail to take proper airport security precautions before an attack happens, while others worry that they will overreact once an attack does occur. Unfortunately, these two problems are not mutually exclusive. It could well be that governments both fail to take proper precautions before an attack occurs and respond with unnecessary “security theater” measures afterward.

I. Perverse Political Incentives Before and After Terrorist Attacks.

Before an attack occurs, or when a long period of time has passed between attacks, politicians have little incentive to enact good security measures. They have limited time and political capital, and the incentive is to spend it on measures that are popular with the general public or that benefit powerful interest groups. Neither the public nor interest groups are likely to push hard for effective security measures when there is no immediate fear of attack.

To be sure, incumbent politicians might be blamed if a successful attack occurs. However, large successful attacks are fairly rare, and there is a good chance that none will occur during any given politician’s term even if security policies are far from optimal. Moreover, when an attack does occur, many voters will assume that it was unpredictable and forego imposing electoral sanctions on the incumbents. For example, neither party suffered electoral damage after the failure to prevent the 9/11 attacks. This helps explain why, prior to 9/11, neither Democrats nor Republicans made a high priority of eliminating even our worst security policies, such as the “intelligence wall” which was later heavily criticized by the 9/11 Commission and others.

After an attack, politicians have strong incentives to enact measures that make the public believe they are “doing something” to prevent a recurrence. Unfortunately, “security theater” policies often accomplish this [...]

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Beauty and the Political Beasts

Australian economists Amy King and Andrew Leigh have an interesting article showing that the perceived beauty of candidates has a major impact on electoral success [HT: Prawfsblawg]. By their analysis of data from Australian parliamentary elections, one standard deviation of candidate “beauty” (the difference between a candidate at the 84th percentile of attractiveness relative to other candidates and one at the 50th) increases a candidate’s percentage of the vote by 1.5 to 2 percent. This is a major effect, since about 10% of Australian legislators won their seats by less than that margin, during the period studied. Moreover, this data probably understates the true impact of physical attractiveness, because it looks only at the relative success of those politicians who get major party nominations; obviously, however, the parties themselves are aware of the importance of looks and thus will try to nominate good-looking candidates, thereby excluding some unattractive but potentially more competent alternatives.

Physical attractiveness influences electoral outcomes in the US as well as Australia. As the Prawfsblawg post linked above points out, taller candidates seem to have an edge in American presidential elections. A 2005 National Bureau of Economic Research study found that the relative physical attractiveness of rival candidates has a big impact on the vote to determine the president of the American Economics Association.

I. Physical Attractiveness and Rational Political Ignorance.

The impact of physical attractiveness on electoral success is another effect of voter ignorance and irrationality. Because individual votes have so little chance of actually affecting electoral outcomes, voters have little incentive either to acquire political knowledge (“rational ignorance”) or to do a good job of evaluating the information they have (“rational irrationality”). If voters know little about politics and public policy, they may rely on extremely limited information to make their decisions, including [...]

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Applying the Precautionary Principle Consistently

One major problem with most invocations of the precautionary principle is that people tend to apply it to whatever danger they want to prevent, but largely ignore it in considering the potential dangers created by the policies they advocate. For example, Dick Cheney applied a version of the principle to the threat of terrorism, arguing that even a small chance of a catastrophic terrorist attack justified taking sweeping measures to eliminate it. At the same time, he tended to ignore the potential dangers of the anti-terrorist measures themselves. Similarly, environmentalists apply the precautionary principle to global warming, but not to the risks created by policies intended to alleviate global warming.

If we have to take seriously the dangers of a global warming catastrophe, we should give equally serious consideration to the risks on the other side. For example, it’s possible that cutting carbon dioxide emissions by 80%, as some environmentalists advocate, would devastate the global economy, impoverishing millions and causing widespread suffering and death. Moreover, enforcing a worldwide cap and trade regime strong enough to compel obedience by China, India, Russia, and other potentially recalcitrant states might require a global authority with massive powers; even if these states formally agree to a cap and trade system, they might not enforce it aggressively against their own industries, unless compelled. The vast powers necessary to impose compliance could easily be abused in a variety of ways. In the most extreme scenario, the enforcement authority could eventually become an oppressive or even totalitarian world government from which there is no hope of escape. These two scenarios are admittedly unlikely (though the first is improbable largely because an 80% emissions cut is likely to be politically infeasible for the foreseeable future), but they can’t be completely ruled out. If, as Thomas Friedman [...]

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John Mark Reynolds on Sarah Palin

John Mark Reynolds of the conservative First Things blog has written a detailed chapter by chapter review of Sarah Palin’s Going Rogue. His conclusions, which he summarizes here are similar to mine, an interesting result given that both of us were initially sympathetic to Palin, albeit for partially different reasons:

Sarah Palin has not grown in the year since the election. Those of us who hoped that Palin had been “hidden” by the campaign know the truth now. She still is what she was.

She is smart, but not book-smart. She has common sense, but not practical wisdom. These are not fatal flaws, but she shows no signs of changing or recognizing them….

Palin uses four hundred pages to give her side of things, but I am still at a loss to describe her political or governing philosophy in any detail …

While an excellent chief executive in Alaska, there is reason to believe that Palin lacks the intellectual skills needed to be an effective President. Most important, she does not seem to recognize this and shows no sign of getting them.

I have not given up on Palin and find much in her to admire, but she would not get my primary vote based on this book and what I know about her to date. I hope I am wrong and am open to changing my mind.

Ultimately, the problem with Palin is not that she is folksy, that she is religious, that she didn’t attend a prestigious university, or that she dislikes “East Coast elites.” These are all side issues. Like Reynolds, I also don’t believe that she is stupid. The problem is that she is ignorant about major national political issues, and has made no apparent effort to remedy that ignorance. That might [...]

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“Climategate” and the Social Validation of Knowledge

Recent evidence that prominent climate scientists have tried to intimidate academic journals into not publishing papers submitted by “climate change” skeptics have caused a major brouhaha in the ongoing political battle over global warming. At least some of the scientists in question certainly seem to have put ideology above the search for truth. The effort to keep skeptical articles out of academic journals also raises the issue of whether the academic “consensus” supporting global warming theory is genuine, or a product of systematic exclusion of dissenting voices.

I lack relevant scientific expertise on global warming, so I don’t have anything useful to say about the scientific issues involved. The question I want to address is what impact these revelations should have on our views of the global warming issue. If, unlike me, you have enough expertise in climate science to assess the scientific literature for yourself, I don’t think “Climategate” should have any impact on your views at all. You can read the mainstream literature, as well as the skeptics’ writings (which certainly exist in print, even if the Climategate culprits have kept some of them out of peer-reviewed journals) and make an informed decision for yourself.

Most of us, however, lack expertise on climate issues. And our knowledge of complex issues we don’t have personal expertise on is largely based on social validation. For example, I think that Einsteinian physics is generally more correct than Newtonian physics, even though I know very little about either. Why? Because that’s the overwhelming consensus of professional physicists, and I have no reason to believe that their conclusions should be discounted as biased or otherwise driven by considerations other than truth-seeking. My views of climate science were (and are) based on similar considerations. I thought that global warming was probably a genuine [...]

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In (Limited) Praise of Right-Wing Populism

I am no fan of populism of either the left or right-wing variety. In my view, most populist movements exploit voter ignorance and irrationality to promote policies that tend to do far more harm than good. That said, I have been pleasantly surprised by the right-wing populist reaction to the economic crisis and Obama’s policies. With rare exceptions, right-wing populists such as Glenn Beck, Rush Limbaugh, Mark Levin, and the Tea Party protesters, have advocated free market approaches to dealing with the crisis, and have attacked Obama and the Democratic Congress for seeking massive increases in government spending and regulation. They have not responded in any of several much worse ways that seemed like plausible alternatives a year ago, and may still be today.

True, much of their rhetoric is oversimplified, doesn’t take account of counterarguments, and is unfair to opponents. But the same can be said for nearly all political rhetoric directed at a popular audience made up of rationally ignorant voters who pay only very limited attention to politics and don’t understand the details of policy debates. On balance, however, the positions taken by the right-wing populists on these issues are basically simplified versions of those taken by the most sophisticated libertarian and limited-government conservative economists and policy scholars. There has been relatively little advocacy of strange, crackpot ideas or weird conspiracy theories. Indeed, efforts to paint the Tea Partiers and others as merely closet racists usually have to rely on unsupported claims about “unspoken” assumptions and subtexts. Most, if not all, of the right-wing populists would have reacted in much the same way if the policies advocated by Obama had instead been put forward by a hypothetical President Hillary Clinton or President John Edwards.

Things could have been a lot worse. For example, the right-wing [...]

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Palin, Ignorance, and Stupidity Revisited

Longtime readers may recall that I was initially positive about Sarah Palin because her record was much more libertarian than that of most other major national politicians. Later, I had to reassess my view of Palin, as her ignorance of many important policy issues became apparent. But I also emphasized that ignorance is not the same thing as stupidity, and that in my view Palin suffers from the former, not the latter – a conclusion also reached by liberal Washington Post columnist Eugene Robinson. I do a lot of research on political ignorance, and the distinction between ignorance and stupidity is one that I have often urged people to keep in mind. For reasons that I discuss here and here, even professional politicians often find it rational to devote their time to activities other than learning about major national issues.

Still, an ignorant but intelligent person is capable of remedying her ignorance to a greater extent than one who is both ignorant and stupid. In reading Palin’s recent memoir, Going Rogue, I wanted to see if there was any evidence that she has taken steps to address what many people see as her biggest weakness – myself included. Unfortunately, it’s difficult to say either way. As a sympathetic WSJ reviewer points out, the book devotes little attention to national policy issues. Palin does come across as knowledgeable about Alaska state issues, but her facility in that area was never seriously in question.

The book argues at length that the various gaffes that revealed Palin’s ignorance during the 2008 campaign were mostly the fault of McCain’s consultants and a biased media. I remain unpersuaded. Yes, many people in the media were biased against Palin, and perhaps the consultants made mistakes (it’s hard for me [...]

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President Obama is not a jihadi

A local controversy here in Colorado involves an auto dealer who used the billboard on his property to ask the question “PRESIDENT or JIHAD?” The rest of the billboard attempts (not very successfully in my view) to connect this question to the issue of Obama’s birth certificate. Last night I was briefly interviewed about the billboard by Channel 7 News, the local affiliate of ABC. My view is that there is not a scintilla of evidence to suggest that our President is a jihadi. Accordingly, I exercised my First Amendment rights to criticize someone else’s foolish use of his own First Amendment rights. As is the norm, not every portion of a taped interview gets used on the air. One portion that didn’t make the cut was my equating the allegation of “jihad?” with the earlier claims of some mean-spirited extremists that President Bush was as evil as Hitler. [...]

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Paternalism and Slippery Slopes

Advocates of the “new paternalism” (sometimes also called “libertarian paternalism”) argue that carefully calibrated government interventions can help consumers avoid mistakes caused by their own cognitive biases. In this interesting new article, economist Mario Rizzo and legal scholar Glen Whitman argue that new paternalist policies are vulnerable to slippery slopes that will extend them far beyond the areas where they might be genuinely need to correct consumer errors. Here is the abstract:

The “new paternalism” claims that careful policy interventions can help people make better decisions in terms of their own welfare, with only mild or nonexistent infringement of personal autonomy and choice. This claim to moderation is not sustainable. Applying the insights of the modern literature on slippery slopes to new paternalist policies suggests that such policies are particularly vulnerable to expansion. This is true even if policymakers are fully rational. More importantly, the slippery-slope potential is especially great if policymakers are not fully rational, but instead share the behavioral and cognitive biases attributed to the people their policies are supposed to help. Accepting the new paternalist approach creates a risk of accepting, in the long run, greater restrictions on individual autonomy than have been heretofore acknowledged.

I have myself previously criticized the new paternalism here, here, here, and here. Rizzo and Whitman argue that the danger of slippery slope effects is greater if policymakers themselves suffer from cognitive biases. In this post, I pointed out that the voters who elect the policymakers also suffer from ignorance and cognitive bias, often to a greater extent than the consumers whose biases new paternalist policies are intended to correct. Giving more power to cognitively biased government officials elected by rationally ignorant and cognitively biased voters is likely to exacerbate the effects of cognitive error more [...]

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Repeating the Mistakes of the Mortgage Crisis

The Federal Housing Administration seems intent on repeating one of the key policy errors that played a major role in causing last year’s financial crisis. One of the main causes of the mortgage crisis that led to the broader financial crisis of 2008 was government subsidization of risky mortgages for people who were unlikely to be able to pay them back if real estate prices fell. Investors bought up dubious mortgages supported by Fannie Mae and Freddie Mac because they correctly perceived these “government-sponsored entities” as having an “an implicit government guarantee.” See this account by Charles Calomiris and Peter Wallison. Wallison also presciently warned of the possible dangers back in 2005. Government backing for dubious mortgages was a bipartisan policy backed by many Republicans as well as Democrats. President Bush, for example, sought, in his words, to “use the mighty muscle of the federal government” to expand homeownership by giving GSEs incentives to ease credit requirements.

Unfortunately, policymakers have still not learned their lesson. As columnist Steve Chapman points out, the FHA is again subsidizing the same types of dubious mortgages that the federal government backed with disastrous results in the years leading up to 2008:

Watching Washington policymakers in action, I sometimes think they make mistakes because of unrealistic goals, flawed thinking, blind obedience to party, or dubious information. And sometimes I think they make mistakes because they are—how to put this?—clinically insane.

There is no other way to explain what is going on at the Federal Housing Administration, which provides federal guarantees for home mortgages. Given the collapse in real estate prices, the weak economy, and the epidemic of foreclosures, banks are acting with more caution than before. They now commonly require home buyers to make down payments of 20 percent to qualify for

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Pitfalls of Paternalism

In recent years, advocates of paternalistic policies, such as economist Richard Thaler, argue that government-appointed experts should limit the choices available to consumers in order to prevent them from making poor decisions because of ignorance or cognitive bias. After all, they claim, experts are likely to know better than ordinary consumers which products are too risky for us to use. This kind of “new paternalism” (also known as “libertarian paternalism”) has had a lot of influence in the academic world. It has also caught on in the Obama Administration, which has based major policy initiatives on it such as the proposed Consumer Financial Protection Agency.

In this recent essay, New Zealand economist Eric Crampton points out a serious flaw in the logic underlying the new paternalism. Experts may be better than consumers at figuring out the health risks posed by various products. But they usually have no reliable way to estimate the benefits the consumers get from them. Paternalism can only be justified, if at all, in cases where the risks posed by the product outweigh the benefit purchasers derive from it. Experts who have no way of estimating those benefits are in no position to determine which products should be regulated or banned:

None of us holds health as our only goal. Every time we take a slight risk in traffic, or decide to drive at all, we’re trading the risk of accident against the benefits of getting to where we’d like to go. When we decide to go skiing, we trade off fun against the risks of a broken leg or worse. Even where our children are concerned, we make trade-offs. We could always choose to purchase a little more safety for them than we do. We could spend a little more on the slightly

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