Friday, May 30, 2008

It's Not Just the Other Guy Who's Irrational

As the Democratic nomination process mercifully comes to a close, here’s a pop quiz for all those news junkies out there: what’s the most important difference between the two remaining Democratic candidates? If you said “one has a uterus”, I suppose you get partial credit. But the most important difference between the candidates Barack Obama and Hillary Clinton is their views on healthcare mandates. Senator Clinton favors a requirement for all adults to purchase healthcare (which will be subsidized for those who cannot afford it) while Obama eschews such requirements. An overview of the research suggests that evidence for both sides is mixed (if you think I’m glossing over the issue, you can read further discussion from smart policy experts here, here and here), and that even without mandates, 97% of the population can be covered by either candidates’ plans. Aside from this relatively small difference, both candidates favor increased social spending, repealing the Bush tax cuts and a more internationalist and multilateral approach to foreign policy.

If Clinton and Obama are so similar, then how are Democratic voters making their decisions? After all, recent polls have suggested that 40% of Clinton supporters (and a smaller, but large enough percentage of Obama supporters) would be so disappointed if their candidate lost that they would prefer to stay home on Election Day, or even vote for John McCain. How can theory help us explain this?

Standard self-interested voter models state that rational voters (in the classical economics sense of the word “rational”) determine the candidate who best aligns with their interests; since the two candidates are so similar, voters should be indifferent between them. As one candidate (perhaps randomly) gains a lead in the voting, subsequent voters will begin to vote strategically, based on “electability” and their perceptions of what other voters will be thinking. In due time, a nominee would emerge. But according to Bryan Caplan, an Economics Professor at George Mason University, the self-interested voter model is wrong. People are rational, yes, but only when they are forced to be.

Here’s an example. Ask a Chicago Cubs fan about the odds that their team will (finally) win the World Series this year. He’ll give you a number, say 50% or more. Now ask him if he’d like to bet on that. He’ll probably sulk in his beer. When thinking in the abstract, we tend to re-enforce beliefs that jive with our worldview. Will I work out 5-times a week in order to lose weight? Of course I will! Is NAFTA to blame for manufacturing jobs lost in the US? Damn those Mexicans! But when we’re forced to pay the consequences of our decisions, we tend to think more rationally. Maybe the fact that you can barely drag yourself to the gym once a week suggests your lofty work-out goals are out of reach. Maybe all those economists who say the decline of manufacturing jobs as a percentage of total employment is because of technological change are on to something (BTW, manufacturing output has actually increased over the last twenty years. We’re producing more stuff with less people because we’re using more machines and less physical labor).

So how does this relate to Democratic voters? All participants in a democracy know in the back of their minds that they will not cast the deciding vote. With 100 million registered voters in the country, even if only 10% actually vote, the chances of your vote determining the outcome is so small as to be irrelevant. As a result, there’s less incentive to really analyze policies and make a “rational” decision. It’s much more emotionally appealing (and less psychologically costly) to vote based on one’s worldview—whether you think a black man or a woman “deserves” the Presidency more to make up for historical discrimination; whether you can relate to them on a personal level; which one you want to have a beer with (remember that?).

When people base their votes on their own worldview, rather than their rational assessment of policy prescriptions, then they tend to create large gulfs between even vastly similar candidates, and sometimes even vote for candidates whose policies they don’t even like. How else can we end up in a situation where a Harvard Law grad is seen as pompous and aloof, while a Yale Law grad is a “Working Class Hero”?

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