Irrational Voters Have Their Man

By SAM URETSKY

Richard Thaler, winner of the 2017 Nobel Prize in economics, is credited with creating the study of behavioral economics. Traditionally, economists believed, or at least wrote papers that postulated a rational economic individual. The rational individual made informed economic choices based on maximizing profit or minimizing loss.

More recently this has been loosened up to a utilitarian viewpoint, where happiness or utility replaced profit and loss. This at least incorporated ideas like conspicuous consumption, which has been around for millennia, but is difficult to measure.

Modern marketing takes some of these considerations into account – when products are priced above their practical value in order to maintain luxury status. Paul Krugman, himself a Nobel laureate, wrote, “Anyone with a bit of sense – a group that, believe it or not, includes many economists – knows that people aren’t perfectly rational. But the assumption of hyperrationality still plays far too large a role in the field. And Thaler didn’t just document deviations from rationality, he showed that there are consistent, usable patterns in those deviations.”

Prof. Thaler wrote “An Econ (his term for a totally rational person, i.e., Mr. Spock) would not expect a gift on the day of the year in which she happened to get married, or be born. What difference do these arbitrary dates make? In fact, Econs would be perplexed by the idea of gifts. An Econ would know that cash is the best possible gift; it allows the recipient to buy whatever is optimal. But unless you are married to an economist, I don’t advise giving cash on your next anniversary. Come to think of it, even if your spouse is an economist, this is not a great idea.”

Significantly, we treat voting much the way we’ve treated purchase decisions – as if voters will vote according to their own self interest. Bryan Caplan, an economist at George Mason University, wrote, The Myth of the Rational Voter: Why Democracies Choose Bad Politics (Princeton University Press, 2007) explaining that in part, voters are ill or mis-informed, but that there are also biases. The publisher’s blurb for the book sums it up: “The greatest obstacle to sound economic policy is not entrenched special interests or rampant lobbying, but the popular misconceptions, irrational beliefs, and personal biases held by ordinary voters .... Caplan argues that voters continually elect politicians who either share their biases or else pretend to, resulting in bad policies winning again and again by popular demand.”

One example is the anti-foreign bias, which emphasizes the dangers of foreign competition without regard for the benefits of mutual trade. Any politician who shares the common biases, or claims to, is assured of a good share of the vote.

Rational economic behavior, like rational political behavior, depends on knowledge of the product being sold. Unfortunately, President Trump has been inordinately successful in convincing his followers that his tweets, and Fox news, are the only reliable sources of news.

To President Trump’s base, the tweets, far from being self serving, are the most trustworthy news sources because they aren’t contaminated by the Times or the Post. The Washington Post carried a report, “Trump supporters eager to ‘drain the swamp’ help fill Republican Party.“ This year nearly 60% of the donations to the RNC have been in denominations of $200 or less.

Interviews with Trump supporters commonly show full faith in the leader, and disappointment that Democrats won’t help support the President’s agenda. It is irrelevant that President Trump is a serial liar, who as of Oct. 10 had made 1,318 false or misleading claims over 263 days since his inauguration, by the Washington Post’s count.

Just as Prof. Thaler made a major breakthrough in understanding of irrational economic behavior, Donald Trump (with help from Vladimir Putin and James Comey and a quirk of the United States Constitution) achieved a breakthrough in irrational voting behavior. Whatever else, Trump has made people, who should know better, believe in him and now the fate of the world is at risk.

Martin Longman, writing in Washington Monthly, wrote an article “How to Win Rural Voters Without Losing Liberal Values.” His proposal is to take on the monopolies and oligopolies that control much of the rural economy. Now that the Republicans seem to have the votes to pass Trump’s budget, which is a step towards passing the absurdly dishonest tax plan, there’s a real need for a strong economic message – and we need it soon.

Sam Uretsky is a writer and pharmacist living in New York. Email sdu01@outlook.com.

From The Progressive Populist, November 15, 2017

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