Bryan Caplan  

The Binary Fallacy

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When I was at the APSA meetings, the famed Arthur Lupia gave yet another speech in defense of voter competence. He offered a long list of arguments. But his most important mistake, in my view, was his claim that voters have a simple problem: They merely need to decide which of the two major candidates they like more. As long as voters are able to identify the Better of Two Goods, they are, for all practical purposes, competent.

I call Lupia's argument the Binary Fallacy. Here's why it's wrong.

Consider a simple median voter model where all voters are dogmatic protectionists. What happens? Both candidates converge to protectionist platforms. Even if everyone votes competently in Lupia's sense, the result is that protectionism triumphs. In fact, if the median voter model works perfectly, the politicians offer identical platforms, so it's impossible for voters to mistakenly choose the inferior candidate!

The lesson is that there is a lot more to voter competence than just making the better of two choices. Democratic competition drives politicians to offer popular policies. If voter competence has an effect on which policies are popular, it distorts policy - even if in equilibrium the voters skillfully compare Tweedledee to Tweedledum.

One common version of the Binary Fallacy: "Voter knowledge doesn't matter because well-informed voters are about equally likely to vote for either party." The problem with this argument is that if voters knew more, both parties would change to win their favor. Better voters would have little effect on the division of power between Democrats and Republicans; but better voters would give us better Democrats and Republicans.


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COMMENTS (11 to date)
Dr. T writes:

That was a nicely stated argument which unfortunately supports my belief that democracy is and will be a failure. Voters have no incentive to educate themselves and make better decisions, and politicians, in their relentless appeals to idiot voters, have descended below the gutters and into the slimiest sewers.

Max M writes:

Alternatives Dr.T - Propose some viable alternatives.

And when that is done - propose the most practical way to institute them as broadly as possible in the shortest possible timeframe.

Garrett Harmon writes:

I had heard this argument before, but I could not put my finger on what I thought was wrong with it. Thanks!

That was a nicely stated argument which unfortunately supports my belief that democracy is and will be a failure. Voters have no incentive to educate themselves and make better decisions, and politicians, in their relentless appeals to idiot voters, have descended below the gutters and into the slimiest sewers.
The problem does not lie with democracy, but with the populace. At its most basic level, successful democracies are considered great because of the people that live in them. Elected officials are a reflection of the people that they represent. For example, consumer savings rates are negative, so it is not surprising that the federal government is running a large deficit. Democracy needs intelligent people in order to survive.

I would disagree with your comment about incentives, Dr. T. In fact, I would say that the incentives to be an informed citizen are quite large. Taxes, spending, and regulations directly affect everyone. These policies can be the difference between growth and recession. Many Americans, however, do not realize that being a good citizen is important.

GU writes:

Mr. Harmon,

I think Dr. T was pointing out the "rational ignorance" argument from public choice theory, namely that the costs of becoming an informed voter outweigh the expected benefits of becoming an informed voter, hence voters have no incentive to become informed (i.e. rational ignorance).

Snark writes:

"Rational Ignorance" is a strong counter-argument to The Myth of the Rational Voter and the Binary Fallacy. In view of the fact that voters have no control over forcing a candidate to deliver on campaign promises, it is simply irrational to invest heavily in determining the best policies. Owing to the costs of voting intelligently, citizens find it entirely rational to remain ignorant on the issues.

reason writes:

GU, snark your argument seems to depend critically on voters only being aware of their individual impotence whereas Garett Harmon's argument depends critically on their awareness of their collective power. Could a tendency to ignore externalities be a biasing factor here? (And yes I agree we would be better off moving away from a two party system).

But all that be as it may, one implication in general would be that investment in a good education is important for more than just individual productivity.

GU writes:

FWIW, as Snark mentioned, Prof. Caplan does not rely on the "rational ignorance" model of voter behavior in his book. Whether Caplan or the traditional public choice story is correct, it doesn't give one much faith in democracy.

This is why constitutional restraints on what is open to democratic rule are important. Basically, the goal of a constitutional democracy is to take most of the important stuff out of the hands of the majority, with a presumption of liberty written into the constitution. Let democracy decide smaller, local problems that have less effect on other people. One big problem today is that many of the constitutional safeguards against majoritarianism run amok have been bastardized by "progressive" jurisprudence.

As for reason's point about education, I agree, it is important. In fact, Caplan shows that education is basically the only variable that correlates with making good policy decisions. The problem is that the type of careful, difficult thinking necessary to really hash out public policy is out of reach for most people; maybe only the ~top 25% of the population is capable of it. There will always be large masses of dumb people, and politicians will continue to pander to them unless our system changes.

MSK writes:

As Mr. Caplin states in the original posting - "Consider a simple median voter model where all voters ... What happens? Both candidates converge on a policy of " (insert bad idea here). If the only choice is between two implementations of a bad idea, what are the incentives for voters to educate themselves? I think an equally important point was made above by Snark - "voters have no control over forcing a candidate to deliver on campaign promises" . . . the simple truth is that our only leverage as voters is to deny our support to those who displease us when they come up for re-election, it's just sometimes we pleebs don't have enough sense to do the right thing - as was demonstrated all too well at a local level, the people of New Orleans (my former home town) re-elected Ray Nagin, even after his actions (or lack thereof) during Hurricane Katrina - which was arguably the most extreme example of failure by an elected officials since Tammany Hall. I can't find the quote but someone once said democracy as a system of government is terrible, it's just better than anything else... It may only be my jaded perception but is seems to have unfortunately become the case that the only purpose served by the two parties is to perpetuate incumbency, rather than provide a marketplace for ideas where we the voters can shop for the policy positions that best suit our needs.

ws1835 writes:

I would put forth my personal theory that the deficiencies commonly exhibited/cited regarding the ignorance of voters and their electoral decisions are all related to the practice of universal sufferage. Unfortunately, a good majority of the electorate does not critically analyze ANYTHING in their lives. This chunk of the population acts on impulse in their decisionmaking. Anyone working in sales (appliances, cars, electroinics, etc) can attest to this behavior. Salesmen count on it to help boost their income. When I was a car salesman years back I saw folks buy flashy cars they didn't need rather than practical alternatives day in and day out.

For these folks, the act of voting is no different than a purchase decision. Hence, large electorate elections tend to be ruled by soundbites or slogans rather than reasoned policy discussions. This is the only thing that makes cult of personality even possible in most cases. Once you understand this principle, poor election choices and short-sighted public policy are inherently a part of any system that lets the general public vote.

In terms of alternatives to the present system, the only apparent option would be a system of limited suffrage combined with a strong set of constitutional safeguards. Suffrage would be aimed at demographics that are most likely to spend some time and effort on studying public policy. The colonial governments familiar to the founding fathers tended toward this structure, and generally had some form of limited suffrage. (outside of women and slaves....i.e., not all white males were allowed to vote) I would argue that such limited suffrage had a profound impact on public policy in colonial America, just as expanding suffrage since that time has had a profound impact.

How one would select the appropriate demographics for suffrage is the magic question of course. I believe most of the colonial limitations involved owning property. Various authors/pundits (Heinlein, etc) have proposed models based on public service, payment of taxes, etc. Obviously, someone gets left out no matter what basis is chosen. However, considering the special interest politics at play in our current system and the inability of the average impulse voter to countermand such politics, there are plenty of people being left out now.

Your model of 2 parties fighting a single issue campaign is unhelpful.

The consensus required by voters of our politicians seems pretty sensible to me. We are a low tax, regulation-light, free country and supporting that is required of politicians. Since the conversation requires a standard and your model won't do, lets use as the standard the majority of humanity. In comparison to humanity, we are well governed by our process.

Second, disputes arise over manifold tactical issues on which consensus hasn't been concluded. This permits the parties a chance to implement policies, as curbed by sensitivity to their next election, and produces a steady stream of experimentation that leads to discarding ideas or a consensual adoption. Voters regulate the process and, as I have said, do it better than the majority or even super-majority of humanity.

Seems pretty functional and effective and voters get credit.

Milky Way writes:

And better voters would give us worse market because more time and effort would be spent on learning about those virtually useless topics (to them). I am a little surprised that an economist would argue for better voters (or better this or better that) while at the same time they would argue that persons are making marginally optimum choices.

Voting democracies make mistakes. But that alone is not an argument. Market make mistakes all the time. There is such a thing called bankruptcy. Elites make mistakes all the time considering that many and many decisions are not made by voting but by elites. They make mistakes. So what? You say that we, therefore, should encourage market instead of government. That's good. But, let's see, there are those issues that are essentially collective. Say, during Cuba missile crisis, individual decisions do not make any sense. Voting or elite decision or voting-by-money, whatever, it is a collective decision to be made.

Your whole pet topic is as good as many clever arguments. I appreciate that, but not much else. Oh, by the way, Mankiw is ridiculous now. He's completely consumed by his own pet topic, that pigovian tax thing. Maybe I should have my theorem: smart people getting stupid when they are totally consumed by their pet topics.

All that being said, I have to admit that I didn't read your book cause I'm not in a country where I can buy it. Maybe you do have profound things there. Though I highly doubt it after reading Mankiw's reaction to your book. Your book seems to make him even more consumed in his stupid argument for pigovian tax. This alone (its effect to an otherwise smart mind) is enough evidence that your book do more harm than good to this world. (And your Caplanian and Makiw-pronounciation thing make me sick.)

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