This is very interesting book. Most interesting I’ve read in a while.
If neither way of verifying the existence of preferences over beliefs
appeals to you, a final one remains. Reverse the direction of reason
ing. Smoke usually means fire. The more bizarre a mistake is, the
harder it is to attribute to lack of information. Suppose your friend
thinks he is Napoleon. It is conceivable that he got an improbable
coincidence of misleading signals sufficient to convince any of us.
But it is awfully suspicious that he embraces the pleasant view that
he is a world-historic figure, rather than, say, Napoleon’s dishwasher.
Similarly, suppose an adult sees trade as a zero-sum game. Since he
experiences the opposite every day, it is hard to blame his mistake on
“lack of information.” More plausibly, like blaming your team’s defeat
on cheaters, seeing trade as disguised exploitation soothes those who
dislike the market’s outcome.
Common problem with reincarnation reports. Also: https://en.wikipedia.org/wiki/Emperor_Norton
In extreme cases, mistaken beliefs are fatal. A baby-proofed house
illustrates many errors that adults cannot afford to make. It is danger
ous to think that poisonous substances are candy It is dangerous to
reject the theory of gravity at the top of the stairs. It is dangerous to
hold that sticking forks in electrical sockets is harmless fun.
But false beliefs do not have to be deadly to be costly If the price
of oranges is 50 cents each, but you mistakenly believe it is a dollar,
you buy too few oranges. If bottled water is, contrary to your impres
sion, neither healthier nor better-tasting than tap water, you may
throw hundreds of dollars down the drain. If your chance of getting
an academic job is lower than you guess, you could waste your twent
ies in a dead-end Ph.D. program.
There was a recent danish study on the quality of bottled water vs. tap water, and they were found to be the same. Bottled water is seriously waste of money. http://www.bt.dk/test/stor-test-kildevand-er-det-rene-snyd
Mosca and Jihad. In the Jain example, stubborn belief leads to dis
comfort. Gaetano Mosca presents a case where stubborn belief leads
Mohammed, for instance, promises paradise to all who fall in a
holy war. Now if every believer were to guide his conduct by that
assurance in the Koran, every time a Mohammedan army found
itself faced by unbelievers it ought either to conquer or to fall to
the last man. It cannot be denied that a certain number of individu
als do live up to the letter of the Prophet’s word, but as between
defeat and death followed by eternal bliss, the majority of Moham
medans normally elect defeat.45
Yes, religious people are irrational, even about their own irrational beliefs: http://chaospet.com/2008/10/08/110-jesus-loves-abortion/
they should also try to get themselves killed as soon as possible. After all, heaven is infinitely good, so it’s obviously infinitely better than being on earth. An infinite improvement!
If you listen to your fellow citizens, you get the impression that they
disagree. How many times have you heard, “Every vote matters”? But
people are less credulous than they sound. The infamous poll tax—
which restricted the vote to those willing to pay for it—provides a
clean illustration. If individuals acted on the belief that one vote
makes a big difference, they would be willing to pay a lot to partici
pate. Few are. Historically, poll taxes significantly reduced turnout.65
There is little reason to think that matters are different today. Imagine
setting a poll tax to reduce presidential turnout from 50% to 5%. How
high would it have to be? A couple hundred dollars? What makes the
poll tax alarming is that most of us subconsciously know that most
of us subconsciously know that one vote does not count.
Citizens often talk as if they personally have power over electoral
outcomes. They deliberate about their options as if they were order
ing dinner. But their actions tell a different tale: They expect to be
served the same meal no matter what they “order.”
What does this imply about the material price a voter pays for polit
ical irrationality? Let D be the difference between a voter’s willingness
to pay for policy A instead of policy B. Then the expected cost of
voting the wrong way is not D, but the probability of decisiveness p
times D. If p = 0, pD = 0 as well. Intuitively, if one vote cannot change
policy outcomes, the price of irrationality is zero.
But rational irrationality does not require Orwellian underpinnings.
The psychological interpretation can be seriously toned down with
out changing the model. Above all, the steps should be conceived as
tacit. To get in your car and drive away entails a long series of steps—
take out your keys, unlock and open the door, sit down, put the key
in the ignition, and so on. The thought processes behind these steps
Eire rarely explicit. Yet we know the steps on some level, because when
we observe a would-be driver who fails to take one—by, say, trying to
open a locked door without using his key—it is easy to state which
step he skipped.
Once we recognize that cognitive “steps” are usually tacit, we can
enhance the introspective credibility of the steps themselves. The
process of irrationality can be recast:
Step 1: Be rational on topics where you have no emotional attach
ment to a particular answer.
Step 2: On topics where you have an emotional attachment to a
particular answer, keep a “lookout” for questions where false be
liefs imply a substantial material cost for you.
Step 3: If you pay no substantial material costs of error, go with the
flow; believe whatever makes you feel best.
Step 4: If there are substantial material costs of error, raise your level
of intellectual self-discipline in order to become more objective.
Step 5: Balance the emotional trauma of heightened objectivity—
the progressive shattering of your comforting illusions—against
the material costs of error.
There is no need to posit that people start with a clear perception of
the truth, then throw it away. The only requirement is that rationality
remain on “standby,” ready to engage when error is dangerous.
Relevant to the ethics of belief:
So Classical Public Choice’s stories about rational ignorance prove
too much. But not much too much. By any absolute measure, average
levels of politicsil knowledge Eire low.8 Less than 40% of American
adults know both of their senators’ names.9 Slightly fewer know both
senators’ parties—a particularly significant finding given its oft-cited
informationEil role.10 Much of the public has forgotten—or never
learned—the elementary and unchanging facts taught in every civics
class. About half knows that each state has two senators, and only a
quarter knows the length of their terms in office.11 FEimiliEirity with
politicians’ voting records and policy positions is predictably close
to nil even on high-profile issues, but amazingly good on fun topics
irrelevant to policy. As Delli Carpini and Keeter remark:
During the 1992 presidential campaign 89 percent of the public
knew that Vice President Quayle was feuding with the television
character Murphy Brown, but only 19 percent could characterize
Bill Clinton’s record on the environment. . . 86 percent of the pub
lic knew that the Bushes’ dog was named Millie, yet only 15 percent
knew that both presidential candidates supported the death pen
alty. Judge Wapner (host of the television series “People’s Court”)
was identified by more people than were Chief Justices Burger or
Apparently irrational cultural beliefs are quite remarkable:
They do not appear irrational by slightly departing from
common sense, or timidly going beyond what the
evidence allows. They appear, rather, like down-right
provocations against common sense rationality.
Economists’ love of qualification is notorious, but most doubt that
the protechnology position needs to be qualified. Technology often
creates new jobs; without the computer, there would be no jobs in
computer programming or software development. But the funda
mental defense of labor-saving technology is that employing more
workers than you need wastes valuable labor. If you pay a worker to
twiddle his thumbs, you could have paid him to do something socially
Economists add that market forces readily convert this potential
social benefit into an actual one. After technology throws people out
of work, they have an incentive to find a new use for their talents. Cox
and Aim aptly describe this process as “churn”: “Through relentless
turmoil, the economy re-creates itself, shifting labor resources to
where they’re needed, replacing old jobs with new ones.”75 They illus
trate this process with history’s most striking example: The drastic
decline in agricultural employment:
In 1800, it took nearly 95 of every 100 Americans to feed the country.
In 1900, it took 40. Today, it takes just 3…. The workers no longer
needed on farms have been put to use providing new homes, furni
ture, clothing, computers, pharmaceuticals, appliances, medical
assistance, movies, financial advice, video games, gourmet meals,
and an almost dizzying array of other goods and services.. . . What
we have in place of long hours in the fields is the wealth of goods
and services that come from allowing the churn to work, wherever
and whenever it might occur.76
These arguments sound harsh. That is part of the reason why they are
so unpopular: people would rather feel compassionately than think
logically. Many economists advocate government assistance to cush
ion displaced workers’ transition, and retain public support for a dy
namic economy. Alan Blinder recommends extended unemployment
insurance, retraining, and relocation subsidies.77 Other economists
disagree. But almost all economists grant that stopping transitions
has a grave cost.
While this is correct in the general, it does not work in the case where there some jobs that have no possible jobs left, or too few jobs they can perform. Humans are limited by their intelligence, if we can make robots that can do what humans do better or equally well at lower costs, this WILL be a problem.
Economists are especially critical of the antiforeign outlook because
it does not just happen to be wrong; it frequently conflicts with ele
mentary economics. Textbooks teach that total output increases if
producers specialize and trade. On an individual level, who could
deny it? Imagine how much time it would take to grow your own food,
when a few hours’ wages spent at the grocery store feed you for weeks.
Analogies between individual and social behavior are at times mis
leading, but this is not one of those times. International trade is, as
Steven Landsburg explains, a technology:
There are two technologies for producing automobiles in America.
One is to manufacture them in Detroit, and the other is to grow
them in Iowa. Everybody knows about the first technology; let me
tell you about the second. First you plant seeds, which are the raw
materials from which automobiles are constructed. You wait a few
months until wheat appears. Then you harvest the wheat, load it
onto ships, and sail the ships westward into the Pacific Ocean. After
a few months, the ships reappear with Toyotas on them.59
Great quote! I will remember that one.
Skipping ahead to the present, Alan Blinder blames opposition to
tradable pollution permits on antimarket bias.39 Why let people “pay
to pollute,” when we can force them to cease and desist? The textbook
answer is that tradable permits get you more pollution abatement for
the same cost. The firms able to cheaply cut their emissions do so,
selling their excess pollution quota to less flexible polluters. End re
sult: More abatement bang for your buck. A price for pollution is
therefore not a pure transfer; it creates incentives to improve environ
mental quality as cheaply as possible. But noneconomists disagree—
including relatively sophisticated policy insiders. Blinder discusses a
fascinating survey of 63 environmentalists, congressional staffers,
and industry lobbyists. Not one could explain economists’ standard
rationale for tradable permits.4
Good intentions are ubiquitous in politics; what is scarce is accu
rate beliefs. The pertinent question about selective participation is
whether voters are more biased than nonvoters, not whether voters
take advantage of nonvoters.59 Empirically, the opposite holds: The
median voter is less biased than the median nonvoter. One of the
main predictors of turnout, education, substantially increases eco
nomic literacy. The other two—age and income—have little effect on
Though it sounds naive to count on the affluent to look out for the
interests of the needy, that is roughly what the data advise. All kinds
of voters hope to make society better off, but the well educated are
more likely to get the job done.60 Selective turnout widens the gap
between what the public gets and what it wants. But it narrows the
gap between what the public gets and what it needs.
great quote, “Good intentions are ubiquitous in politics; what is scarce is accurate beliefs.”
If people dont vote for self-interest, then representation is not necessary. To complaints about lack of representation are not well-founded, at least to some degree.
In financial and betting markets, there are intrinsic reasons why
clearer heads wield disproportionate influence.61 People who know
more can expect to earn higher profits, giving them a stronger to in
centive to participate. Furthermore, past winners have more assets to
influence the market price. In contrast, the disproportionate electoral
influence of the well educated is a lucky surprise. Indeed, since the
value of their time is greater, one would expect them to vote less. To
be blunt, the problem with democracy is not that clearer heads have
surplus influence. The problem is that, compared to financial and
betting markets, the surplus is small.
More meritocracy is needed, it seems.
If education causes better economic understanding, there is an ar
gument for education subsidies—albeit not necessarily higher sub
sidies than we have now.62 If the connection is not causal, however,
throwing money at education treats a symptom of economic illiteracy,
not the disease. You would get more bang for your buck by defunding
efforts to “get out the vote.”63 One intriguing piece of evidence against
the causal theory is that educational attainment rose substantially in
the postwar era, but political knowledge stayed about the same.64
this indicates that it is g not education that causes greater political knowledge. In other words, g is a common cause of both better education and greater political knowledge. This isnt surprising at all. But it might still be that education has some beneficial effect, the study referred to is faulty in some way. Or that perhaps we’re doing education wrong. Perhaps we need incentives for people to increase their political knowledge? After all, if greater political knowledge causes better democratic results, and better democratic results cause more economic growth for the country, then it does pay for itself. It might even be a good investment.
The cite of 64 is: Delli Carpini, Michael, and Scott Keeter. 1996. What Americans Know About
Politics and Why It Matters. New Haven: Yale University Press.
It cant be found on either bookos or libgen, so i cant look it up.
Before studying public opinion, many wonder why democracy does
not work better. After one becomes familiar with the public’s system
atic biases, however, one is struck by the opposite question: Why does
democracy work as well as it does? How do the unpopular policies
that sustain the prosperity of the West survive? Selective participation
is probably one significant part of the answer. It is easy to criticize
the beliefs of the median voter, but at least he is less deluded than
the median nonvoter.
If voters are systematically mistaken about what policies work,
there is a striking implication: They will not be satisfied by the politi
cians they elect. A politician who ignores the public’s policy prefer
ences looks like a corrupt tool of special interests. A politician who
implements the public’s policy preferences looks incompetent be
cause of the bad consequences. Empirically, the shoe fits: In the GSS,
only 25% agree that “People we elect to Congress try to keep the
promises they have made during the election,” and only 20% agree
that “most government administrators can be trusted to do what is
best for the country.”71 Why does democratic competition yield so few
satisfied customers? Because politicians are damned if they do and
damned if they don’t. The public calls them venal for failing to deliver
As in economics, laymen reject the basics, not merely details. Toxi
cologists are vastly more likely than the public to affirm that “use of
chemicals has improved our health more than it has harmed it,” to
deny that natural chemicals are less harmful than man-made chemi
cals, and to reject the view that “it can never be too expensive to
reduce the risks associated with chemicals.”81 While critics might like
to impugn the toxicologists’ objectivity, it is hard to take such accusa
tions seriously. The public’s views are often patently silly, and toxicol
ogists who work in industry, academia, and regulatory bureaus largely
see eye to eye.82
seems worth looking up these studies.
81. Kraus, Nancy, Torbjörn Malmfors, and Paul Slovic. “Intuitive toxicology: Expert and lay judgments of chemical risks.” Risk analysis 12.2 (1992): 215-232.
82. Lichter and Rothman (1999) similarly document that cancer research
ers’ ideology has little effect on their scientific judgment. Liberal cancer re
searchers who do not work in the private sector still embrace their profes
sion’s contrarian views. “As a group, the experts—whether conservative or
liberal, Democratic or Republican—viewed cancer risks along roughly the
same lines. Thus, their perspectives on this topic do not appear to be ‘con
taminated’ by either narrow self-interest or broader ideological commit
ments” (1999: 116).
Why then does environmental policy put as much emphasis on
dosage as it does? Selective participation is probably part of the story.
Mirroring my results, Kraus, Malmfors, and Slovic (1992) find that ed
ucation makes people think like toxicologists.84 The bulk of the expla
nation, though, is probably that voters care about economic well-being
as well as safety from toxic substances. Moving from low dosage to
zero is expensive. It might absorb all of GDP. This puts a democratic
leader in a tight spot. If he embraces the public’s doseless worldview
and legislates accordingly, it would spark economic disaster. Over
60% of the public agrees that “It can never be too expensive to reduce
the risks associated with chemicals,”85 but the leader who complied
would be a hated scapegoat once the economy fell to pieces. On the
other hand, a leader who dismisses every low-dose scare as “unscien
tific” and “paranoid” would soon be a reviled symbol of pedantic in
sensitivity. Given their incentives, politicians cannot disregard the
public’s misconceptions, but they often drag their feet.
nowhere is this as clear as with pesticides and radiation. The public’s extreme fear of those do not at all mirror the scientific evidence of their harmfulness at low dosages.
Leaders’ incentive to rationally assess the effects of policy might be
perverse, not just weak. Machiavelli counsels the prince “to do evil if
constrained” but at the same time “take great care that nothing goes
out of his mouth which is not full of” “mercy, faith, integrity, humanity
and religion.” One can freely play the hypocrite because “everybody
sees what you appear to be, few feel what you are, and those few will
not dare oppose themselves to the many.”10 Yet, contra Machiavelli,
psychologists have documented humans’ real if modest ability to de
tect dishonesty from body language, tone of voice, and more.11 George
Costanza memorably counseled Jerry Seinfeld, “Just remember, it’s
not a lie if you believe it.”12 The honestly mistaken politician appears
more genuine because he is more genuine. This gives leaders who
sincerely share their constituents’ policy views a competitive advan
tage over Machiavellian rivals.13
I’ve sometimes heard the claim that privately, politicians really do acknowledge that ex. war on drugs does not work and is counter-productive, but that they go along with the voter opinion anyway. Perhaps this isn’t true. Perhaps the politicians really are as deluded as the voters? Or even more! Polls in Denmark show that politicians are firmly against legalization, while the public/voters are slightly positive.
To get ahead in politics, leaders need a blend of naive populism
and realistic cynicism. No wonder the modal politician has a law de
gree. Dye and Zeigler report that “70 percent of the presidents, vice
presidents, and cabinet officers of the United States and more than
50 percent of the U.S. senators and House members” have been law
yers.14 The economic role of government has greatly expanded since
the New Deal, but the percentage of congressmen with economic
training remains negligible.15 Economic issues Eire important to vot
ers, but they do not want politicians with economic expertise—espe
cially not ones who lecture them and point out their confusions.
no wonder they think new laws can solve everything…
It helps to sell the right kind of favors. Like a journalist with an ax
to grind, a shrewd politician moves along the margins of voter indif
ference. The public is protectionist, but rarely has strong opinions
about which industries need help. This is a great opportunity for a
politician and a struggling industry to make a deal. Steel manufactur
ers could pay a politician to take (a) a popular stand against foreigners
combined with (b) a not unpopular stand for American steel. In
maxim form: Do what the public wants when it cares; take bids from
interested parties when its doesn’t. Bear in mind, though, that the
important thing is not how burdensome a concession is, but how bur
densome voters perceive it to be.
Always lean to the green, as it is said in Congress. http://www.huffingtonpost.com/lawrence-lessig/neoprogressives_b_704715.html
Consider the insurance market failure known as “adverse selec
tion.” If people who want insurance know their own riskiness, but
insurers only know average riskiness, the market tends to shrink. Low-
risk people drop out, which raises consumers’ average riskiness,
which raises prices, which leads more low-risk customers to drop
out.52 In the worst-case scenario, the market “unravels.” Prices get so
high that no one buys insurance, and consumers get so risky that
firms cannot afford to sell for less.
Interesting. This shud happen to some degree becuz of the new consumer genomics. It may also be illegal for the insurance companies to utilize known information to change rates. For instance, feminists’ ideas about equality of the sexes had the result that it become illegal in the EU to change rates conditional on sex. This means that prices rose for women and fell for men even tho men cause most of the accidents.
The main upshot of my analysis of democracy is that it is a good
idea to rely more on private choice and the free market. But what—if
anything—can be done to improve outcomes, taking the supremacy
of democracy over the market as fixed?. The answer depends on how
flexibly you define “democracy.” Would we still have a “democracy”
if you needed to pass a test of economic literacy to vote? If you needed
a college degree? Both of these measures raise the economic under
standing of the median voter, leading to more sensible policies. Fran
chise restrictions were historically used for discriminatory ends, but
that hardly implies that they should never be used again for any rea
son. A test of voter competence is no more objectionable than a driv
ing test. Both bad driving and bad voting are dangerous not merely
to the individual who practices them, but to innocent bystanders. As
Frederic Bastiat argues, “The right to suffrage rests on the presump
tion of capacity”:
And why is incapacity a cause of exclusion? Because it is not the
voter alone who must bear the consequences of his vote; because
each vote involves and affects the whole community; because the
community clearly has the right to require some guarantee as to
the acts on which its welfare and existence depend.56
A more palatable way to raise the economic literacy of the median
voter is by giving extra votes to individuals or groups with greater
economic literacy. Remarkably, until the passage of the Representa
tion of the People Act of 1949, Britain retained plural voting for gradu
ates of elite universities and business owners. As Speck explains,
“Graduates had been able to vote for candidates in twelve universities
in addition to those in their own constituencies, and businessmen
with premises in a constituency other than their own domicile could
vote in both.”57 Since more educated voters think more like econo
mists, there is much to be said for such weighting schemes. I leave it
to the reader to decide whether 1948 Britain counts as a democracy.
wow, never knew this!
Since well-educated people are better voters, another tempting way
to improve democracy is to give voters more education. Maybe it
would work. But it would be expensive, Eind as mentioned in the pre
vious chapter, education may be a proxy for intelligence or curiosity.
A cheaper strategy, and one where a causal effect is more credible, is
changing the curriculum. Steven Pinker Eirgues that schools should
try to “provide students with the cognitive skills that are most im
portant for grasping the modern world and that are most unlike the
cognitive tools they Eire born with,” by emphasizing “economics, evo
lutionary biology, and probability and statistics.”60 Pinker essentially
wants to give schools a new mission: rooting out the biased beliefs
that students arrive with, especially beliefs that impinge on govern
ment policy.61 What should be cut to make room for the new material?
There are only twenty-four hours in a day, and a decision to teach
one subject is also a decision not to teach another one. The ques
tion is not whether trigonometry is important, but whether it is
more important than statistics; not whether an educated person
should know the classics, but whether it is more important for an
educated person to know the classics than elementary economics.62