The rationally irrational citizen

In his book, The Myth Of The Rational Voter: Why Democracies Choose Bad Policies, economist Bryan Caplan posits that most people operate in economic and other areas largely on the basis of rational irrationality. Caplan observes that although the private cost of an irrational personal action can be negligible, the social cost can be very high and vice versa. Like economic models for most any product, forces at play in shaping personal rational irrationality include preferences (personal demand) for an irrational behavior and the price the irrational actor pays for acting irrationally.

The implication is that as the personal price for an irrational act increases, the person is increasingly incentivized to consume less irrationality, i.e., they tend to act more rationally. All other things being equal, a high personal preference for a given irrational act tends to lead to more irrational behavior. When viewed like this, there is logic in irrationality, hence the label rational irrationality. And, it becomes clear that rational irrationality is not quite the same as rational ignorance, where voters stop searching for truth when the cost in effort to find truth is too high. By contrast, rational irrationality posits that people actively, but mostly unconsciously, avoid the truth.

This line of thinking gets even stranger when it’s applied to politics. It is well-known to social and political science that people’s beliefs and behaviors are often contradictory under varying circumstances. For example, people who assert strong protectionist beliefs about trade policy, usually don’t give much weight to a product’s national origin relative to the more important factors of the product’s price and quality.

That’s an example of people responding to fluctuating incentives, which unconsciously causes consumers to change viewpoints depending on the circumstances. One can stand back and level an accusation of hypocrisy, but this kind of behavior reflects a natural working of the human mind. So, if a politically protectionist consumer has a choice of buying a pair of jeans made in China for $40.00 or an equivalent pair made in the US for $60.00, it’s not unusual for the consumer to pick the imported product. In this example, the high cost of being politically rational or ideologically consistent is $20.00 per pair of jeans. That’s enough of an incentive to increase the politically irrational act of buying the import from the buyer’s point of view (but it’s a rational choice from the buyer’s economic point of view). If the price differential was lower, say only $8.00 per pair of jeans, maybe most protectionists would opt for the US product over the import to vindicate their ideological belief.

The point is that fluctuating incentives lead to different behaviors.

Caplan goes on to point out the psychological plausibility of rational irrationality, which he asserts “appears to map an odd route to delusion” in three steps. First, a person tries to find the truth (real or imagined), second they weigh the psychological cost of rejecting truth vs. the material (real world) costs, and third, if the psychological benefits of being wrong outweigh the material costs, the person will often “purge the truth from their mind and embrace error.” That self-delusion process may sound implausible, but it’s not. The mental process is mostly tacit or unconscious.

Looked at another way, people psychologically can afford to be irrational on topics where they have little or no emotional or psychological attachment to a given choice or answer, e.g., buying the cheap jeans from China for people who aren’t politically protectionist imposes no psychological cost. However, when there is an emotional or psychological attachment to a given choice or answer, but there’s little or no material cost of error, people will tend to believe whatever makes them feel best, even if they are wrong. On the other hand if there’s a significant material cost of error, people will tend to become more objective and they more critically and consciously weigh the psychological cost of breaking “comforting illusions” against the material cost of error.

Caplan takes care to point out that rational irrationality does not mean that all political views are always senseless or in error. Instead, it casts doubt on everyone’s political beliefs. The problem with rational irrationality is that it fosters both mistaken beliefs about how the world works and support for counterproductive political policies. Unlike shoppers for consumer goods, voters do not have clear incentives to be rational. Voting is not a slight variation on shopping. However, there are major psychological incentives for voters to set objectivity aside and be irrational.

As Caplan puts it: “Political behavior seems weird because the incentives that voters face are weird.” Maybe weird political behavior isn't weird. Weird politics is normal from the point of view of human cognitive biology.

B&B orig: 10/6/16