The Myth of the Rational Voter

Caplan argues that democracy produces bad economic policy not because voters are ignorant, which the standard rational ignorance literature already accepts, but because they hold systematically mistaken beliefs that they prefer to hold. He calls this rational irrationality: since an individual vote has essentially zero probability of changing an outcome, the private cost of holding a comfortable false belief is nearly zero, so people indulge beliefs they would abandon if they bore the consequences.

His evidence is the Survey of Americans and Economists on the Economy, which asked the same economic questions of the general public and of professional economists. He identifies four systematic biases where the public differs from economists in a consistent direction: anti-market bias, underestimating the benefits of market mechanisms; anti-foreign bias, underestimating the benefits of trade with foreigners; make-work bias, treating employment rather than production as the goal; and pessimistic bias, systematically believing conditions are worse and worsening. He controls for income, education, ideology and other factors and finds the gaps persist.

His conclusions are uncomfortable and he states them plainly: more democracy is not the remedy for bad policy, and insulating economic decisions from voter preference, through independent central banks, trade agreements or judicial constraint, produces better outcomes.

The main objection is that Caplan treats the economics profession's consensus as the standard of truth, which is defensible on some questions and not on others, and the 2008 crisis complicated that assumption. The empirical finding that public and expert opinion diverge systematically has held up.