by Bryan Caplan
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Product Description
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. This is economist Bryan Caplan's sobering assessment in this provocative and eye-opening book. 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. Boldly calling into question our most basic assumptions about American politics, Caplan contends that democracy fails precisely because it does what voters want. Through an analysis of Americans' voting behavior and opinions on a range of economic issues, he makes the convincing case that noneconomists suffer from four prevailing biases: they underestimate the wisdom of the market mechanism, distrust foreigners, undervalue the benefits of conserving labor, and pessimistically believe the economy is going from bad to worse. Caplan lays out several bold ways to make democratic government work better--for example, urging economic educators to focus on correcting popular misconceptions and recommending that democracies do less and let markets take up the slack. The Myth of the Rational Voter takes an unflinching look at how people who vote under the influence of false beliefs ultimately end up with government that delivers lousy results. With the upcoming presidential election season drawing nearer, this thought-provoking book is sure to spark a long-overdue reappraisal of our elective system.
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Average Customer Review:
0 of 1 people found the following review helpful:
 Good, 2008-11-22
I really appreciated this purchase. The book is a methodological novelty and I am sure that many authors will cite it.
0 of 1 people found the following review helpful:
Sad but true, 2008-10-30
This book will give you a great deal of insight on why America functions the way it does. It is not a pretty picture. Basically, people vote for politicians who tell them what they want to hear, regardless of any logical inconistencies, because they don't trouble themselves to understand the issues in a non-emotional way. Given what we have heard from our presidential candidates lately, this goes a long way towards explaining why we elect who we do.
3 of 6 people found the following review helpful:
 Huh?, 2008-10-28
Caplan does not seem to appreciate the fact that this country was never supposed to be a democracy in the first place. The United States of America is a republic, not a democracy. In fact, until the early 1900s the word "democracy" was treated as a dirty word of sorts, and you never heard it in political speeches. Now politicians keen on vote buying stress the advantages (to their careers) of democracy.
This book says that a democracy is not a market, but a commons. No, a true democracy is a lynch mob. It's mob rule. If 100 people form a democracy and you're one of them and 70 of those people want to kill you and take your land, guess what, they can! They're the majority. Majority rules! This country is a republic and our freedoms are protected by rule of law, period.
The only political party that seems to appreciate this today is the Libertarian party. Democracy is not what it is important to preserve. Our liberty is. Our liberty is preserved by rule of law, a law that is above our elected officials, that they cannot change once "democratically" elected. Despotic tyrants are democratically elected all the time. Fascists are democratically elected. What is important are the restrictions on their power. Mencken said of democracy that "On some great and glorious day the plain folks of the land will reach their heart's desire at last, and the White House will be adorned by a downright moron." (As it is right now. This is also however about to happen in a week or so, regardless of which of the two morons wins.)
2 of 6 people found the following review helpful:
 Interesting but flawed;Caplan needs to read The Wealth of Nations, 2008-10-13
This is an interesting book.Caplan's argument is that the majority of voters are irrational, both individually and collectively, in the area of political and public goods decision making at all levels of government.Unfortunately ,the book is intellectually flawed for at least five reasons
First,Caplan has absolutely no idea what Adam Smith is talking about.Consider the following claims made by Caplan on p.32 : " This is the central lesson of The Wealth of Nations(1776,WN) : the " invisible hand " quietly persuades selfish businessmen to serve the public good." Caplan has made a fundamental error in confusing enlightened self interest with selfishness,avarice,or greed.The partial,out of context quotations(p.14,424 of the Modern Library(Cannan)edition of the WN) he gives about our owing the products produced by the baker,brewer,and butcher to their own interest or self love and not their benevolence(charity)overlooks the fact that charity begins at home.The businessman MUST FIRST provide for his family and himself.This must be his primary goal.Such a goal in no manner or shape translates as selfish.The businessman realizes that he must first be SUCCESSFUL before he can aid others.On the same page he claims that understanding Smith's central lesson allows one to understand the fallacy of usury laws.Smith is,in fact a major supporter of an updated version of usury laws.The central lesson of the WN is that long run economic growth requires that the long run rate of interest must be fixed permanently by the central bank at a level a little bit above the prime rate of interest charged the most credit worthy of individuals.Smith fully realizes that this requires an explicit policy of credit restriction.NO loans are to be made to 3 categories of borrower-projectors,imprudent risk takers,and prodigals.These 3 categories are equivalent to J M Keynes's speculators and rentiers in the General Theory.Smith is very clear about what will happen to the savings of depositors if the private commercial banks make loans to these categories of borrower-the savings will be wasted and destroyed.It will be impossible for investment to equal savings intertemporally in such a case (See pp.260-340 in general and pp.339-340 specifically for Smith's conclusion).
Second,Caplan is simply ignorant about Smith's views on trade and tariffs.Smith is a supporter of both revenue and retaliatory tariffs (see pp.434-439 of Smith).It
is well known that ,as the head of Customs in Scotland in the early 1780's,he imposed the largest revenue tariff in history on imports into Scotland.His record was broken by
Alexander Hamilton in 1794 in the USA.Hamilton made it clear that he was following Smith.It is bizarre to see Caplan present the claim that a 0 % tariff is a complete free trade position or goal(p.144) when Smith stated that such a belief is " Utopian " : " to expect,indeed,that the freedom of trade should ever be entirely restored... is as absurd as to expect that an Oceana or Utopia should ever be established in it.Not only the prejudices of the public,but what is much more unconquerable,the private interests of many individuals,irresistibly oppose it "(Smith,WN,pp.437-438).In this case the invisible hand does NOT lead to where Caplan thinks it does.
The third problem is Caplan's unclear understanding of the risk versus uncertainty divide that impacts decision making in the political arena.The rational voter is faced with making a political decision in an atmosphere of great uncertainty ,due to incomplete and missing information ,as well as conflicting claims by experts presenting conflicting analysis leading to differing policy conclusions.The example of international trade and tariffs is an excellent example.Caplan's " free trade " position,representative of mainstream economics, is diametrically opposed by Adam Smith, in theory,practice,and policy.Caplan clearly accepts Smith as an expert.A careful reader of WN,intent on using the wisdom of Adam Smith to evaluate different politicians' views on trade before deciding to vote, is thus confronted with a conflicting set of recommendations-should he follow Caplan and other mainstream,Benthamite Utilitarian economists or Adam Smith,universally recognized by nearly all economists as the greatest of all economists ? Unfortunately, the average voter is not able to apply the rational actor model of SEU(Subjective Expected Utility )Theory in either its modern version or the older version put forth by Jeremy Bentham in 1787 as a critique of both Adam Smith's Theory of Moral Sentiments(1759;6th edition 1790)and WN.
The fourth problem involves Caplan's reliance on the fuzzy and unclear work of the modern behaviorist school's reliance on the 1979 Prospect Theory(Cumulative Prospect Theory,1993) of Kahneman and Tversky.The fundamental results that K-T claimed for their theory was that decision makers had non linear probability preferences that resulted in the use of decsion weights,as opposed to probabilities, that were subproportional or superproportional.Keynes had already recognized this fact in his A Treatise on Probability(1921;TP) in chapter 26 in section 8.Keynes specified the subproportional weighting factor used by decision makers as being representable by p/(1+q),where p is the probability of success and q is the probability of failure.Keynes combines the decision weight p/(1+q) with the outcome A to arrive at a modified version of his conventional coefficient of risk and weight,maximize cA,which is to maximize cA= p/(1+q)A.It is obvious that the super proportionality result involves using p(1+q).p is the linear result.The various crossover results are easily obtained by considering various linear combinations of the 3 main coefficients listed above(i.e.,a[p/(1+q)]+(1-a)[p(1+q),where 0
The final problem involves Caplan's resort to the use of the least squares based econometric techniques of multiple regression and correlation that require the assumption of normality.This means that the voter is assumed to know the propagation mechanism that is generating the time series data.This is not correct under conditions of uncertainty or ambiguity.No goodness of fit tests are provided by Caplan to justify the use of such techniques.Caplan's econometric results can not be used to support the claim of voter irrationality.Voters are rational.However,they are making decisions under conditions that involve a range of uncertainty /ambiguity,and not risk.The only natioal,American election in the 20th century that could be accurately forecasted using a multiple regression approach was an election that everyone already knew was going to be won by the Democrats without the use of such a technique.That election was the 1932 election.THe odds could be clearly calculated in that election only.
Caplan's book needs to be revised in a latter edition.Despite all of the errors it would still be interesting to read due to the great amount of literature covered and discussed.I recommend that the book be obtained.
1 of 2 people found the following review helpful:
Wonderfully thought provoking., 2008-09-04
This book is wonderfully thought provoking and can be summed up with an exhortation that Caplan uses near the end: "Democracy is a commons, not a market."
Under this thesis Caplan shows how economics would predict 'irrational' voter behavior even under the rational actor theory. Voters are no more irrational when voting for bad policies than are people who decry global warming while still driving to work.
Caplan gets carried away with the rhetoric of his position occasionally, but his points have that delightful quality of seeming obvious once explained that economic writing aspires to. Well worth the read.
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