IEA Blog

With the opinion polls pointing to a close result and the prospect of a hung parliament, turnout is expected to be relatively high in today’s election. Yet for economists this presents a bit of a puzzle.

Given that the chance of any single vote being decisive is so small, particularly outside a handful of highly marginal seats, the individual act of voting is arguably irrational – especially since costs are incurred, such as time and effort wasted on the trip to the polling station.

Moreover, one can only vote for a crude package of proposals, which in practice is likely to be changed significantly when it comes to implementation. The political process is extremely inefficient at responding to individual preferences compared with the fine differentiation of markets.

Worse still, various authors from the rational choice school (for example, Olson and Stigler) have shown that policy tends to be determined by special interests rather than the preferences of voters. The “logic of collective action” means that small concentrated groups have a far stronger incentive to commit resources to lobbying politicians and bureaucrats than large dispersed groups such as general taxpayers.

Special interests also engage in “agenda manipulation” to frame policy debates in particular ways and exclude perspectives that are detrimental to their cause. Indeed, Schumpeter went as far as to suggest that politicians and interest groups “are able to fashion and, within very wide limits, even to create the will of the people.” While this may be going too far, a strong case can certainly be made that such strategies further undermine the notion that voting “makes a difference.” (And in some cases, elite interests may simply ignore the wishes of voters, as with the ratification of the Lisbon Treaty).

So why do people continue to vote in large numbers? One hypothesis is that voters find it difficult to calculate probabilities and therefore don’t realise their individual vote is unlikely to make any difference. Another idea is that people vote because they value the preservation of the wider democratic process – they act out of duty and/or altruism. Neither explanation is very satisfactory from a rational choice perspective.

The IEA is delighted that Gary Becker will be giving the Hayek Lecture on June 17th this year. Gary Becker attended Hayek’s evening seminars at the University of Chicago, thus making a nice link to F.A. Hayek, who was the inspiration behind the founding of the IEA.

Becker is, of course, renowned for applying economic ideas to unconventional areas and won the Nobel Prize in 1992. His research programme has examined sociology, demography, human capital, criminology, the economics of the family and so on. At the lecture in June he will be specifically discussing migration.

Gary Becker’s research programme is founded on the idea that the behaviour of an individual adheres to the same fundamental principles in different areas. The same explanatory model should thus, according to Becker, be applicable in analysing different aspects of human behaviour.

Becker’s approach has been criticised for reducing human behaviour to unrealistic axioms and base economic motives. However, this is a mistake. In many, ways it is Becker’s critics who are reductionist and, certainly, they have a very incomplete view of many policy issues if they neglect Becker’s arguments. Becker never argues that self interest is the only motivating factor for a particular action: he argues that individuals make rational choices, motivated by a range of preferences which will include self interest.

Let us take crime as an example. Many people will never commit a serious crime – however great the benefit to them from doing so. But, for those who are willing to commit a crime because they are not restrained by their moral views, their behaviour will surely be affected by economic incentives. What is the pay off? What is the probability of getting caught? What is the sentence?…And so on. This does not just apply to murderers and robbers but to a much larger number of people who might be willing to commit (say) a speeding offence to catch a ferry for which they are late. And this reasoning can obviously be applied to a large number of other fields – the welfare state, whether footballers commit fouls etc.

In other words, whatever our moral views, we ignore the economic motivation, which is often important in particular circumstances, at our peril. Gary Becker is well worth listening to…

Click here for full details of the event.