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Public Choice Ignorance Everywhere

November 9, 2010

Since learning about public choice economics, I have been constantly shocked by how little it has been internalized by economists. For example, the phenomenon of Donald Boudreaux, Director of the Center for Public Choice, spending his time on the activism strategy of writing letters to the editor when I would describe Public Choice as “the study of how writing letters to the editor doesn’t accomplish anything.” Imagine the Director of the Center for Einsteinian Physics calculating spaceship trajectories using Newtonian mechanics in all of his consulting work, and getting the answers wrong every time because he fails to take relativity into account, and you’ll understand my bewilderment. Public Choice provides awfully compelling reasons to Change Incentives, Not Minds, yet in the end it appears that the teacher’s urge to teach and to have teaching be the answer is so strong as to overwhelm mere economics.

More recently, Megan McArdle gave a shining example of public choice ignorance with a very sensible, reasonable piece about why we should abolish the corporate income tax. The piece concludes:

Want to get corporate money out of politics? Want to erode the power of the Chamber of Commerce? Take away one of their primary motives to get involved.

I don’t say this will persuade everyone. But I hope that liberals will at least consider that there might be a better way than the corporate income tax to achieve their goals.

Pointing out a more efficient policy is classic Folk Activism – it assumes that we don’t have efficient policies because no clever economist has yet designed them or eloquently described their advantages. That might have been a reasonable argument 100 years ago, but we’re in the post-Mancur Olson world: we have a whole school of economics explaining how democracy is systematically biased towards policies that transfer from dispersed interests to concentrated ones.

And what is McArdle doing? She’s complaining about a policy that does exactly what we expect democratic policies to do, and advocating for a different policy that would be against the goals of special interests (“Want to get corporate money out of politics?”) and better for society as a whole. As I said in a Students For Liberty talk this past weekend, for all the good this approach does, McArdle might as well have called a press conference and farted into the microphone.

My metaphor is deliberately provocative because I find this pattern so appalling, and it seems absurd that economists so often ignore these basic results in their own field. It moves me to shout: We do not live in a world that mainly suffers bad policies due to lack of ideas about better ones, or lack of elegant explanations supporting good policies, but one that suffers bad policies due to system and meta-system level incentives. In the real world, if you want to have any chance at any effect on changing bad policies, you must take this into account, frustrating and difficult though it is. Vaguely assuming that the problem is not enough eloquent blog posts or op eds is like finance professors actively investing in individual stocks (ignoring both efficient markets & diversification), or nutrition experts living on Twinkies – experts behaving directly contrary to the most basic results in their own fields.

Of course, finance professors do invest in individual stocks, and nutrition experts sometimes eat twinkies – investing and eating both invoke strong biases that make it hard to follow the best strategy. And the same is true for economists – I call it Folk Activism, after all, because it is so deeply intuitive – it’s not going to go away anytime soon. But let’s at least point it out whenever it happens, make the cognitive dissonance explicit, and call out the economist equivalents of Twinkie-snarfing nutritionists. Sound like a plan?

P.S. One challenge to this idea might be that it is itself a form of Folk Activism. A response is that shame will work on economists much better than politicians, especially if it comes from respected peers. After all, economists (and bloggers) care what other economists (and bloggers) think much more than politicians care what economists think. Still, holding the mirror of public choice up to economists might be too ineffective to be worthwhile, and the best strategy might be simply to ignore the misguided multitude.

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18 Comments leave one →
  1. November 9, 2010 2:03 am

    I see Don Boudreaux-style outreach educational efforts as valuable not because they’ll convince leaders to change policy, but because they may turn on a light bulb in some individual’s head who will use the new insight as a springboard to changing the world in a way nobody could anticipate.

    Playing “black swan, black swan, who’s got the black swan” isn’t a good wager, perhaps, but if somebody has insight that others lack, but doesn’t have a strategy for actually changing the world in a unique way, maybe that person’s best hope is to share insight with others and hope that one of them will become the practical game changer.

    • November 15, 2010 1:41 am

      Maybe. But if that’s their goal, then their communications should be tuned for that goal – focused on communicating the reasons why the world works in bad ways. For example, one might teach basic public choice, without knowing how to change the rule-sets to get it to work better, in the hope that someone would learn and come up with a solution.

      But this is not much of an argument for, say, teaching that policies are bad, because that is more steps away from the actual solution. You are sharing an insight that is barely useful, and holding back insights that are closer to the meat of the problem. This is much easier, it is lower-hanging fruit, but isn’t it obviously less effective?

  2. November 9, 2010 2:13 am

    You need to come to terms with Byran Caplan style public choice. From his view, public education matters.

  3. November 9, 2010 2:34 am

    “we have a whole school of economics explaining how democracy is systematically biased towards policies that transfer from dispersed interests to concentrated ones.”

    That might have been a reasonable argument 15 years ago, but we’re in the post-Caplan world…

    Anyway, I think you need to draw a distinction between changing minds to change policy (Boudreaux-style) and changing minds to change systems (Patri-style).

    • November 15, 2010 1:44 am

      Right, changing minds is just fine if you can personally change enough minds to form a group large enough to go enact change. It is not OK if you are vaguely hoping that by changing some minds, you will through some indeterminate (or worse – determined by other things) path change an outcome.

  4. November 9, 2010 4:52 pm

    Sometimes “behaving directly contrary to the basic results of their own field” works great!

    Like this nutrition professor who may have got healthier on a Twinkie diet:

    http://www.cnn.com/2010/HEALTH/11/08/twinkie.diet.professor/index.html

    It is possible that some people have yet to realize where their true interests lie, and education can change this.

  5. November 10, 2010 4:13 am

    While education will not stop bad incentives from being bad, education certainly matters in improving incentives as well as in resisting bad incentives. Education alone may not bring a game change – but look what the real Public Choice experts do: propaganda, propaganda, propaganda. If politicians, bureaucrats, journalists, rich people, etc., constantly try to propagate their ideas instead of just enjoying domination over society without giving a damn without people think – they are probably on to something. If universally, Establishments that capture the culture survive, and Establishments that don’t crumble, then maybe culture is important, and people in power know it.

    So game-shifting efforts like seasteading, decentralized computer networks, and other technologies may be essential to improving the political situation – but so are ideas important. Ideas are also part of technology. Better ways to understand the world, resist fallacies, propagate “vaccines” to fallacies, peaceably resolve conflicts, etc., are valuable technologies, too.

  6. November 10, 2010 4:14 am

    I suppose my conclusion is that you shouldn’t oppose changing incentives and changing minds. The two may be distinct, but are still quite correlated.

  7. Brad Taylor permalink*
    November 10, 2010 10:11 pm

    If you understand public choice theory but don’t see any hope in things like seasteading, trying to convince voters to be less stupid is the best strategy. Absent ways of changing the technological environment from which meta-rules emerge, you need to change minds to change incentives (replace what we have with meaningful federalism or ancap). I don’t think people like Boudreaux and McArdle are stupid. I’m sure they recognize the problem of reform and the tiny expected value of folk activism. They just don’t see any better way and also get expressive utility from complaining about policy (I know I do!).

    I think it’s crucial for those of us who see seasteading as a better way to engage in folk activism to convince out very smart folk activist allies that the expected value of developing the knowledge to settle the ocean is much higher. Having all that letter-writing energy put into something more productive. Imagine if even 10% of the funding and talent which currently goes to libertarian thinktanks went to supporting seasteading and free zones.

  8. November 11, 2010 2:52 am

    Abolishing the corporate income tax sounds feasible, I think there are already countries that have negligible rates. And reform sometimes does follow public figures advocating more efficient ideas. We’re talking now about trading carbon credits because that was already done successfully with sulfur (the economist behind that scheme advocates a tax rather than cap for carbon now). We had a significant reform of the tax code people consider fairly successful in 1986. Charles Murray helped inspire “the end of welfare as we know it” in the 90s.

  9. November 11, 2010 6:56 pm

    I think you miss a distinction between the short term and long term. Sure, in the short term the incentives may be stacked against a policy. But, we need to ask how certain good ideas ever become popular in the long run.

    For example, how did some many nations and people move from being mercantilist in thought to adopting the truth of gains from trade, etc.? Well, some economists thought about it and made their arguments and those arguments over a long period of time started to win out. In the short run though the incentives were probably against a shift. It is not as if all of a sudden everyone changed their view of economics!

    So, to criticize Dr. B et al is short sighted. They are making a case and perhaps slowly changing minds. Same thing with people criticizing the foreign aid industry. Maybe in a decade or two things will be dramatically better even if there are heavily entrenched interests now.

    Come to think of it, YOU are doing this on the blog. The fact that we don’t see a 1000 nations suggests there are some political incentives against centralized governments ceding power. Yet, you continue to waste your time trying to convince people decentralization is good.

  10. John permalink
    November 12, 2010 11:15 am

    Agree with Mo’s final para. What being ranting against is practically indistinguishable from the rant itself (that it, a blog post).

    Nice one!

  11. November 13, 2010 4:41 pm

    Tuco: When you have to shoot, shoot, don’t talk.

    From The Good, the Bad, and the Ugly

    Men of action are rare in the world of iPhones, academics, and the media. Much easier to rant.

  12. December 16, 2010 5:44 pm

    Everybody knows that successful folk activism requires folk songs.

Trackbacks

  1. Public Choice: Change Incentives, Not Minds! | Delightfully Distinctive COLRS
  2. Public Choice Ignorance Everywhere (via Let A Thousand Nations Bloom) « Drewt333's WordPress.com Blog
  3. The value of outreach | News and Features
  4. The value of outreach - conyolo.com | conyolo.com

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