The Myth of the Rational Voter: Why Democracies Choose Bad Policies

Imagine a bustling town square where citizens gather to decide their future. The ideal of democracy is that these people, armed with reason and knowledge, will choose the best path forward. Yet, time and again, democracies enact policies that seem to defy common sense and economic wisdom. Why does this happen? This is the paradox of democracy: the system is designed to align rulers’ interests with those of the ruled, yet often produces bafflingly poor outcomes.

Consider the enduring example of protectionism. Economists have long agreed that free trade benefits all parties involved, yet nearly every democracy maintains tariffs and import restrictions. This contradiction suggests that voters may not be as informed or rational as the democratic ideal assumes. But why would voters support policies that seemingly harm their own interests?

The answer lies in the concept of rational ignorance. Because the chance that a single vote will sway an election is minuscule, it is entirely rational for voters to avoid the cost of acquiring detailed political knowledge. Voters choose to remain uninformed because the personal benefit of being informed is negligible compared to the effort required. This rational ignorance creates a knowledge gap that politicians and interest groups can exploit, leading to policies that reflect misconceptions rather than informed preferences.

Yet, this is not a fatal flaw of democracy but a complex challenge. The system's promise remains compelling, but understanding its limitations is crucial. As we move forward, we will explore how systematic biases in voter beliefs shape policy, how economists and the public differ in understanding, and what this means for the future of democratic governance.

Next, we delve into the nature of these biases and how they distort voter perceptions.