Robert J. Stonebraker, Winthrop University
The Joy of
Economics: Making Sense out of Life
Robert J. Stonebraker, Winthrop
University
Rational Ignorance
.....where ignorance is bliss, 'tis folly to be wise.
.....Thomas Gray
German was my worst college subject. I lacked both aptitude and interest in memorizing vocabulary and grammatical rules. One particular semester I earned "A" grades in every class, except for a "C" in German. Could I have done better? Of course. I chose to limit my efforts in German. Was it a mistake? Was it an irrational step in a misspent youth? No. I have no regrets. I would make the same choice again.
Brainpower is a scarce commodity. As with Ben and Jerry's ice cream and Utz's potato chips, I never will have enough. I could have learned more German, but such knowledge is not cheap. It takes time and energy -- time and energy that could be spent in other pursuits. And it clogs neural pathways -- pathways that could deliver alternative pleasures and information. Rational economic agents pursue knowledge only if they expect the benefits to exceed the costs. I chose ignorance.
I am not alone. We all choose ignorance. I choose ignorance about German syntax. I also choose ignorance about quantum mechanics (a choice that dismays my astronomer son), about architectural features of Turkish mosques, and about WrestleMania. I recognize the potential benefits of knowledge in such areas but, to me at least, those benefits pale in relation to the associated costs. My ignorance is rational.
Classroom strategies
As a college instructor, the shoe is on the other foot. Just as I choose to be ignorant about German, my students often choose to be ignorant about economics. And I must grudgingly admit that part of this chosen ignorance could be rational. Even my most brilliant lectures, my most clever insights and most exquisite chalkboard graphs elicit little more than ho hum reactions in some students. Impassioned exhortation might successfully raise their effort levels in a few cases, but is not a reliable strategy. The way to alter behavior is to alter its perceived costs and benefits.
Devising ways to make learning easier is one approach. Better teaching methods can lower the cost of learning and, therefore, increase the quantity demanded. However, the method is far from foolproof. Better teaching enables students to learn the same material with less time and effort. Knowing they can now get their desired course grade with less effort, students might rationally choose to spend less time studying economics. Rational students, whose primary interests lie elsewhere, might simply divert their energies to other pursuits -- perhaps German. If so, their knowledge of German will rise, but they will remain rationally ignorant about economics.
The alternative approach is to raise the cost of ignorance. This is the major purpose of giving exams. Students who choose ignorance are penalized. Exams do not always deliver the goods, but they do have an effect. Comments such as "this will be on your next exam" can shake even the most dissolute student out of a sullen stupor.
The uninformed electorate
Similar problems arise in elections. Voter turnouts typically are slim. In presidential elections, barely 50 percent of eligible voters cast their ballots.2 Less critical contests like those for student government officials on college campuses can engender even less enthusiasm than my chalkboard graphs in introductory economics.
Perhaps worse, those who vote often are ill informed. Even the most diligent voters encounter unfamiliar names on the ballot. How many of us truly understand political issues? What stand have our Congressional candidates taken on acid-rain legislation? What bills are pending in the state legislature and what amendments might potential state representatives support? Will county commissioner hopefuls raise or lower the budget for softball field maintenance? And what is a prothonotary anyway?
Even economists cannot answer these questions! Should we be surprised that most of the electorate is uninformed or even misinformed? Should we be surprised at voter apathy? No. It is rational ignorance. We pursue information only if the benefits we expect exceed our costs. And the benefits of such information are negligible. New information may not affect my choice of candidates, and even if it does, so what? My vote is irrelevant. The last election in which my vote was decisive occurred when Jeff Bailey captured the hall monitor position in my fifth grade classroom. The chance of my vote affecting the outcome of a national, or even local, election is essentially zero.
Why become informed? Why spend the time and resources needed to be politically involved if the benefits I will receive in turn are negligible? As long as the marginal cost of producing the information exceeds my personal benefits, political ignorance is rational.
However, self-interest may conflict with social interest. Even if I do not spend the time to be well informed, I still want others to do so. If everyone else becomes well informed, the "right" people will be elected, and the "right" policies will be enacted whether or not I participate. This is a classic example of what economists term external effects. As other voters become more informed, we all are made better off. Their information benefits them (private benefits), but it spills over and benefits us as well (external benefits).
Individually, I have an incentive to let others do the work, to take a "free ride" on their efforts. However, if we all wait to free ride on the efforts of others, political information and activism will be in critically short supply.
Special interests
Of course, not everyone will be apathetic. Those with a strong personal stake in an election or issue will participate. Pending legislation to subsidize chicken ranchers in the East may not attract much attention from vegetarians in Oregon, but it certainly will get the attention of chicken ranchers in the East. When people's "special interests" are on the line, the benefits of political involvement can exceed the costs and otherwise apathetic voters can be transformed into political activists writing letters, gathering petitions and promising campaign contributions to officials voting in their favor.
Imagine that you are a legislator considering a bill that would create $100 million of benefits. If these benefits are widely dispersed -- perhaps $1 to each of 100 million people -- few, if any, voters will take notice. With only $1 at stake, the benefits will be too small to warrant active participation. Very few of your constituents will know about the bill, and even fewer will care. But suppose those $100 million of benefits are more concentrated. Suppose the bill will create $1 million in benefits for each of 100 people. You should expect to see each of these100 beneficiaries forcefully lobbying to get the bill passed.
If only those with special interests become involved, they will dominate the political process. Unfortunately, the "special interests" of such people may conflict with the "public interest." If so, the "wrong" candidates may be elected and the "wrong" policies enacted. For example, suppose the bill creating $100 million of benefits also will cost $101 million. The bill should be voted down. However, if the benefits are concentrated in the hands of just 100 people, you will have 100 people banging on your door urging you to vote "yes". And, if the $101 million of costs are evenly dispersed across 100 million people, none will have enough at stake to lobby against the bill's passage. A "yes" vote will bring you the loyalty, support and campaign contributions (!) of 100 happy people. True, you will impose costs on 100 million others. But they will not know and, even if they do find out, they will not care -- the impact on each is too small. Although the costs of the bill exceed its benefits, such bills often pass.
Ideally legislators will push us toward allocative efficiency by passing the most valuable set of laws and regulations possible. But legislators cannot know which potential laws and regulations we believe to be the most valuable unless we tell them. If we fall prey to rational ignorance and remain silent, we should not be surprised if legislators fail to do our bidding. If those with special interests are the only ones talking, they will be the only ones that legislators hear. Rational ignorance might be in our best self-interest, but it often is not in our best social-interest.
What is the solution? How do we induce consumers to "purchase" information and political involvement that is not in their self-interest? Economists normally advocate government intervention to correct such problems. Programs that increase the private benefits or decrease the costs of political involvement might work. But in this case, the government has little incentive to fix things. Why should special-interest groups want to change a political process they dominate? Why should they support reforms that will increase the involvement of others, thereby cutting their own influence? Those with the power to fix the market failure are precisely the ones who benefit from it.
No, I don't have the answer; I just have the question. I'm counting on you for the answer.
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Notes:
1. See McKenzie, Richard B. and Tullock, Gordon, The Best of the New World of Economics, fifth edition, Irwin, Homewood, Illinois, 1989, chapter 21, for an extended discussion of these tradeoffs.
2. The 1960 contest pitting Richard M. Nixon against John F. Kennedy attracted one of the highest percentage turnouts in history with votes from 63 percent of eligible citizens. Turnout for the 2008 election, the highest in forty years, was 57 percent. Off-year elections generate smaller turnouts, typically around 35 to 40 percent of potential voters.
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Testing Yourself
To test your understanding of the major concepts in this reading, try answering the following:
1. Explain the concept of rational ignorance and why it occurs.
2. Explain why special-interest groups dominate the political process.
3. Use the concept of rational ignorance to explain why government policies are not always the best or most efficient ones possible.