Between economic man and the rational voter

…is the assumption that “homo politicus”, as a voter, is as rational in his decision making as his economic counterpart anymore valid? Across Europe and North America, the rise of nativist politicians and fringe ideas appear to put the lie to this. Decluttering both the political and economic space of fake news might help the rational decision maker. And the legion of regulators that support the market economy…work towards this end.

In order for the increasingly mathematical models treasured by economists to make sense, they all assume that man, the active agent in these sets of equations, is a rational entity. In this reading, “Homo economicus” is not just all-knowing. His decision-making is fact-based. And he invariably aims to maximise personal utility. Is it any surprise, then, that economic models are far more beautiful (if less useful) than real world situations? Nearly always, policy driven by the best wonks tend to over- or undershoot their stated goals. As a result, you have to explain how a rational populace, victim of such predation, still struggles to act for itself. horizons begin to matter as much as aggregate activity levels ― both of which, at the right scale, become completely meaningless.

Even the most stochastic models barely scratch the surface that is the randomness of markets (in capitalist economies ― the dominant milieu for much of these models). Neither does Schumpeter’s notion of “creative destruction” fix anything in this regard. Psychologists, on the other hand, have studied man for long enough to agree that bases of his actions do not lend themselves to pert categorisation. Man in all his complexity is as much the result of his environment as he is a cause of whatever shape that environment takes or whichever direction it is headed.

The unresolved contradictions between the extent to which man is a consequence of his nature or upbringing, and how both of these feed on themselves to support his impulses, are no less crucial for the study of man, than are questions around whether economic man actually maximises subjective expected utility. In posing this latter question, behavioural economics presents the strongest challenge yet to traditional economics’ assumption of profit or utility maximisation as a condition of our behaviour.

…such is the borderline nature of much of the new political thinking in the West, that regulators of the political space, designed along the dimensions of those in charge of markets in the West, would simply infringe on those rights without which all men cease to be free ― especially the right to subscribe to looney notions.

How much of an accident is it, though, that in discussing politics, “experts” in the field make the same assumption for the models with which they interrogate society as economists make? It is hard to quarrel with the paramount position that political scientists bestow on democracy in the organisation and management of human societies. Winston Churchill had a lot going for his contention that “democracy is the worst form of government except for all those other forms that have been tried from time to time”. As with the market economy, with which it is traditionally associated, democracy’s virtues are almost about the freedoms it hands the individual, as it is about the restraints on what an organised collective may do.

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Put this way, is the assumption that “homo politicus”, as a voter, is as rational in his decision making as his economic counterpart anymore valid? Across Europe and North America, the rise of nativist politicians and fringe ideas appear to put the lie to this. Decluttering both the political and economic space of fake news might help the rational decision maker. And the legion of regulators that support the market economy ― including rules against insider trading, for one ― work towards this end. But such is the borderline nature of much of the new political thinking in the West, that regulators of the political space, designed along the dimensions of those in charge of markets in the West, would simply infringe on those rights without which all men cease to be free ― especially the right to subscribe to looney notions.

Nowhere, however, is the upshot of the assumption of a rational homo politicus more important (or its basis flimsier) than in frontier and emerging economies such as ours. Here, powerful, narrow elites nearly always fail to erect, and where rudiments of these are in place, they invariably erode institutions of governance in pursuit of their private interests.

Nowhere, however, is the upshot of the assumption of a rational homo politicus more important (or its basis flimsier) than in frontier and emerging economies such as ours. Here, powerful, narrow elites nearly always fail to erect, and where rudiments of these are in place, they invariably erode institutions of governance in pursuit of their private interests. Despite which, “nation-builders” out of the West ceaselessly push democracy as the cure-all for governance deficits. Improved governance, especially through a democracy, is advertised in this reading as necessary for society’s improved security and prosperity. Since, acting always in their self-interest, the electorate may not knowingly empower those who would hurt them.

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Our experience since 1999 point to the clear weakness of this way of looking at the problem. Ignore if you will the elite’s readiness to continue to subvert processes in their interests by suborning the voting process. But still you have to explain how a rational populace, victim of such predation, still struggles to act for itself. One argument is that through policies designed to immiserate the people, the elite conspire to drive instinctual responses to their policies. I have been told that better and targeted investment in human capital, especially through better schools and healthcare systems, would support the rational voter hypothesis.

But that would still leave us having to explain the readiness with which some of us, educated to the hilt, push statements that we know to be manifestly untrue, in a bid to sow dissent and confusion around us.

Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.